Public Utilities Commission of California v. United States

PETITIONER:Public Utilities Commission of California
RESPONDENT:United States
LOCATION:Wolverine Tube, Inc.

DOCKET NO.: 23
DECIDED BY: Warren Court (1957-1958)
LOWER COURT:

CITATION: 355 US 534 (1958)
ARGUED: Jan 07, 1958
DECIDED: Mar 03, 1958

Facts of the case

Question

Audio Transcription for Oral Argument – January 07, 1958 in Public Utilities Commission of California v. United States

J. Thomason Phelps:

Mr. Chief Justice, may it please the Court?

With the Court’s permission I should like to take approximately half of the appellant’s time to open and my colleague Judge McKeage would like to have the remaining time for rebuttal.

This is an appeal from a judgment of a three-judge district court for the Northern District of California.

That judgment declared unconstitutional a statute of the State of California and permanently enjoined the Public Utilities Commission, the appellant here, from taking any action to carry out the terms of that statute.

This case presents two major aspects.

The first is one I may call a preliminary or threshold or jurisdictional question, involving the question of whether or not the district court should have entertained the complaint and then second is what I may call the ultimate question, which is whether or not the State of California, through the commission, had the power to regulate the rates of commercial carriers for the transpiration of property of the United States.

This matter had its inception in 1954.

In order to make clear a number of questions that arise under this preliminary aspect of the case, I should like to describe as briefly as I can the statutory and administrative framework under which commercial carriers are regulated by the commission in California.

For our present purposes and in order to simplify the matter, I think we may consider carriers in California as in two categories.

In the one, we have the rails and the so called certificated motor carriers which are operating under certificates of public convenience and necessity issued by the commission and we can call these the public utility carriers, because under California law they are public utilities for all purposes of that law.

They are required to file tariffs and with certain exceptions they are required to assess and collect no other than that tariff rate.

In the other category, there are, what you may call permit carriers, they are so called in California.

There are thousands of them.

They operate under mere permits issued by the commission and their rates are regulated in California by certain minimum rate orders promulgated by the commission from time to time.

So that these permit carriers are required to assess no less than these minimum rates.

Now although we have these categories of carrier, and they are regulated somewhat differently, they compete with each other vigorously for all kinds of traffic, including the traffic of the United States government.

For many years it’s been the commission’s policy to equalize the conditions under which these two classes of carriers compete with one another.

For many years prior to 1955, Section 530 of the Public Utilities Code, any provision the effect of which was to grant to these public utility carriers an unlimited right to transport property of the United States and other governments, free or at reduced rates, a provision comparable to Section 22 of the Interstate Commerce Act.

Now in order to give the permit carrier the same privilege the commission, a number of years ago, incorporated in certain of its minimum rate orders, a provision authorizing these permit carriers to deviate from the minimum rates, for the transportation of property for the armed forces, that’s very important, to bear in mind that limitation.

That provision was Item 20 in Minimum Rate Tariff number 2, promulgated by the commission applicable to general commodities, not all but so called general commodities.

Now in 1954, a group of carriers, who had been transporting large quantities of property for the United States government, filed with the commission a petition and that is where this matter had its inception.

That petition alleged that due to the intense competition of carriers for government business, the rates for that business had deteriorated to the point where the revenues of the carriers were depressed to unreasonably low levels and there was a threat of a burden upon other traffic, that petitioner requested the commission to take appropriate action.

The action that these carriers requested of the commission was the cancellation of that Item 20 provision.

Later by amendment that request was modified into a request merely that the commission authorized permit carriers to deviate from the minimum rates only to meet the rate of a public utility carrier that had been filed with the — some agency of the United States government in order to give the permit carriers the benefit of knowledge of what these other rates were.

The commission found as facts substantially all of the allegations of the petitioner.

The remedy which the commission sought to accomplish, however, was a remedy which required the cooperation of the United States government and by cooperation I mean the commission’s order contemplated that the United States government would require these public utility carriers to file with the commission, simply for the sake of giving publicity these reduced rate tenders which they had filed with various agencies of the United States government.

So the commission’s action and its proposed remedy was conditioned upon that action by the government.

Later on the commission was formally advised that the United States government had declined to require the publishing and the filing of these reduced rate tenders with the commission.

The commission’s attempt to remedy therefore became a futility.

In the middle of 1955, therefore, the California legislature enacted an amendment to Section 530 of Public Utilities Code, the effect of which was to withdraw from the public utility carriers, this previously enjoyed unlimited right to transport for the government free or at reduced rates and empowered the commission to permit such transportation, upon such terms and conditions as it saw fit.

J. Thomason Phelps:

There was, however, an important proviso attached to that amendment, a proviso that had the effect of partially restoring its privilege so to speak to the utility carriers in order to enable them to meet whatever reduced rate might be authorized to the permit carriers.

That amendment was to become effective on September 7th 1955.

Now on August 16th 1955 the commission in anticipation of that September 7th date and realizing that the statute would be defeated in large measure unless and until the commission canceled this Item 20 provision to the permit carriers.

On August 16th the commission issued a decision which canceled Item 20.

Ten days later on August 26th at a time, and this is important, when the commission’s action canceling that privilege to the permit carriers could have been stayed by the United States until its rights had been finally determined by this Court, instead it acquiesced in the commission’s cancelation of that privilege and merely requested a postponement of 90 days of its effect.

Earl Warren:

May I ask you what way of acquiesce — just by asking for a continuance of that is what you mean or do it express acquiescence (Inaudible) —

J. Thomason Phelps:

I use the word ‘acquiescence’ to describe what I think is the effect of it.

There were representations in the petition filed by the government requesting postponement which had the effect I submit of being an acquiescence.

They stated for example that the United States could make the necessary arrangements within 90 days, that they believed that it could be done in a short time, that they believe they could within that period of time reach agreement upon rates that would be satisfactory to the commission and to the parties.

The United States thereby I submit Your Honors lost its right to a state and waived its right to state of the commission’s actions.

On September 6th, that’s the day before September 7th the effective date of the statute, the commission did postpone the cancelation of Item 20 for a period of 90 days as requested by the government, so that the cancellation was deferred until December 5, 1955.

Now September 7th then arrived the following day and it’s important to bear in mind that on that date, September 7th, the United States waived and lost its right to a judicial review under California law of the commission’s act.

It’s also important to Your Honors —

Earl Warren:

May I ask — may I ask how it lost the — lost that right?

J. Thomason Phelps:

Its right to review under California law was conditioned upon its having applied to the commission for a rehearing of this decision on or before the effective date of the decision.

Now, on the same date of September 7th it’s important to keep in mind that for certain classes of government traffic this Section 530 of the statute as amended became effective.

Now those classes of traffic are these, all traffic in all commodities for all of the civilian agencies of the United States government, the Veterans Administration, the Bureau of Reclamation, the General Services Administration and others.

It also become effective upon certain kinds of armed forces traffic that is to say traffic in certain so called special commodities other than general commodities, petroleum, live stock, fresh fruits and vegetables for example.

Later the government requested a further postponement by 60 days of the commission’s action.

Earl Warren:

From what date to what date?

J. Thomason Phelps:

That was about 10 days Your Honor before the December 5th that was November 27 as I recall it.

Earl Warren:

Now as I understand I am just trying to get the sequence Mr. Phelps in my mind, the order was originally to take effect on the 7th of September and at that time the government asked to have it continued for a certain length of time.

J. Thomason Phelps:

That’s correct Your Honor.

Earl Warren:

And that was done, is that right?

J. Thomason Phelps:

That’s correct.

Earl Warren:

And that request was you say in the form of an acquiescence in the jurisdiction of the commission?

J. Thomason Phelps:

I believe that’s a fair interpretation Your Honor.

Earl Warren:

Yes, now you said a moment ago that that under state law they, the government lost the right to review the order of the court by not having appealed from the September 7th date.

J. Thomason Phelps:

Yes.

Earl Warren:

Well now is — did not the continuance that they gave until some time in December detract from the finality of that judgments?

J. Thomason Phelps:

Well yes Your Honor I should have made that more clear.

What the government lost was its right to review or to seek review as of that time of the commission’s cancellation as it was — as it was done by the commission’s prior order.

But it is true the government’s request for a postponement that was granted by the commission then deferred to a later date, the effective date of the cancellation and gave rise to a further opportunity for the government to seek review of that order.

Earl Warren:

Then it did have in the end of December it did have a right to have that California order reviewed?

