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333 U.S. 496 68 S.Ct. 695 92 L.Ed. 831 COMMISSIONER OF INTERNAL REVENUEv.SOUTH TEXAS LUMBER CO. No. 384. Argued Jan. 14, 1948. Decided March 29, 1948. Rehearing Denied May 3, 1948. Mr. Lee A. Jackson, of Washington, D.C., for petitioner. Mr. Charles C. MacLean, Jr., of New York City, for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case raises a question as to respondent's liability for the taxable year 1943 under the Excess Profits Tax of 1940, as amended. 54 Stat. 975, 26 U.S.C. § 710 et seq., 26 U.S.C.A. Int.Rev.Code, § 710 et seq. The law was passed to tax abnormally high profits due to large governmental expenditures about to be made from appropriations for national defense.1 The excess profits tax was a graduated surtax upon a portion of corporate income, and was imposed in addition to the regular income tax. It applied to all corporate profits and gains over and above what Congress deemed to be a fair and normal return for the corporate business taxed. 2 Under the controlling 1943 law the amount of income subject to this excess profits tax is computed by subtracting from the net income subject to regular income tax the amount of earnings Congress deemed to be a taxpayer's normal and fair return.2 This deductible amount, called the excess profits credit, was to be computed in one of two ways, whichever resulted in the lesser tax. § 712. The first, not used here, permits a deduction of an amount equal to the company's average net income for the taxable years 1936 to 1939 inclusive. § 713. The second, used here, permits a deduction of an amount equal to 8 per centum of the taxpayer's invested capital for the taxable year.3 § 714. An includable element of the 'invested capital' is the 'accumulated earnings and profits as of the beginning of such taxable year.' § 718. It thus appears that by this method Congress intended, with minor exceptions not here relevant, to impose the excess profits tax on all annual net income in excess of 8% of a corporation's working capital, including its accumulated profits. The controversy here is over the taxpayer's claim that in computing its 1943 tax the statute allows it to include in this 8% deduction its 'accumulated profits' from certain installment sales, which profits the tapayer, in accordance with an option conferred upon him, had elected not to report as a part of its taxable income in prior years. 3 Beginning in 1937 and extending over a four-year period, respondent sold parcels of real estate, gave deeds, and took installment notes, which were secured by mortgages and vendors liens. It kept its books generally on a calendar year accrual basis of accounting, a basis under which all obligations of a company applicable to a year are listed as expenditures, whether paid that year or not, and all obligations to it incurred by others applicable to the year are set up as income on the same basis. Under 26 U.S.C. § 41, 26 U.S.C.A. Int.Rev.Code, § 41, an income taxpayer may report income and expenditures either on an accrual basis, or on a cash basis—under which latter method annual net income is measured by the difference between actual cash received and paid out within the taxable year. In any event, the basis used must, in the language of § 41, 'clearly reflect the income.' 4 Respondent did not report the value of its land installment notes as income on the accrual basis as it could have done under § 41. Instead, from 1937 up to and including 1943, it has consistently reported its annual income from the installment sales on a third, or 'installment' basis, expressly authorized for certain types of installment sales by 26 U.S.C. § 44, 26 U.S.C.A. Int.Rev.Code, § 44. That section permits a taxpayer to return as taxable income for a given year only 'that proportion of the installment payments actually received in that year which the gross profit realized or to be realized when payment is completed, bears to the total contract price.' Thus respondent's installment income has actually been reported for taxes all along substantially on a modified cash receipts basis, and the taxpayer's net income, which is subjected both to the normal income tax and to the excess profits tax, has not in any of these years reflected the unpaid balances on the installment notes, or any part of them. On the contrary, these balances were listed on respondent's tax returns during these years as 'Unrealized Profit Installment Sales.' 