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PUBLIC UTILITIES COMMISSION FOR THE STATE OF KANSAS ET AL. v. LANDON, RECEIVER OF THE KANSAS NATURAL GAS COMPANY, ET AL.
KANSAS CITY, MISSOURI, ET AL. v. LANDON, RECEIVER OF THE KANSAS NATURAL GAS COMPANY, ET AL.
KANSAS CITY GAS COMPANY ET AL. v. KANSAS NATURAL GAS COMPANY ET AL.
UTILITIES COMMISSION FOR THE STATE OF KANSAS ET AL. v. LANDON, RECEIVER OF THE KANSAS NATURAL GAS COMPANY, ET AL.
APPEALS FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF KANSAS.
Nos. 277, 329, 330, 353. Argued November 6, 1918. Decided
The District Court, having extended its receivership under Jud. Code, § 56, over the entire business and property of a company engaged in interstate transportation and sale of gas in several States of the circuit, has jurisdiction of a dependent bill brought by the receivers to enjoin officials of those States from imposing rates alleged to be confiscatory, and burdensome to the interstate business. P. 244. See 234 Fed. Rep. 152, 155.
Interstate commerce is a practical conception, and what falls within it must be determined upon considerations of established facts and known commercial methods. P. 245.
While the piping of natural gas from State to State, and its sale and delivery to independent local gas companies, is interstate commerce, the retailing of the gas by the local companies to their consumers is intrastate commerce and is not a continuation of such interstate commerce, even though their mains are connected per
Argument for Landon et al.
manently with those of their vendor and their vendor's agreed compensation is a definite proportion of their gross receipts. Id. In such case, regulation of the rates chargeable by the local companies has but an indirect effect upon the interstate business of the transporting and selling company; at least when the latter is in the hands of receivers who have not accepted or become bound by the contracts with the former; and such receivers, not being obliged to accept unremunerative prices, have no ground to complain that rates fixed for the local companies are confiscatory, or are burdensome to the interstate business, even though that business consists exclusively in selling the gas to such local companies. P. 246. 234 Fed. Rep. 152; 242 Fed. Rep. 658; 245 Fed. Rep. 950, reversed.
THE case is stated in the opinion. (See also, post, 591.)
Mr. F. S. Jackson for Public Utilities Commission for the State of Kansas et al.
Mr. Robert Stone and Mr. Chester I. Long, with whom Mr. John H. Atwood, Mr. George T. McDermott, Mr. Austin M. Cowan, Mr. R. A. Brown, Mr. T. S. Salathiel and Mr. John J. Jones were on the briefs, for Landon, Receiver; Kansas Natural Gas Co.; and Sharitt, Receiver:1
That the court below had jurisdiction over the Kansas and Missouri defendants because of the ancillary and dependent character of the suit, see 234 Fed. Rep. 154; Phoenix Ry. Co. v. Geary, 239 U. S. 277; Krippendorf v. Hyde, 110 U. S. 276; White v. Ewing, 159 U. S. 36.
1 For the cases involving this controversy in various phases, see: McKinney v. Kansas Natural Gas Co., 206 Fed. Rep. 772; McKinney v. Landon, 209 Fed. Rep. 300; Kansas City Pipe Line Co. v. Fidelity Title & Trust Co., 217 Fed. Rep. 187; Fidelity Title & Trust Co. v. Kansas Natural Gas Co., 219 Fed. Rep. 614; State v. Flannelly, 96 Kansas, 372; s. c., 96 Kansas, 833; Landon v. Public Utilities Commission, 234 Fed. Rep. 152; State v. Litchfield, 97 Kansas, 592; State v. Kansas Natural Gas Co., 100 Kansas, 593; State v. Gas Company, 102 Kansas, 712; Landon v. Public Utilities Commission, 242 Fed. Rep. 658; Landon v. Public Utilities Commission, 245 Fed. Rep. 950; St. Joseph Gas Co. v. Barker, 243 Fed. Rep. 206.
Argument for Landon et al.
There is no misjoinder of causes. unit, to be protected as such.
The property is a
The protection of the commerce clause extends not only to the transportation of the article, but also to the sale of the article when it arrives at its destination. Heyman v. Hays, 236 U. S. 178; Pipe Line Cases, 234 U. S. 548; Brown v. Maryland, 12 Wheat. 419; American Express Co. v. Iowa, 196 U. S. 133; Minnesota v. Barber, 136 U. S. 313; Schollenberger v. Pennsylvania, 171 U. S. 1, 24. The transportation and sale of natural gas in interstate commerce is national in character. Haskell v. Cowham, 187 Fed. Rep. 403; 234 Fed. Rep., at p. 164; West v. Kansas Natural Gas Co., 221 U. S. 229; Haskell v. Kansas Natural Gas Co., 224 U. S. 217; this case, 242 Fed. Rep. 687, 689; South Covington Ry. Co. v. Covington, 235 U. S. 537; Pipe Line Cases, 234 U. S. 548; Wabash &c. Ry. Co. v. Illinois, 118 U. S. 557.