J. Thomason Phelps:

Yes, yes Your Honor, it did.

Now on December 2, that’s the date this compliant was filed, the situation was then that the government who, I should — I said a moment ago, had participated through out these proceedings before the commission and was represented by counsel.

After having participated in that proceeding and having failed to seek review of the commission’s decision and requesting merely a postponement, the State of Affairs was that certain rates for certain classes of traffic established rates were in effect.

And for traffic carried by the permit carriers for the armed forces, the commission’s cancellation order was scheduled to become effective on December 5, three days later.

December 2 was a Friday.

In the afternoon of Friday, December 2, this complaint was filed.

It requested a temporary restraining order and an adjudication without the statute, 530 of the code, was unconstitutional.

Your Honors there was not a single word in that compliant about these prior proceedings before the commission.

The relief requested was merely that the commission be restrained from carrying into effect the terms of the Section 530.

Apparently however sometime before the United States attorney presented this application for a restraining order to the District Court, he or someone became aware of this decision of the commission cancelling Item 20 and apparently became aware of its significance.

And so this United States attorney urged the District Court to take action before 12:01 am the following Monday in order to prevent this action of the commission from becoming effective, that was an overall representation, there was nothing whatever in the complaint about it.

The commission was given an opportunity to appear and to be heard on this application for restraining order.

I appeared and I pointed out to the court the difficulties involved with a restraining order that was purely prohibitory in form, and that was the form in which it had been proposed by the government, merely asking that the commission be restrained from taking action, and I pointed out to the Court that merely by the lapse of time and complete inaction by the commission, this decision of the commission would become effective at 12:01 a.m., the following Monday.

I also pointed out that it would take affirmative action by the commission to countermand that prior decision and to accomplish what the government thought.

I advised the Court also of the difficulties involved in taking that affirmative action, maybe it was late Friday afternoon, the order was scheduled to become effective at 12:01 midnight, Monday.

And it was necessary to give notice to thousands of these permit carriers who had been presumably making preparations for a period of 90 days to get ready for the new law with reference to rates.

Nonetheless the District Court issued the restraining order that had been proposed, purely prohibitory in form, but from bench the District Court advised me that he expected the commission to take affirmative action to abate this decision of the commission.

It was quite difficult for the commission to resolve what was plainly an ambiguity in the instructions of the Court, the written restraining order saying refrain from acting, and the oral part of the restraining order saying take affirmative action.

Felix Frankfurter:

What it is this portion of your argument Mr. Phelps?

J. Thomason Phelps:

I beg your pardon?

Felix Frankfurter:

To what end are you directing your present argument?

J. Thomason Phelps:

There are two ends Mr. Justice Frankfurter.

One I think this action of the District Court was a violation of the principles of comity and even more important the action of the District Court in issuing this restraining order and the action that the committee taken in compliance, in it’s attempted to comply with it had the effect of plunging into confusion and uncertainty the entire rate structure for the transportation of government property from California.

Felix Frankfurter:

You mean – the conclusion I draw from what you’ve just said that if your — the inference of your argument is accepted it would have been needless to go in to all these far — more far reaching issues, is that it?

J. Thomason Phelps:

You mean on the ultimate question Your Honor?

Felix Frankfurter:

Yes.

J. Thomason Phelps:

Yes.

We urge the Court equally with the opposition on the ultimate question we urge that this case should be returned to the District Court with instructions to dismiss the complaint, that it should have never been tainted.

Felix Frankfurter:

And what would the consequence of that be regarding government shipments?

J. Thomason Phelps:

This is the present state of affairs Your Honor on that.

So far as the transportation by permit carriers for property for the armed forces that is abeyance by virtue of the action the commission took in compliance with the restraining order, and that is to say the commission suspended or postponed the cancellation of that Item 20 until the final disposition of this pending matter in this Court.

Felix Frankfurter:

If your remedy, if I follow you and the suit would be dismissed then that restraining order would fall too, would it not?

J. Thomason Phelps:

Yes Your Honor.

Felix Frankfurter:

So everything, so one must assume that the slate is wiped clean?

J. Thomason Phelps:

Yes Your Honor.

Felix Frankfurter:

And on that assumption I have asked you what would be the consequence regarding government shipment or armed service shipment?

J. Thomason Phelps:

So far as the traffic of the permit carriers for the armed forces is concerned, there would be no immediate effect because of this indefinite postponement of this Item 20, that is to say Item 20 would still be in effect, giving to permit carriers this unlimited right to charge the armed forces whatever rates they chose.

Now so far as the other types of traffic are concerned, presumably the — if this Court reverses and remands —

Felix Frankfurter:

But if they didn’t, assume, make your assumption.

J. Thomason Phelps:

Yes.

Felix Frankfurter:

That the suit in order dismissed.

J. Thomason Phelps:

Yes.

Then in that event the Section 530 of the statute would become effective and would require these public utility carriers to assess and collect that tariff rates except armed forces traffic, which by virtue of this proviso, they may still deviate in order to compete with the permit carriers, but for armed forces traffic in — other than general commodities, and for traffic of the all the all the civilian agencies of the United States, then in the event that you prescribed Mr. Justice Frankfurter, Section 530 would require the public utility carriers to assess and collect that tariff rate.

Felix Frankfurter:

On the shipments made the armed force, what proportion roughly indicated to be, is what you call general traffic and what is not?

What would be within the dispensing power and what would not?

J. Thomason Phelps:

I’m afraid I can’t answer that Your Honor.

There is no reference in the record.

Felix Frankfurter:

Sizable?

J. Thomason Phelps:

There is sizable Your Honor, yes.

Felix Frankfurter:

Very sizable?

J. Thomason Phelps:

Yes, that’s my understanding, although there are no concrete figures in the record.

Felix Frankfurter:

So that the upshot is that the armed service shipments would be subject to — would be dependent on the traffics filed with your commission?

J. Thomason Phelps:

No Your Honor.

Felix Frankfurter:

Under these — as to the area that you just would be very sizable.

J. Thomason Phelps:

Now with respect to that sizable, armed forces traffic Your Honor, this cancellation of the Item 20 provision having been postponed by the commission is still outstanding and would remain outstanding —

Felix Frankfurter:

I see.

Felix Frankfurter:

I misunderstood you.

I thought that the — I wanted to know what is not subject to that cancellation, is that sizable?

Is the armed service traffic not within the protection of the qualification, the freedom to give what rates — is that sizable?

J. Thomason Phelps:

I would assume yes Your Honor, although there are no figures, but for example petroleum, now I would assume that the armed forces transports petroleum in very large quantities in California.

Felix Frankfurter:

So that as to that body of traffic, armed service traffic, the traffic would have to move subject to California rates?

J. Thomason Phelps:

That’s right, unless and until the commission took action to arrest it which it could do Your Honors, and I should say that’s where I close, that the commission is prepared to stipulate through its —

Felix Frankfurter:

Well that’s not on the record, isn’t it?

There was such a stipulation of — there was a stipulation of fair deal of not making trouble or difficulty.

J. Thomason Phelps:

There was a stipulation Mr. Justice Frankfurter, but not of the kind I’m about to describe.

Felix Frankfurter:

Alright.

J. Thomason Phelps:

The one I’m about to describe is one whereby Judge McKeage as the attorney for the commission authorized by a statute to exercise all of its legal function, is fair to stipulate that if this Court should require the dissolution of that restraining order that injunction, and so that these conditions which we’ve described might otherwise become effective or might become effective in the absence of the commission’s action, we would stipulate that the commission would take such action promptly in order to avoid having this immediate impact of tariff rates fall upon United States government traffic.

Felix Frankfurter:

Is Judge McKeage appointee of the Governor of the state?

J. Thomason Phelps:

No Your Honor.

Felix Frankfurter:

Appointee of the commission?

J. Thomason Phelps:

Yes Your Honor.

Felix Frankfurter:

Does the commission survive, if I read correctly the papers, you are to have a new Governor before very long.

Does it survive a change in the occupancy of Sacramento?

J. Thomason Phelps:

Yes it does Your Honor.

Felix Frankfurter:

It does?

J. Thomason Phelps:

Yes.

Felix Frankfurter:

So this, he can give an assurance that outlives the Governor and the commission.

J. Thomason Phelps:

That is our view of it Your Honor, yes.

Felix Frankfurter:

I think you’re fortunate to have this kind of a commission, that’s non political.