5 On its 1943 excess profits tax return respondent nevertheless reported as 'accumulated earnings and profits' the amount of 'Unrealized Profit Installment Sales' shown on its books at the end of 1942,4 and included this amount in 'invested capital.' It thus sought to deduct 8% of its theretofore designated 'unrealized profit' in computing its excess profits tax. The Commissioner redetermined the tax for 1943 after eliminating this item from 'invested capital.' The Tax Court sustained the Commissioner's redetermination, 7 T.C. 669, relying on its opinion in Kimbrell's Home Furnishings, Inc., v. Commissioner, 7 T.C. 339.5 The Circuit Court of Appeals, 5 Cir., 162 F.2d 866, with one justice dissenting, reversed on the authority of its decision in Commissioner v. Shenandoah Co., 5 Cir., 138 F.2d 792. The Government's petition for certiorari alleged that the result reached by the Circuit Court of Appeals was counter to the Commissioner's regulations and to longstanding tax practices recognized by statutes and judicial opinions, under which practices a taxpayer normally cannot report taxable income on one accounting basis and adjustments of that income on another. The questions thereby raised are of importance in tax administration and we granted certiorari to consider them. 6 A Treasury regulation, set out in part below,6 applicable to both the normal income tax and the excess profits tax,7 specifically prv ides that 'a corporation computing income on the installment basis as provided in section 44 shall, with respect to the installment transactions, compute earnings and profits on such basis.'8 Since respondent computed its taxable income from installment sales on the installment or modified cash receipts basis, but computed its earnings and profits from these same sales on another basis, the accrual, it contends that the regulation is invalid because inconsistent with the governing code provisions. Validity of the regulation is therefore the crucial question. 7 This Court has many times declared that Treasury regulations must be sustained unless unreasonable and plainly inconsistent with the revenue statutes and that they constitute contemporaneous constructions by those charged with administration of these statutes which should not be overruled except for weighty reasons. See, e.g., Fawcus Machine Co. v. United States, 282 U.S. 375, 378, 51 S.Ct. 144, 145, 75 L.Ed. 397. 8 This regulation is in harmony with the long-established congressional policy that a taxpayer generally cannot compute income taxes by reporting annual income on a cash basis and deductions on an accrual basis. Such a practice has been uniformly held inadmissible because it results in a distorted picture which makes a tax return fail truly to reflect net income. This has been the construction given income, estate, and previous excess profits tax laws by administrative officials, the Board of Tax Appeals, and the courts.9 9 The regulation's reasonableness and consistency with the statutes which impose the excess profits tax on incomes, is also supported by prior legislative and administrative history. The present 'invested capital' deduction is patterned after a similar provision in § 326(a) of the Revenue Act of 1918, 40 Stat. 1057, 1088, 1092. That section imposed a 'War-Profits and Excess-Profits Tax.' Invested capital there included 'paid in or earned surplus and undivided profits.' Undert hat law the administration, the Board of Tax Appeals, and the courts have uniformly held that a taxpayer, having elected to adopt the installment basis of accounting, could not thereafter distort his true excess profits tax income by including uncollected installment obligations in his 'invested capital' deduction base.10 A taxpayer, having chosen to report his taxable income from installment sales on the installment cash receipts plan, thereby spreading its gross earnings and profits from such sales over a number of years and avoiding high tax rates, was not permitted to obtain a further reduction by shifting to an accrual plan and treating uncollected balances on these installment sales as though they had actually been received in the year of the sale. 10 The history of the congressional adoption of the optional installment basis also supports the power of the Commissioner to adopt the regulation here involved. Prior to 1926 the right of a taxpayer to report on the installment plan rested only on Treasury regulations.11 In 1925, the Board of Tax Appeals held these regulations were without statutory support.12 Congress promptly, in § 212(d) of the 1926 Revenue Act, 26 U.S.C.A.Int.Rev.Acts, page 162, adopted the present statutory authority for an elective installment basis for reporting income, the Senate committee report on the measure designating it as a 'third basis, the installment basis.'13 This new statutory provision was strikingly similar to the Treasury regulations previously held unauthorized by the Board of Tax Appeals. That the Commissioner was particularly intended by Congress to have broad rule-making power under the regulation was manifested by the first words in the new installment basis section which only permitted taxpayers to take advantage of it 'Under regulations prescribed by the Commissioner with the approval of the Secretary * * *.' The clause is still contained in § 44 of the code. This gives added reasons why interpretations of the Act and regulations under it should not be overruled by the courts unless clearly contrary to the will of Congress. See Burnet v. S. & L. Bldg. Corporation, 288 U.S. 406, 415, 53 S.Ct. 428, 430, 77 L.Ed. 861. 