Williams v. Standard Oil Co of Louisiana Same v. Texas Co

• Decision Date: 02 January 1929
• Docket Number: 65,Nos. 64,s. 64
• Citation: 73 L.Ed. 287,278 U.S. 235,49 S.Ct. 115
• Parties: WILLIAMS, Commissioner of Finance of Tennessee, et al. v. STANDARD OIL CO. OF LOUISIANA. SAME v. TEXAS CO
• Court: U.S. Supreme Court

278 U.S. 235

49 S.Ct. 115

73 L.Ed. 287

WILLIAMS, Commissioner of Finance of Tennessee, et al.

v STANDARD OIL CO. OF LOUISIANA.

SAME

v. TEXAS CO.

Nos. 64, 65.

Argued Nov. 23, 1928.

Decided Jan. 2, 1929.

Messrs. Charles T. Cates, Jr., of Knoxville, Tenn., James J. Lynch, of Chattanooga, Tenn., H. N. Leech, of Clarksville, Tenn., and L. D. Smith, Atty. Gen., for appellants.

[Argument of Counsel from page 236 intentionally omitted] Messrs. John W. Davis, of New York City, and H. Dent Minor, of Memphis, Tenn., for appellee Standard Oil Co., of Louisiana.

Messrs. John B. Keeble, of Nashville, Tenn., Harry T. Klein, of New York City, and C. B. Ames, of Oklahoma City, Okl., for appellee Texas Co.

[Argument of Counsel from page 237 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the Court.

These cases were considered together by the court below and are submitted together here. In both the validity of a statute of Tennessee is assailed as contravening the federal Constitution. Appellee in No. 64 is a corporation organized under the laws of Louisiana, and appellee in No. 65 is a corporation organized under the laws of Delaware. From a time long prior to the passage of the statute, both have been engaged and are now engaged in the business of selling gasoline in the state of Tennessee.

The statute was adopted in 1927. Its purpose and effect are to fix prices at which gasoline may be sold within the state. A division of motors and motor fuels is created in the department of finance and taxation and authorized to collect and record data concerning the manufacture and sale of gasoline, freight rates, differentials in price to wholesalers and retailers, the cost and expense of production and sale, etc. The information thus collected is made available for use by the commissioner of finance and taxation in the regulation of prices at which gasoline may be sold in the state. Permits for such sale are to be issued subject to the approval of the commissioner but only at the prices fixed and determined. Prices of gasoline are to be fixed with a proper differential between the wholesale and retail price. Rebates, price concessions, and price discrimination between persons or localities are forbidden. The prices first are to be stated by the applicant for a permit, and, if not approved by the superintendent of the division, are to be determined by that official, with a right of review by the commissioner and finally by the courts. Chapter 22, p. 53, Public Acts Tennessee 1927. By a general statute (Shannon's Tennessee Code, § 6437) a violation of the act is a misdemeanor and is punishable by fine and imprisonment. Pressly v. State, 114 Tenn. 534, 538, 86 S. W. 378, 69 L. R. A. 291, 108 Am. St. Rep. 921.

Appellees brought separate suits in the court below to enjoin the state officers named as appellants from carrying out their intention to enforce the act and institute criminal proceedings for violations of it against appellees, respectively, and to have the act declared unconstitutional and void. Under the facts alleged, the suits were properly brought. Terrace v. Thompson, 263 U. S. 197, 214, 44 S. Ct. 15, 68 L. Ed. 255; Tyson & Brother v. Banton, 273 U. S. 418, 427, 428, 47 S. Ct. 426, 71 L. Ed. 718.

The principal ground of attack, and the only one we need to consider here, is that the Legislature is without power to authorize agencies of the state to fix prices at which gasoline may be sold in the state, because the effect will be to deprive the vendors of such gasoline of their property without due process of law in violation of the Fourteenth Amendment. Appellees applied for a temporary injunction against appellants, upon which there was a hearing, and the court below, consisting of three judges (section 266, Judicial Code; 28 USCA § 380), granted the injunction as prayed. 24 F.(2d) 455 (D. C.) sub nom. Standard Oil Co. v. Hall.