J. Thomason Phelps:

Now my time —

Felix Frankfurter:

It’s not relevant to the argument.

I am just expressing private opinion.

J. Thomason Phelps:

The time I’m allotted to myself Your Honor has ended and I shall be glad to give way to the government, thank you.

Earl Warren:

Mr. Davis

John F . Davis:

Mr. Chief justice and the Court please?

I would like to give just a word of background on this case.

John F . Davis:

Historically, the United States has been free to negotiate rates about transportation of its property throughout the history of the country.

Section 22 of the Interstate Commerce Act, which was adopted in 1887, provided the specific expectation with respect to interstate traffic as such.

And the states by and large made no attempt to impose regulations on intrastate traffic until recently.

State of California —

William O. Douglas:

(Inaudible)

John F . Davis:

And I say and the states made no attempt to impose rates upon the United States for intrastate traffic until very recently.

California —

William O. Douglas:

Interstate rates or —

John F . Davis:

Intra — and interstate ICC, the Interstate Commerce Act made the exemption.

In California that we’ve —

William O. Douglas:

Prior to that, the interstate rates —

John F . Davis:

No the United States was not governed by any rates on intrastate or interstate.

William O. Douglas:

It was subject to negotiation in each case?

John F . Davis:

In each case.

In California for example, there was a specific provision of the California Public Utility code giving the United States, exempting the United States from the power of the commission with respect to rates.

William J. Brennan, Jr.:

How long ago the picture changed?

John F . Davis:

That this picture changed?

William J. Brennan, Jr.:

Not only in California, in general?

John F . Davis:

In California yeah the change in the law was made in 1955, generally these changes occurred within the last five to six years Mr. Justice Brennan.

The — there has been some —

William O. Douglas:

The Commerce Commission had no —

John F . Davis:

Pardon, the Interstate Commerce Commission?

William O. Douglas:

(Inaudible)

John F . Davis:

No but I would mention this, there has been considerable discussion as to the general government transportation policies.

And there was a concerted movement to alter or amend Section 22 of the Interstate Commerce Act in order to take away the exception with respect to Interstate Commerce.

Congress last summer turned down the request.

Of course there would be no constitutional question there because Congress governing the transport would be able to subject its own transportation to such rates as it desires.

But as a matter of policy Congress determined last summer not to amend, not to repeal Section 22 but to leave the United States free of the regular tariffs for the transportation of its own, of its own property.

That was as recently as I say this last summer.

California on the other hand, this problem became acute in California in — I think it was in 1954, when some small truckers began to engage in what the established trucking companies felt was cutthroat competition.

John F . Davis:

They were cutting their rates for the transportation of government property and an association of the truckers went to the Public Utility Commission in California and said, we need protection from these interlopers that are destroying our business.

There was an attempt to remedy this through commission action and when that proved futile, the legislature of California passed the law, which repealed the exemption for government — transportation of government property and that’s the Section which is now before this Court.

I believe it is unnecessary by and large to go into the administrative proceedings which have occurred before the California commission.

The remedy, if it was a remedy, which the United States could have achieved through participating in those proceedings, was only a partial remedy.

Section 530 of the Public Utility Code is self executing.

It provides that — it provides that the commission may permit common carriers to transport property at reduced rates for the United States subject to such extent and subject to such conditions as it may consider just and reasonable.

In other words, the provision of the public utility code is self executing.

Unless the commission grants exception from it, the United States is automatically subject to the regular intrastate rates in California.

Felix Frankfurter:

Could the California Commission on petition of the United States give you everything you want?

Could the California legislation authorize its commission and give you relief to the full extent that the government insists upon in assailing the constitutionality of that statute?

John F . Davis:

I believe not Your Honor.

The act as I say, and this is a pure question of statutory construction I think, the commission may permit —

Earl Warren:

Is that in the record during the briefs –?

John F . Davis:

The law that I’m reading, yes, this is the section of law.

Earl Warren:

Yes, where is it?

John F . Davis:

It’s quoted down in our brief at page 2, under 530 of the California Public Utility Commission.

The commission may permit common carriers to transport the property at reduced rates for the United States, state county and municipal governments, to such extent and subject to such conditions as it may consider just and reasonable.

Now if we’ve got everything we wanted Mr. Justice Frankfurter, we’d require a ruling by the Public Utility Commission that no conditions are necessary and United States may continue to act as it has in the past.

Felix Frankfurter:

But this involved the desire of the government to ship gasoline or whatever the commodities are, my imagination (Inaudible) at certain rates or free of charge.

John F . Davis:

That’s right.

Felix Frankfurter:

Now what I want to know is whether could you file a petition with the California commission saying the governments desires to ship so many tons, or so many barrels, or so many caskets of this, that or the other commodity at the following rate or free of charge, I suppose government doesn’t want it for nothing at this kind of a rate, is the California Commission empowered to grant such a petition physically seeking, leaving Uncle Sam out of pocket by not one cent more than you want to be left out of the pocket?

John F . Davis:

It may not do it with respect to transportation free because the word ‘free’ was dropped out of the statute with respect to transportation of property.

That is not really is the essence of our case because we don’t expect that before the free examination —

William O. Douglas:

That isn’t — not only not the essence not in the case.

John F . Davis:

It’s in the case —

Felix Frankfurter:

Whether as the matter of dollar and cents you could get the kind of transportation charge that the United States wants?

John F . Davis:

That’s right.

The commission could grant exceptions presumably it could grant exceptions in every case where we ask them.

Felix Frankfurter:

Are you going to say a word as to why it is necessary for you to go through what might be merely idle form if you don’t know.

John F . Davis:

Yes I will indeed go into that.

John F . Davis:

But first I want to suggest to this Court, that we do not have to, we do not have to consider really the effect of this commission proceeding to alter its order with respect to permit carriers because its only partial relief.

The act is there.

It applies except with respect to the – what’s carved out of it.

Felix Frankfurter:

Well, I don’t understand why you say partial as to what you want in dollars and cents in full?

John F . Davis:

Not well in these —

Felix Frankfurter:

That’s my question, that’s the question of fact.

Can it give you the transportation rates that you want?

John F . Davis:

It can but I’ve said — in the proceeding which Mr. Phelps was talking about they were dealing only with part of the relief that was involved.

And so I think there is a substantial, suspiciously substantial amount of relief which isn’t involved in that proceeding.

There was no reason that the United States should —

Felix Frankfurter:

(Inaudible) that proceeding —

John F . Davis:

That’s right.

Felix Frankfurter:

Can it start an independent proceeding for that —

John F . Davis:

That is the problem — that is the procedural problem which is before this Court, and before they reach the merits and that is and it’s stated in various ways the exhaustion of administrative remedies, stated as the ground — whether this is a matter of comity, stated on whether there is a case or controversy before that court, and that’s specifically the first question which this Court must face up to.

And that is –

Felix Frankfurter:

Whether you just pulled out that particular proceeding?

John F . Davis:

Whether this is ripe for decision.

Now I don’t think that the commission argues that the federal government must wait until there has been an injury to the United States through the disclosure of confidential information of – that there shall have been delayed in military shipments or that these other injuries which were alleged to be in prosect and with result – I don’t think that the commission argues that we must wait until those specific things occur before we can get relief because the very purpose of an injunctive proceeding such as this is when these things are imminent, when they arise from the — what has already occurred then an injunction is a proper remedy and —

Felix Frankfurter:

I don’t get the disclosure — I don’t get the disclosure point at all because I assume that when you make a private arrangement with a trucker, you have to tell him what he has to carry, don’t you?

John F . Davis:

Now as a matter of fact, very frequently the actual carriers don’t know what they are carrying.

Felix Frankfurter:

That is you say we’re going to present you with so many cases and we’re ready to pay not more than X dollars per ton, is that it?

John F . Davis:

In the high security cases there is a single representative of the truckers who has been cleared for confidential information and the armed service involved negotiates directly with him and tells him as much information as is necessary in order for him to — and only as much information as is necessary for him to perform the transportation.

Felix Frankfurter:

And to push you on that specific point, you couldn’t make such an arrangement with the commission?

John F . Davis:

Well I think it is entirely possible we could make such a condition with the commission.

Judge McKeage says that the commission — obviously the commission doesn’t want to harm the United States of the security.

But I say we shouldn’t, the United States shouldn’t be in a position where it has to make that provision with them.

They should not have the power, the authority to require us to make those laws.