With one or two exceptions, the distributing companies do no business except to transport and distribute the natural gas transported in interstate commerce by the plaintiff receivers. Employment of these local agencies in itself would not authorize the State to regulate the interstate commerce conducted by the plaintiff receiver. West v. Kansas Natural Gas Co., supra; Western Union Telegraph Co. v. Foster, 247 U. S. 105. Local incidental service at the beginning or end of the journey does not affect the interstate character. Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U. S. 498; Pennsylvania R. R. Co. v. Clark Coal Co., 238 U. S. 456, 465-468; Southern Ry. Co. v. Prescott, 240 U. S. 632; Pennsylvania R. R. Co. v. Sonman Coal Co., 242 U. S. 120. The Supreme Court of Kansas, in State v. Flannelly, 96 Kansas, 372, and State v. Litchfield, 97 Kansas, 592, took the position that the distributing companies were but the agents of the receiver of the Kansas Natural Gas Company. If so, this case comes within Crenshaw v.
Argument for Landon et al.
Arkansas, 227 U. S. 389; Singer Sewing Machine Co. v. Brickell, 233 U. S. 304; Davis v. Virginia, 236 U. S. 697; and Stewart v. Michigan, 232 U. S. 665; for the order for the gas is given by the consumer to the distributing company long before the gas is started in the course of transportation. When the consumer connects with the distributing company's system, he thereby asks for a supply to be furnished him at all times in the future. It is with the knowledge of the demands of these consumers, and for the purpose of supplying them, that the receiver starts his natural gas in the course of transportation from Oklahoma to Kansas.
The use of the distributing companies' systems in the distribution and sale of natural gas does not change the interstate character of the commerce. As the court below found (242 Fed. Rep. 681), the transportation does not cease until the gas is consumed. The contention that the gas is at rest, that the whole pipe line system constitutes one huge reservoir from which the gas is taken off as needed by the consumers, is not supported by the evidence and is contrary to the court's finding.
Plurality of carriers does not affect the question. South Covington Ry. Co. v. Covington, 235 U. S. 537.
There may be a change of ownership in transit without affecting the character of the shipment. Gulf, Colorado & Santa Fe Ry. Co. v. Texas, 204 U. S. 403. It is the purpose and intent with which a shipment is commenced that determines. Kelley v. Rhoads, 188 U. S. 1, 23; Swift & Co. v. United States, 196 U. S. 375.
The present case is much stronger than the Swift Case, for here the gas moves without interruption or change in ownership from the gas fields in Oklahoma to consumers in Kansas and Missouri. It is more than a recurring course of dealing. It is constant and continuous. When it is started in its course it is with the intent and purpose that it shall be delivered to consumers without interruption
Argument for Landon et al.
in transportation. See also Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U. S. 498; Texas & New Orleans R. R. Co. v. Sabine Tram Co., 227 U. S. 111; Railroad Commission of Louisiana v. Texas & Pacific Ry. Co., 229 U. S. 336; Pennsylvania R. R. Co. v. Clark Coal Co., 238 U. S. 456; Pennsylvania R. R. Co. v. Sonman Coal Co., 242 U. S. 120; Atchison, Topeka & Santa Fe Ry. Co. v. Harold, 241 U. S. 371; Railroad Commission v. Worthington, 225 U. S. 101. The distributing companies occupy the same position as connecting carriers, and the gas moves in a like manner as if a carload of coal was shipped from Oklahoma over a railroad, delivered to a terminal company at the outskirts of the city, and by the terminal company delivered to the consignee. United States v. Terminal Association of St. Louis, 224 U. S. 383; Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U. S. 498.
Incidental storage in the pipe lines and holders does not destroy the interstate character of the movement; nor does the drawing out of the gas for consumption as the movement progresses. Western Transit Co. v. Leslie & Co., 242 U. S. 448; Western Union Telegraph Co. v. Foster, 247 U. S. 105. The original package doctrine is applicable only to goods which have come to rest after their interstate journey and are intended to be transported no further in interstate commerce.
The mixing of intra- and interstate natural gas in the same pipe lines does not give the State authority over the mass. State v. Stock Yards Co., 94 Kansas, 96, 99; Minnesota Rate Cases, 230 U. S. 352.
The gas in both main and service pipes belongs to the receivers and is paid for by the consumer at his meter. The receiver must bear all the loss from leakage, and gets nothing for the gas delivered if the consumer does not pay. The theory that the interstate transportation ends with a sale and delivery to the distributing company where the