It is settled by recent decisions of this court that a state Legislature is without constitutional power to fix prices at which commodities may be sold, services rendered, or property used, unless the business or property involved is 'affected with a public interest.' Wolff Packing Co. v. Industrial Court, 262 U. S. 522, 43 S. Ct. 630, 67 L. Ed. 1103, 27 A. L. R. 1280; Tyson & Brother v. Banton, supra; Fairmont Creamery Co. v. Minnesota, 274 U. S. 1, 47 S. Ct. 506, 71 L. Ed. 893, 52 A. L. R. 163; Ribnik v. McBride, 277 U. S. 350, 48 S. Ct. 545, 72 L. Ed. 913. Nothing is gained by reiterating the statement that the phrase is indefinite. By repeated decisions of this court, beginning with Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77, that phrase, however it may be characterized, has become the established test by which the legislative power to fix prices of commodities, use of property, or services, must be measured. As applied in particular instances, its meaning may be considered both from an affirmative and a negative point of view. Affirmatively, it means that a business or property, in order to be affected with a public interest, must be such or be so employed as to justify the conclusion that it has been devoted to a public use and its use thereby in effect granted to the public. Tyson & Brother v. Banton, supra, 273 U. S. 434 (47 S. Ct. 426). Negatively, it does not mean that a business is affected with a public interest merely because it is large or because the public are warranted in having a feeling of concern in respect of its maintenance. Id., 273 U. S. 430 (47 S. Ct. 426). The meaning and application of the phrase are examined at length in the Tyson Case, and we see no reason for restating what is there said.

In support of the act under review it is urged that gasoline is of widespread use; that enormous quantities of it are sold in the state of Tennessee; and that it has become necessary and indispensable in carrying on commercial and other activities within the state. But we are here concerned with the character of the business, not with its size or the extent to which the commodity is used. Gasoline is one of the ordinary commodities of trade, differing, so far as the question here is affected, in no essential respect from a great variety of other articles commonly bought and sold by merchants and private dealers in the country. The decisions referred to above make it perfectly clear that the business of dealing in such articles, irrespective of its extent, does not come within the phrase 'affected with a public interest.' Those decisions control the present case.

There is nothing in the point that the act in question may be justified on the ground that the sale of gasoline in Tennessee is monopolized by appellees, or by either of them, because, objections to the materiality of the contention aside, an inspection of the pleadings and of the affidavits submitted to the lower court discloses an utter failure to show the existence of such monopoly.

Nor need we stop to consider the further contention that appellees, being foreign corporations, may not carry on their business within the state except by complying with the conditions prescribed by the state. While that is the general rule, a well-settled limitation upon it is that the state may not impose conditions which require the relinquishment of rights guaranteed by the federal Constitution. Frost Trucking Co. v. R. Com., 271 U. S. 583, 593, et seq., 46 S. Ct. 605, 70 L. Ed. 1101, 47 A. L. R. 457, where the applicable decisions of this court are reviewed.

Finally, it is said that even if the price-fixing provisions be held invalid other provisions of the act should be upheld as separate and distinct. This contention is emphasized by a reference to section 12 of the act, which declares: 'That if any section or provision of this act shall be held to be invalid this shall not affect the validity of other sections or provisions hereof.'

In Hill v. Wallace, 259 U. S. 44, 71, 42 S. Ct. 453, 459 (66 L. Ed. 822), it is said that such a legislative declaration serves to assure the courts that separate sections or provisions of a partly invalid act may be properly sustained 'without hesitation or doubt as to whether they would have been adopted, even if the Legislature had been advised of the invalidity of part.' But the general rule is that the unobjectionable part of a statute cannot be held separable unless it appears that, 'standing alone, legal effect can be given to it and that the Legislature intended the provision to stand, in case others included in the act and held bad should fall.' The question is one of...