Felix Frankfurter:

They way to keep a secret is to keep it.

John F . Davis:

That’s right.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

That is right.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

I think not Your Honor because this is in the nature of an injunctive proceeding and that proper persons that we wanted to get the injunction against are the persons who we’re going to enforce this statute against the United States, which I believe clearly is the Public Utilities Commission in California.

I think California would have been a proper party in this case, but I don’t think it’s a necessary party.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

It’s not — the commission —

Charles E. Whittaker:

(Inaudible)

John F . Davis:

That’s right.

It is the arm of the state which is established to enforce this law.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

As I say since the form of this procedure is the injunctive procedure, I do not believe the state is a necessary party.

I think it would have been a proper party.

I don’t think it’s a jurisdictional party.

I don’t think that there can be no case without the state being in.

You can see we’re not trying to enjoin the legislature of the State of California, the Governor of the California or United States Attorney in California.

We’re trying to enjoin the particular arm of California which is established to do these things.

Now if the legislature had no power to pass the law, the law is a nullity, the commission is acting without proper authority and therefore can be enjoined, that’s the — the theory of it is that they have no real authority to act because the statute is unconstitutional.

I think that the real basis that the Public Utility Commission raises this jurisdictional point is because of the actions of this Court in such cases as Public Service Commission of Utah against Wycoff and then two or three years ago a case involving the same Public Utility Commission in connection with the United Airlines cases, and in those this Court said that the particular agency hadn’t attempted to bring the shipper within its jurisdiction and it was too early to try to enjoin the action, until the commission involved had decided whether or not the shipper was subject to its jurisdiction.

Now this case is different in more than one way.

For one thing there is no question of interpretation, there’s no power in the commission, not to take jurisdiction over the United States.

The Act itself, there was the exception in the Act, with respect to United States and the legislature repealed the exception so that the statute is specifically now subject — applicable to property carried for the United States.

So we don’t have to go back to the particular commission in order for them to determine whether or not this is applicable to this carriage.

Now that was the case in Pennsylvania and in Texas where we have these similar questions, and we have in those cases gone to the state courts in order to get that state question resolved, but here there is no such question.

Now the second reason that this is different from the Wycoff cases and the Public Service Commission against United Airlines is that, in this case the Act is self executing and that no order of the commission is necessary in order to have these effects which we feel are so harmful to the United States.

The day after this act becomes effective, the United States would have to pay the tariffs set by the Public Utility Commission of California and would have to ship subject to their regulations until they got an exception.

So that —

Felix Frankfurter:

And that would be, that exception would be prospective and not retrospective?

John F . Davis:

It might be retrospective, I do not know Your Honor, I think they might be able to make it retrospective, but in any event —

Felix Frankfurter:

Well if they have power to make it retrospective, then so far as money is concerned Uncle Sam isn’t got a pocket and you have to evoke some other non-monitory consideration of potential harm to the United States, is that correct?

John F . Davis:

We might not be out of pocket.

John F . Davis:

I think that it is unrealistic.

Legally speaking we might be — not be out of pocket.

Actually the purpose of passing this law and giving the commission this authority was because there was a feeling that we were taking advantage of cut rate transportation and they wanted to change that situation.

So if the commission carries out the mandate of the California legislatures, it will cost us some money, maybe it should cost us some money, maybe it shouldn’t.

Felix Frankfurter:

But, on the other hand if this patriotic vow by the representatives of California, that they want to be just as helpful, just as respectful of the needs of United States as the government (Inaudible)

John F . Davis:

That recurs throughout this case, that whenever the commission is pushed to the point where it appears that their authority might damage the defense effort.

The commission quickly takes the position we will not abuse our discretion in this respect.

We will respect the secrecy.

We will provide rules so that there will be no violation of secrecy.

With respect to making rates retroactively, we will advice that it can be retroactive.

With respect to prosecution of government officials, we will not prosecute government officials in this case whether we have power or not.

Now this is an echo of the position taken by counsel for the State of Maryland in McCulloch against Maryland.

There the statement was made why should you assume that we’re going to abuse this authority to tax.

Everybody says the powers to tax involves the power to destroy and maybe it does, but we are as patriotic as anybody else and we are not going to abuse the power to —

Felix Frankfurter:

But they actually did impose tax.

John F . Davis:

They imposed —

Felix Frankfurter:

That was the issue, this isn’t speculated.

There wasn’t any dispensing power, but it appears (Inaudible) to the Governor or to then the Attorney General Roger Taney, but he can wave the fact, you actually have an obstructive tax.

John F . Davis:

Well, it was stated that they could — that was the argument made to this Court that we can use this taxing power so that it will not hinder the government in carrying out its function.

Now I submit that Chief Justice Marshall was quite right when he said that if someone has to restrain himself, when the two sovereigns, whenever you get one of these problems with the two — conflicts between the two sovereigns and one has to take into consideration the perfectly reasonable purposes and function to the other, one should restrain himself.

Then under our federal system it isn’t for the California commission to say we are going to restrain ourselves.

We’re not going to act improperly in this case.

Rather under our constitutional system and I’m getting into the merits here, the government of the United States is made the supreme government when there is a conflict and its for the United States to say, well we’ll change our policy with respect to the intrastate transportation in California and we’ll try to injure your local interest.

Felix Frankfurter:

Are you saying this, that if ultimately California has no power to determine what Uncle Sam arranged between himself and the truckers, he doesn’t have to get that position by leave, by the grace of California.

John F . Davis:

That is right, that is exactly what I am saying.

Earl Warren:

Well Mr. Davis doesn’t the fact that this statute is self executing make it more imperative that the state be a party defendant as Maryland was as a defendant in the McCulloch versus Maryland?

John F . Davis:

Well excuse me Your Honor, Maryland was the plaintiff in McCulloch against Maryland as I think, they brought the action.

Earl Warren:

Yes, that’s right.

John F . Davis:

I do not see Your Honor why it is essential that the state as a state be made a party, if we make a party in this case the arm of the state which is responsible for this particular function of the state and as I understand from Mr. McKeage they have full authority, criminal and everything else with respect to the execution of the statute.

Earl Warren:

Well in any case then, where the state has an arm of its government to enforce its laws, is it sufficient to sue just the officer, if it’s a constable, if it’s a constable who has the power to do —

John F . Davis:

I think —

Earl Warren:

— to enforce a law can you sue the constable and not the state and not declare the act unconstitutional?

John F . Davis:

I don’t know in enough about the California practice nor the powers, but generally speaking, of course it isn’t enough to just pick anybody down the line and make him the defendant in the case.

Frequently —

Earl Warren:

The peace officer and peace officers have certain rights, the powers of enforcement to whether constables, sheriffs or highway patrolmen or whoever they might be.

Now if that is the arm of the government that does it, would it be sufficient to sue the constable?

John F . Davis:

I would think if acted directly under authority of the statute and he was the man responsible to the legislature in effect, because the legislature gave him this authority to act, to perform without direction from others that he would be the first — there are many suits involving governments where you do sue the arm.

The common example of course has been tax litigation where we have so commissioner cases —

Felix Frankfurter:

Is this the corporate — is this the corporate body Mr. Davis under California law, Public Utilities Commission?

John F . Davis:

I would have to pass that.

I think it’s a public —

Felix Frankfurter:

But I mean it’s the interstate commerce.

John F . Davis:

I would think so, except —

Felix Frankfurter:

(Inaudible)

John F . Davis:

Well I assumed so.

Felix Frankfurter:

You don’t know about California?

John F . Davis:

It just — it occurs to me that Mr. Justice Whittaker and the Chief Justice are entirely right that the State of California has an interest in this and would have been a property party.

It seems to me that there no one could have criticized the government for bringing California in, but I submit that particularly in testing constitutionality, when you are suing someone for acting improperly because it has no authority, because the act is a nullity.

In this case the person who was acting improperly if we are right, because the act is a nullity is the commission, and that’s why we sue them.

Earl Warren:

But only because the act is unconstitutional?

John F . Davis:

That’s right, if the act is constitutional why then —

Earl Warren:

Then their conduct is —

John F . Davis:

But that’s the historic way that you test the Constitution, particularly with respect to the United States where you can’t sue the United States without permission, why they have suits against the Secretary or Interior or and the other cabinet offices on the ground that you’re suing them because they have no authority to act.

Earl Warren:

But what line of cases do you rely on to substantiate that point that you can sue only the enforcing agency in order to establish the unconstitutionality of the act when they have done nothing to go beyond a fair interpretation of the act?

John F . Davis:

Mr. Chief Justice I may have misspoken myself.

I do not mean to say that you could sue only the commission, the Public Utility Commission and not (Inaudible).

What I am suggesting is that it is enough if you sue them.

I think it would have been quite proper to have joined the —

Earl Warren:

Well let’s say enough, what cases —

John F . Davis:

The line of cases that I would rely on would be the — I’m sorry that none of them come to my mind at this moment during the argument, but the line of cases —

Earl Warren:

Are they in your brief?

John F . Davis:

No, this point is not raised, in their there has been no question.

Well maybe it was raised way below, but it’s not raised in their present brief and we haven’t briefed it before this Court.

I’d be glad to submit a brief on it.

Hugo L. Black:

Do you think ex parte Young has an influence?

John F . Davis:

I would think it certainly would have — it would be — would influence on.

Felix Frankfurter:

Are you saying that, although the legislature of California has empowered this commission to do something or to make certain demands, you say that the legislature of California went beyond its constitutional power, therefore the officials are not close with authority, and therefore you enjoin them from doing what the legislature of California authorized them to do but has to now power to authorize.

John F . Davis:

Yes Your Honor, this is the basic theory on which many suites against federal officials are brought, and they are done in that way in the case of the federal government because of lack of power to sue the government of course, but the whole theory of them is that the person being unauthorized is subject to sue.

I —

Charles E. Whittaker:

(Inaudible)

John F . Davis:

Mr. McKeage in his reply brief argued that the commission does have judicial power and I think it’s entirely consistent with the powers of California and to give it judicial power if it wishes to, I don’t know.

I mean it doesn’t seem to me important to this case whether they have judicial power or not.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

I don’t know, I have no idea whether they are a court under California law.

Felix Frankfurter:

Does it make a difference?

John F . Davis:

I say — I cannot see that it makes a difference to this case, whether they have judicial powers or not.

There is no question they have administrative powers.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

That’s right, but may I make a little correction Mr. Justice Whittaker, it comes not from an order of the California Commission.

It comes from an order of the three judge district court setup to determine the constitutionality of Section 530 of the California Code, but there has been no determination by any California court as to the constitutionality of this act.

Earl Warren:

And further there’s been no final acts of any kind by the commission?

John F . Davis:

No.

Well the commission was enjoined before the act became effective.

I mean the act would become effective by its terms and the day before it was — this would have become effective, why they said it was a restraining order.

This case comes to the Court after a five-day trial before a three-judge District Court in California at which detailed testimony was taken as to the effect of this statute on the transportation facilities of the armed services.

The government presented I think 12 witnesses, most of whom were officers involved in the day to day transportation of government property for the armed services.

And they testified as to how being subject to the California Commission Code, how that would effect their transportation problems.

And I think it’s only fair to say that they were unanimous in finding that it would effect the government — armed services transportation in three ways.

One, it would cause extensive delays in preparing for particular shipment and this was pointed out not generally, but by taking specific shipment and showing what kind of paperwork would be necessary in order to meet the California requirement.

The second suggestion was that it would materially endanger the security of these shipments and the third suggestion was that it would very materially increase the cost of these shipments.

William J. Brennan, Jr.:

Well would your constitutional argument be different if those findings had not been made?

John F . Davis:

I think that these finding help.

To be sure judge — the Chief Justice Marshall said that — made it clear that any authority would be sufficient to make a statement — the imposition of a state control unconstitutional.

I think there has been some withdrawal from that position and I think it’s important to consider whether or not this is incidental or minor or whether this is something which will really impair and be dangerous to the defense therefore.

In any event that was the theory on which the case was tried and the district judge, rather the circuit judge speaking for the three-judge District Court made specific findings as on the basis of this evidence, on the basis of the evidence from the cross-examination with respect to the effect of this law upon these shipments.

Therefore, we don’t merely have a straight case of, if you want to call it, McCulloch against Marshall where on the theory of McCulloch against Marshall where the Court said this a federal power.

The state may not touch upon it at all.

It doesn’t make any difference whether it’s small, large, they just can’t touch it.

Here we have a case of real evidence showing that this – the effect of this would be material.

William J. Brennan, Jr.:

Not in any economic sense?

John F . Davis:

Well both in an economic and in an operational sense if you want to put it in that way.

William J. Brennan, Jr.:

Delay was one.

John F . Davis:

Delay and disclosure of security information and third was economic matter of expense.

Earl Warren:

In other words, the truckers testified that you couldn’t disclose to the commission what the government had closed to them without endangering the security of the nation?

Was that the – what had been testified?

John F . Davis:

No there was testimony by the truckers to that effect.

The testimony –

Earl Warren:

I thought you said that was the – that was one of the three things that they had testified to them, these –

John F . Davis:

No, I’m again speaking of the transportation officials of the armed services who have made this – gave the testimony and what they testified was that with respect to security shipment present time, they’re handled through a single representative of the carriers who is given, who is examined and found to be cleared and then he is given, I think the term is ‘such information as is necessary in order to make the shipment.’

Actually they sometimes misdescribe, misdescribe the treat the property which is being shipped.

They ship it in a – and I know I’m talking from the record and they ship it in the circuitous route so that nobody can tell where it is going to arrive.

And this is done — and apparently it is done often – it is done when securities matters are involved in order to secure this information from enemy sources.

Charles E. Whittaker:

(Inaudible)

John F . Davis:

Well it is under the — under the present code you couldn’t get intrastate rates without making these disclosures.

It is – the commission I suggest or Mr. McKeage suggests, the commission has authority, if you please, to give relief in that situation but until they give relief, the application of the statute would prohibit this kind of thing.

Now the question is should the armed service be – should they have to rely on relief to be given to them by a state agency in a matter of national defense.

And the theory of the government’s case is that Congress has said that in matters of national defense, these matters of judgment shall be handled by the federal government and not by the states.

And it does involve the question of judgment as to what kind of relief you will give in a situation –

William J. Brennan, Jr.:

Well, Mr. Davis if there’s an area of control (Inaudible) state would increase expense consideration, standing alone inhibit the exercise of state power?

John F . Davis:

Well, many of the cases dealing with governmental immunities, the conflict between the two sovereigns have said that where the imposition of the control is not direct and where the result is only an increased cost, then the state shall have the power to do it.

John F . Davis:

I know of no case that says that where the imposition is directly on the United States, as I believe it is in this case, where there is any statement that the state shall be able to impose the additional expense on the federal government, the tax cases are cases where they tax agencies of the United States and the United States eventually has to pay, but there’s for example no case saying that you can tax the United States even though it’s a nondiscriminatory tax.

William J. Brennan, Jr.:

(Inaudible) the difference between Uncle Sam saying higher freight rates and an agency (Inaudible) saying freight –

John F . Davis:

Well, by an agency if it is a commission, but if it’s a contracting party and if it is nondiscriminatory then this Court has said that kind of economic burden is what we have to pay for living in a country where we have two branches of government.

But in this particular case, it is our position that the imposition is directly on the United States and whatever economic burden is therefore whether discriminatory or not.

William J. Brennan, Jr.:

Well, on that, on that argument, would that make any difference, the amount of increase merely because it is something that Uncle Sam had to pay directly.

That itself would —

John F . Davis:

That’s certainly the theory of McCulloch against Maryland.

We don’t have to reach that in this case because I think that we do have ample evidence as to the extent of the increased part.

In the governmental cases I think that it helps to analyze, to draw a distinction between the government immunity situation, which I think is involved here, that is state imposing its will on a government function.

And the supremacy of federal legislation which is given by Article 6 of the Constitution, which says that – when Congress passes a law and the state lawyer is in conflict, any state lawyer in conflict with it, it must give way, they are two lines of cases, I think this can be decided under either of these lines and I think primarily this is a case of the governmental immunity.

This is a matter where the state is attempting to impose its will on a function which Congress has given to Congress.

And this isn’t a question of finding inconsistencies between Congressional action, Congressional statutes and state statutes but rather it’s the basic question of the state imposing its will on a defense function.

But if you want to take the narrow type of case, the kind of case that was involved last term in Miller against Arkansas, even there we find that there’s a, what I believe to be a conflict, between the state regulation and the federal regulation and in that – if that is so by then Article 6 of the Constitution, the federal regulation must prevail.

Felix Frankfurter:

Mr. Davis, could you tell me whether in those other cases where local law had to yield or deem constitutionally inapplicable to federal activity, the (Inaudible)?

John F . Davis:

That’s right.

Felix Frankfurter:

And the —

John F . Davis:

Killing.

Felix Frankfurter:

— the postal carrier, Johnson against Maryland, whether in those cases there were suspensory provisions in the state law provisions, allowing relief or suspension of the state power as against federal agencies, do you have anything on it?

John F . Davis:

I don’t know how much authority was given to the commission –

Felix Frankfurter:

I always thought the (Inaudible)

John F . Davis:

There are about four of these cases we might have in mind along this line and maybe it will be worthwhile to look them just briefly.

Mayo against the United States was a case where the federal government was sending fertilizer into Florida in an attempt build up the nitrogen in the soil.

And State of Florida proceeded to impose an inspection and tax a inspection by examining the fertilizer which the federal government sent into Florida in order to find out whether the fertilizer was the kind of thing it was supposed to be.

No here I have no idea whether Florida had any authority not to examine this fertilizer.

I would guess the — administratively they could have failed to examine that if they wanted to.

Johnson against Maryland is a case of whether or not Maryland could impose a license provision on a driver of the United States mail truck.

Now I presume that the laws of Maryland require all drivers on the road to be licensed and that they don’t give any authority to not to license people.

Hunt against the United States involved a —

Earl Warren:

What was that last case Mr. —

John F . Davis:

Johnson against Maryland was the license case–

Earl Warren:

Maryland was a party to that action?

John F . Davis:

Maryland was a party to that action, yes.

I am not sure, I think Maryland in that case was again the moving party although I am not sure Your Honor.

I don’t remember the way it came up, I don’t remember.

Oleomargarine case which Mr. Justice Frankfurter has mentioned I don’t know whether they had any powers of making exemption or not.

And —

Felix Frankfurter:

It seems to me the most trivial of the laws [Attempt to laughter] using Oleomargarine.

John F . Davis:

Well that —

Felix Frankfurter:

I can’t see the foundation of this country shaking it if that’s required.

John F . Davis:

Then there was the case of the Forest Rangers out in the Grand Canyon National Park who found that the deer were eating up the foliage and they first tried to transport them out of the park and to limit them in various ways.

And finally the only way to handle the situation was to kill them and there was an attempt by the game officials of the State of Arizona to prevent these officials from carrying out their duties.

In that case I don’t know whether they had any discretion or not, I assume they had certain amount of discretion.

Getting back to the question of conflict, conflict between the state regulatory provisions and the federal regulatory provisions, generally speaking procurement by the armed services is carried out through competitive bidding, but section — but chapter 10 of the United States Code gives discretion to make the purchases through negotiations in those situations where it isn’t practical to fit.

Each of the — well the Secretary of Defense and the various secretaries of each of the services are given authority to make regulation with respect to their procurement.

And we cite in the brief and I won’t attempt to read them but we cite in our brief the particular regulations which contemplate that each of the services will negotiate a price with carriers for the transportation of goods in those state cases where they find that the established rates are not economical.

I suggest that here we have then a direct conflict between a California Law which says carriage of goods for the armed services shall be subject to the rates on file with the commission and a provision in these regulations which provides specifically that they shall be negotiated.

And so I think that to summarize what I have tried to say I think we have here a case which is ripe for decision because of the fact that we have a statute which becomes effective without any order by the commission.

This would be effective except for the restraining order and would have a deleterious effect upon transportation of government unless, unless the California Commission sees fit in its judgment to relieve the United States of that burden.

If that is so I suggest that that statute is unconstitutional because the whole framework of the relationship between the federal and state governments must be that when judgment must be exercised to avoid one of these conflicts, it must be the restraint on the part of the federal government not a restrain on the part of the state government.

May I ask — would the court decide that I file a brief with respect to the necessity of California being a party, it isn’t covered at all in my brief and I’d be anxious to file it if the court — it would be helpful to the Court.

Earl Warren:

Well possibly if you just give us the list of your authorities and do it quickly so we could counsel while he is here so they have an opportunity to reply, and then we can have for a conference on it right.

John F . Davis:

Well I will be glad to get it done in time, so he can reply and so that it can be ready for the conference.

Earl Warren:

Yes thank you.

Judge McKeage.

Everett C. McKeage:

I believe that I have about 29 minutes Mr. Chief Justice and I shall attempt if I can to answer some of the question propounded by the members of the Court.

I realize that it’s unusual and I know of no similar situation, that Public Utilities Commission of the State of California is both a court and an administrative tribunal.

There can be possibly no question about it.

In our reply brief we have set out the cases.

When the act was first interpreted, the Supreme Court of the state held that that was the fact and that is the fact.

Now whether it’s unusual or not it does exercise the judicial power of the State of California.

Felix Frankfurter:

But there are other states —

Everett C. McKeage:

Well that —

Felix Frankfurter:

This court has had it before the Virginia Commission.

I think the Oklahoma commission —

Everett C. McKeage:

Well I should imagine, I cannot speak except for the California Commission.

The Supreme Court of our state pointed out that the constitution and the legislature both with liberation took from the courts of the State of California this judicial power of the state and gave it to the commission.

And I might say that the — at least the reason given by the then Governor of California, Hiram W. Johnson who was responsible for this commission as it now stands, frankly stated that the reason for doing that was to place the commission above the court’s of general jurisdiction because of the fact that in those days a number of these remedial statutes were being stricken down by state courts, one case the (Inaudible) case with regard to workmen’s compensation, so there is no question that that was deliberately done.

The commission is a constitutional agency of the State of California created by its constitutional just the same as the legislature or the executive or the judiciary is created and it was the intent that it be an independent constitutional agency.

The Constitution of California by its own terms places the Public Utilities Act, which is administered by the commission, above the state constitution, if there is any conflict.

The cases cited in our reply brief, there is no possible question about that.

So this Section 530 which is of the Public Utilities Code which is a private and public Utilities act is the supreme law of the State of California as far as state law is concerned.

Now with regard to the point raised that the State of California would be, rather the federal government would be bowing to the State of California.

I fully realize the potency of the argument made by the government with regard to that, but we know that a lot has happened since McCulloch versus Maryland and we also know that it is the duty of a court to presume, indulge ever presumption in favor of state authority in a case of this kind until the contrary is proven.

In other words, the relationship between our dual form or relationship between the federal government and the state government under our dual form of government does require a little forbearance and tolerance and not resolving all these in favor of the predominant power.

As was pointed out by this Court in Penn Dairies case, if the matter is decided against the state and the statute is stricken down, the state has no relief.

Whereas if it’s decided the other way around and the Congress is of the opinion that a burden is cast upon the — an undue burden is cast upon the federal government, it is free of course to relieve that burden.

Now with regard to the matter of the present status of what of government traffic must bear these tariff rates.

The only exemption that existed at the time these matters started was the exemption on general commodities with regard to the permit carriers and also a complete exemption with regard to the so called public utility carriers.

Now the mere exemption of course of the general commodities for the armed services would not cover many of these other commodities, but you can see the way this amendment was drawn.

In that proviso there, it states that the public utility carriers, subject to the Public Utilities Act, may charge what permit carriers are permitting to charge to the government.

Under the Highway Carriers Act, the commission has authority to exempt all government traffic from minimum rates.

When it does that, automatically the Section 530 amendment comes into play and these public utility carriers are exempted from — or rather they are given the authority to charge reduced rates to the government.

So it is within the power of this commission, of the commission, if this injunction should be lifted by the exemption of government traffic under the Highway Carriers Act to automatically exempt it under the Public Utilities Act, and to institute an investigation which it would do with regard to what program to arrange in implementing Section 530, and I must contend, because the Supreme Court of our state says so, that the commission there, exercising judicial power could determine the constitutionality of Section 530, but that wholly aside whether it could exercise it that, that remains it could exercise its administrative authority.

If it did hope that the government, rather these carriers must charge some proof to the government and I am not assuming that the government wants special privilege to the point of paying nothing, but suppose the commission in an investigation of that kind, which it would have instituted, had it not been for this injunction, would specify some particular procedure or rate.

If the United States wanted to intervene and I’m sure that it would, as it did in the Pennsylvania case, before a state commission, it could there urge all of these defenses, including unconstitutionality as it did in the Pennsylvania case.

And if the commission decided against the unconstitutionality of the statute and prescribed some rates, the commission has clear authority to suspend the operating effect of its order, whereby the United States could seek review before the Supreme Court of the State of California.

There is a procedure setup somewhat similar to what this Court pointed out in the Alabama Public Service Commission case and the matter could get to this Court in a proper way.

The government would not be injured in any way whatsoever.

Now of course —

Hugo L. Black:

Did the government – did the government repeat — objected to this state judicial agency against (Inaudible)

Everett C. McKeage:

I was just going to reach that point Mr. Justice Black.

It is true that you might contend that this is a forbearance, and surely it could be so argued, but isn’t a forbearance that should be smiled upon rather than frowned upon, when so much concentration is right nowadays?

Wouldn’t be helpful to this relationship between state and federal authority; that, that sort of good forbearance be shall I say granted?

There should be as a presumption the state officers until the contrary is proven will act in a constitutional way.

This Court has held that time and again.

Every presumption must be in favor of the constitutionality of the statute and we are only asking here for the opportunity to exhaust the remedy before the commission and after that has been exhausted then there’s no question about this matter will be ripe.

Felix Frankfurter:

May I ask you Mr. McKeage whether under your law, a plaintiff can go into a California court and seek to enjoin the commission from doing something on the theory that it has exceeded the statutory or constitutional speed limit?

Everett C. McKeage:

No.

The only —

Felix Frankfurter:

Every action has to go through the commission and then to the Supreme Court of your state?

Everett C. McKeage:

That is right.

Under the procedures set down, under the constitution and the Public Utilities Act, no state court except the Supreme Court to the limited extent provided in that Act has any authority over the commission.

As a matter of fact, the commission has authority to set aside judgments of state courts and it has done so, and the Supreme Court has held so, so it’s not a question of a superior court, a court of general jurisdiction having any jurisdiction over the commission, the contrary is true, the commission —

Felix Frankfurter:

And your Supreme Court can issue prohibition against their taking hold of something.

Everett C. McKeage:

I didn’t understand that.

Felix Frankfurter:

Your — the Supreme Court of California is powerless, is it, to issue prohibition against the utility commission taking certain jurisdiction?

Everett C. McKeage:

Oh no, no the Supreme Court has jurisdiction.

Felix Frankfurter:

It could issue prohibition.

Everett C. McKeage:

It can issue orders to the commission.

It can reverse its decisions, it can issue mandate and I’m sure —

Felix Frankfurter:

Well I don’t mean on appeal, can a plaintiff in California go before your Supreme Court and ask for — get a writ of prohibition against assumption of jurisdiction by your commission.

Everett C. McKeage:

I would have to answer that in this way.

They have gotten mandate in an original proceeding before the Supreme Court.

I cannot recall prohibition.

Felix Frankfurter:

Well mandate is what, mandatory injunction?

Everett C. McKeage:

To tell the commission to do a certain things or not to do a certain thing.

Felix Frankfurter:

Not to do it, but also not to do a certain thing.

Everett C. McKeage:

Well that is our understanding, I can’t —

Felix Frankfurter:

But your proceeding can be begun in your Supreme Court, in your state court.

Everett C. McKeage:

There is no question about that an original proceeding can be commenced in the Supreme Court and the Supreme Court has jurisdiction, it certainly has asserted it and made it effective.

Felix Frankfurter:

So that in that — in cases that you have in mind about which I’m totally ignorant, one does not have to go through your utility commission?

Everett C. McKeage:

Well, I will cite you a case to illustrate, that’s the best I can do.

The commission took the position that it did not have jurisdiction over certain objects of commerce.

Certain people disagreed.

They went to the Supreme Court of the state and filed a petition for a writ of mandate, asking the Supreme Court to order the commission to take jurisdiction and administer these objects of commerce, regulate them.

The Supreme Court held that it had jurisdiction to do so and issued a writ of mandate to the commission requiring it to regulate and —

Felix Frankfurter:

And it did not — and that in the case that you’ve just given me, you’re good enough to give me, the proceeding was not a review of, an ordinary appellate review of what the commission declined to do?

Everett C. McKeage:

No, it was by a writ of mandate, there is no — they didn’t seek out a review at all.

Now —

Charles E. Whittaker:

(Inaudible)

Everett C. McKeage:

That’s right Your Honor.

Charles E. Whittaker:

(Inaudible) whatsoever?

Everett C. McKeage:

Well, the commission was of the opinion that it didn’t have jurisdiction and had just not undertaken to regulate these people.

Charles E. Whittaker:

(Inaudible)

Everett C. McKeage:

And the Supreme Court disagreed, said you do have authority and you should exercise it.

Charles E. Whittaker:

(Inaudible)

Everett C. McKeage:

That was its decision.

Felix Frankfurter:

And I gather if I did gather correctly, I gather that you said the other way around as also occur namely that the commission has exercised the authority and you went to the Supreme Court of your state and got an order of mandate telling it to seek (Inaudible)

Everett C. McKeage:

Well the way that is always done, I have never known it to be done otherwise and I have been there 14 years is by the writ of review.

Felix Frankfurter:

Writ of review?

Everett C. McKeage:

Yes I think that the court would dismiss any petition unless it were a petition for writ of review because that is the exclusive way that a decision of the commission is reviewed, but the court has held that in a peculiar situation as I have stated that a writ of mandate could issue not withstanding the fact there was no review proceeding involved.

Felix Frankfurter:

You are urging, you are urging this as I follow you both of the matter of high (Inaudible) between two governments what is usually called comity, is that it?

Everett C. McKeage:

Comity.

Felix Frankfurter:

That it originated on that ground that it makes for the smooth workings of this two geared governments, these two governments of ours, the government of United States go through this regular process?

Everett C. McKeage:

We certainly urge that and while these things get so close Mr. Justice Frankfurter that it’s very difficult to decide whether it’s comity whether it should be as an absolute matter of constitutional law, but I think that it’s fair to say that the — a fashion shall I use that expression is more and more getting to the point where these matters are looked at in a conciliatory sort of way.

I know that the administrative process, the exhaustion of the administrative remedies orderly procedure like I think this Court said in the (Inaudible) versus New Hampshire and we are talking about the delay incident to all of these things and this Court pointed out that that was one of the small price that we paid for orderly government and this would certainly be orderly government.

Now may I just pass I think in all candor and fairness I should pass to the question raised by the Chief Justice about is there a jurisdictional defect here.

Of course the State of California is not joined as a party.

Well now I certainly I am not prepared to answer that.

I am inclined to think that you can find cases on the both sides.

Everett C. McKeage:

Of course you must realize that the Public Utilities Commission is an independent constitutional agency of the State of California.

The attorney for the commission, your humble servant, is empowered by the Public Utilities Act.

It is stated as his duty to represent the people of the State of California and the commission in all matters involving such a public utility regulation in that state.

So I would assume that a good argument could be made, I am not trying to make the argument for Mr. Davis, but I am in all candor and fairness I suppose an argument could be made in that setting that that type of a constitutional agency having been made the defendant with its counsel empowered to represent the people of the State of California in all of these matters that a good argument could be made that to all intents and purposes the State of California is here.

Now there are cases I am fully aware of that dismiss a matter if the state is not joined.

In other words, you can test the constitutionality of it.

I realize that there are cases that come up in this wise that you sue the agents of a state or of the United States and it happens to be within an area where the sovereign has not consented to be sued and the courts have held that it is law and in effect a suit against sovereign not withstanding the fact the sovereign isn’t named as such but the — its agents are named and therefore the suit fails, because consent has not been given.

So I think there were a variety of cases on it, but in fairness to the record I did want to state the proposition, I have no answer for it, although this is fatally defective without the State of California being joined.

Felix Frankfurter:

In your own state, if review is a sought of an order of your commission, by an interested party how is that suit entitled in the Supreme Court?

Everett C. McKeage:

Well the suit against the commission, if it were an original action of course would be so and so petitioner against Public Utilities Commission, State of California respondent.

Now in all review proceedings —

Felix Frankfurter:

You mean the state is always joined if a shipper or a railroad objects to some order?

Everett C. McKeage:

No not at all.

Felix Frankfurter:

Not at all?

Everett C. McKeage:

No.

The —

Felix Frankfurter:

Well the public — I see California was not the state, but (Inaudible) of the commission.

Everett C. McKeage:

Well the —

Felix Frankfurter:

Alright.

Everett C. McKeage:

In all review proceedings at the commission and the commission alone is made the respondent, whatever maybe the law that’s what we have all assumed that, that is sufficient and the state is never joined in those —

Felix Frankfurter:

And there must have been or have you been fortunate enough, never to have had a suit against the commission in which some constitutional claim was made, you had such things, haven’t you?

Everett C. McKeage:

Well, there could not be a suit against the commission in a state court save in except, in that exceptional case before the Supreme Court of our state.

Felix Frankfurter:

Yes, if it’s in the Supreme Court, if your commission takes jurisdiction and a shipper or a railroad claims that the basis of jurisdiction is unconstitutional, and on that seeks review in your Supreme Court, the state as I understand you would not be joined.

Everett C. McKeage:

No, there the state is —

Earl Warren:

You don’t urge the point to the necessary party, the state being a necessary party.

Everett C. McKeage:

Have we urged it?

Earl Warren:

I say you do not urge it now?

Everett C. McKeage:

In the good conscience I could not urge it Mr. Chief Justice.

Earl Warren:

Yes.

Everett C. McKeage:

We have pointed out in our brief the fact that the state has not been joined, but it is with relation to the factual situation as to whether it was right that the injunction should be against the Public Utilities Commission, whether we had done something that justified some injunction.

Felix Frankfurter:

But it couldn’t be against the state as such, it might be against the government or the legislature, I don’t know who —

Everett C. McKeage:

Well —

Felix Frankfurter:

It couldn’t be against – if you couldn’t enjoin the state as such, whom would you enjoin?

Everett C. McKeage:

Well, surely the various precedents for suing public officials charged with the execution of a statute and the enjoining them and now of course it may or may not be that this question, that a question was raised as to whether the Federal Government or the state as the case maybe should be joined as a party, but as far as the relief is concerned, getting down to the ultimate, the end result, as far as the relief is concerned, the United States has secured all possible relief that I know that it could secure, by paralyzing the arm of the commission, there is nobody else in California that can do anything except the commission, so it has all the relief it could get there.

Earl Warren:

But Judge McKeage, in light of what you just said, I think there is no reason for me to trouble Mr. Davis or you further about a point, as far as I am concerned.

You can forget about the memorandum that Mr. Davis (Inaudible)

Everett C. McKeage:

Well I — It’s certainly about your wish Mr. Chief Justice, I —

Earl Warren:

It’s not necessary.

Everett C. McKeage:

I do think that all we would get would be a sometime probably variety of decisions which — but we have in good faith, I mean in good conscience say that there is a fatal defect here because the State of California is not joined.

And now if Your Honors please I think my time is about up, unless there is some other questions that the Court would desire to ask, why I will retire.

Felix Frankfurter:

What do you say in addition to what you have said, these considerations of practical incidence, practical — all of inconvenience or difficulty or embarrassment, putting financial consideration to one side, what do you say to these practicalities, the arguments of really inconvenience —

Everett C. McKeage:

Yes well I would —

Felix Frankfurter:

— disturbance or call them what you will, embarrassment that Mr. Davis urged?

Everett C. McKeage:

I would say this, Your Honor, those in claimed embarrassment and inconveniences are the historical objections to all regulation.

When regulation was originally sought against the railroads, you will find that the same type of claimed embarrassments impossibility, chaotic conditions, we can’t separate intrastate and interstate.

All of those arguments were brought forward by the objects of regulation.

So I fear that these arguments and I have of course sat through them, participated in the trial, fall into that category.

The two railroad witnesses who came there gave just about the same type of testimony that they would have given back in 1887 when they sought to put them under regulation.

It is pretty much like some of these, you will pardon this illusion, these statements made during political campaigns that if a certain party is elected why grass will go in the streets of the villages and so forth and so on and — but these are matters with those of us who have lived with regulation.

We are used to those things.

Now with regard to the secrecy matter, it would be very simple and easy by the Public Utilities Commission to exempt all practically it was claimed to have security and naturally enough we found that that was abused, was being abused, and used a cover up something later might be done about it.

Felix Frankfurter:

You haven’t any or do you, am I right in assuming you do not question that Congress could tomorrow in organizing things, pass a statute saying it’s the policy of the United States in view of the intermittent help that it is giving to railroads of one sort or another that all governmental property be carried without cost.

Putting to one side question of taking property without due processes of law, California couldn’t say this, thereby the government exceeded its power, would you?

Everett C. McKeage:

No I —

Felix Frankfurter:

So that then we get on to the narrower question as Mr. Davis puts it, whether you haven’t got here not a conflict with an explicit statute, but a sufficient practical and conflict with what the government wants to do or is doing particularly in view of California’s very sizable relation to these Armed Service Shipments.

Everett C. McKeage:

I would say this that reasonable men could differ on that and I am quite sure that the view, that view could be taken, but we maintain that another view could be taken and when you approach the rule of testing constitutionality of the statute the — you must choose the one that will save the statute as this Court pointed out in the national —

Felix Frankfurter:

If it — where would you at all if California can do this, New York can do it, really.

Everett C. McKeage:

That is of course —

Felix Frankfurter:

Florida et cetera?

Everett C. McKeage:

— express here, Pennsylvania has already done it and so I, I assume that would that is a fear.

Everett C. McKeage:

However, getting back on the high level of the relationship between these two governments a little forbearance by the federal government might well be in order.

Hugo L. Black:

Your statute says that the commission may permit railroads to carry (Inaudible) the word may permit.

Everett C. McKeage:

That is right.

Hugo L. Black:

Suppose your commission does – has not permitted the government (Inaudible) tomorrow, the railroad will need to give them a reduced rate, below (Inaudible) would anybody be suggested to punishment of violating this law, the law that’s giving you these rates?

Everett C. McKeage:

Well the carrier if assuming that we had issued an order directed to the carrier that it must charge a certain rate and if it didn’t charge that rate it would be subject of course to punishment under the Public Utilities Act.

But we maintain that the government wouldn’t be subject to punishment, any of its agents under the well known decisions that just a person who merely purchases something unless there is a specific vision of the statute.

Hugo L. Black:

Well, I though that would be in effect (Inaudible)

Everett C. McKeage:

Well there is no question about it if the order had been issued which hasn’t been issued.

That is the point Mr. Justice Black.

We haven’t gotten to that yet.

The injunction stopped us before we had a chance to hold a hearing or to do anything about prescribing these rates.

But —

Hugo L. Black:

Does the act have any other purpose except to decide what rate the railroad must charge —

Everett C. McKeage:

Well —

Hugo L. Black:

— disposition of the act have any purpose but that?

Everett C. McKeage:

Well it is directed to that Mr. Justice Black.

Hugo L. Black:

Have any other purpose except that?

Everett C. McKeage:

It has no other purpose that I know of.

It’s just to reverse what originally was the law that you could allow — that the carriers were privileged, but understand this act runs not through the United States government, but it’s a privilege granted the carrier, that carrier doesn’t have to grant reduced rates.

It could require the government to pay —

Hugo L. Black:

(Inaudible) but if you are right what you are saying is that a state, not the federal government, has the power to fix the rates federal government must pay for its transportation within in the state –?

Everett C. McKeage:

We take that position Your Honor.

Hugo L. Black:

That’s the premise on which the statute is based?

Everett C. McKeage:

That — well we certainly take that that position as the ultimate thing under the 10th Amendment of the federal constitution that the State of California does have that right.

Hugo L. Black:

Are you asserting here that the statute could be construed in a way, which would simply say that the agency had the power to negotiate with the government recognizing the government’s superior authority?

Everett C. McKeage:

It lies within the commission’s power Mr. Justice Black to exempt all of this traffic —

Hugo L. Black:

Lies within its power?

Everett C. McKeage:

Yes that is right.

Hugo L. Black:

And not the government power?

Everett C. McKeage:

Well it lies within the power of the —

Hugo L. Black:

It gets down to a conflict on that basis, does it not?

Everett C. McKeage:

Well as I said before Your Honor —

Hugo L. Black:

Well you are right on that —

Everett C. McKeage:

You could, you could draw that conclusion.

We believe that another conclusion from this could be drawn.

Hugo L. Black:

Do you think exclusion could be drawn and maybe they would fix rates on such a standard that the government would be willing to face them and there would be no conflict?

Everett C. McKeage:

Well that is our feeling and that is what we thought when we started out on this thing but the government, well shall I say abandoned that program and went into the federal court.