11 The installment basis of reporting was enacted, as shown by its history, to relieve taxpayers who adopted it from having to pay an income tax in the year of sale based on the full amount of anticipated profits when in fact they had received in cash only a small portion of the sales price. Another reason was the difficult and time-consuming effort of appraising the uncertain market value of installment obligations.14 There is no indication in any of the congressional history, however, that by passage of this law Congress contemplated that those taxpayers, who elected to adopt this accounting method for their own advantage could by this means obtain a further tax advantage denied all other taxpayers, whereby they could, as to the same taxb le transaction, report in part on a cash receipts basis and in part on an accrual basis. 12 We find nothing unreasonable in the regulations here. See Commissioner v. Wheeler, 324 U.S. 542, 65 S.Ct. 799, 89 L.Ed. 1166. 13 It is argued that notwithstanding what has been said, Congress by enacting § 501 of the 1940 Second Revenue Act, 54 Stat. 974, 1004, 26 U.S.C. § 115(l) 26 U.S.C.A.Int.Rev.Code, § 115(l), had provided a definition of 'earnings and profits' which includes these unpaid installment obligations and that the regulation here conflicts with § 115(l),15 which is applicable alike to both the income and the excess profits taxes. There are at least two reasons why we cannot accept this argument. In the first place, neither § 115(l) nor any other purports to alter the Commission's power to promulgate reasonable regulations which require taxpayers who adopt the installment basis of accounting to use an accounting method that reflects true income. The hybrid method here urged would not accomplish that result. 14 In the second place, we cannot accept the respondent's interpretation of § 115(l). He argues that 'earnings and profits' derived from a sale of property are defined in § 115(l) considered in the light of §§ 111, 112, and 113; that these sections together define such earnings and profits as all gain 'realized' in the year of sale and 'recognized' under the law applicable to the year of sale; that all the anticipated profits from these installment sales were 'realized' when the sales were made because the installment obligations of the purchasers were received by respondent in the year of sale and they must be assumed to have been worth their face value; that they were 'recognized' as taxable by § 111(c), the law applicable to the year of sale; and that consequently, the Commissioner was compelled to accept these lawfully 'realized' and 'recognized' accumulated profits as 'invested capital' for excess profits tax purposes, even though not previously reported as taxable income for either income tax or excess profits tax purposes. Finally respondent contends that § 44 merely conferred upon it a privilege to defer payment of income tax on its tax-'recognized' profits realized from installment sales until the unpaid installment obligations were collected. 15 The congressional reports on § 115(l) do not provide support for the idea that gains not included in taxable income under the taxpayer's method of accounting may nevertheless be considered 'realized' and 'recognized' for computing tax adjustments or deductions so long as they might have entered into such computations under a different method of accounting.16 Furthermore, neither §§ 111, 112, nor 113, require a 'recognition' of the full face value of installment paper. It is true that § 111(b) does provide that gain or loss 'realized' from the sale of property shall be measured by the 'sum of any money received plus the fair market value of the property (other than money) received' and § 111(c) provides that the extent of gain or loss shall be 'recognized' as determined 'under the provisions of section 112.' But § 111(d) provides that nothing in § 111 'shal be construed to prevent (in the case of property sold under contract providing for payment in installments) the taxation of that portion of any installment payment representing gain or profit in the year in which such payment is received.' This means that where a taxpayer has validly reported its income from installment sales on the installment basis provided by § 44, that section, not §§ 111, 112, and 113 prescribes the extent to which receipts from such sales are 'recognized' as taxable and the year in which such receipts are 'recognized' in computing taxable income. Section 44 provides for the return as income 'in any taxable year that proportion of the installment payments actually received in that year which the gross profit realized or to be realized when payment is completed, bears to the total contract price.' Unlike § 111, § 44 does not recognize as subject to income tax liability the 'market value' of deferred installment obligations. They may never be recognized by a taxpayer on the installment basis for tax purposes under § 44 or any other section, for they may never be paid, or may be paid only in part. The anticipated profits from these deferred obligations are recognized and taxable under § 44 only if the obligations are paid and when they are paid, unless they are sold or transferred before payment. Thus whatever meaning is given to the words 'realized' and 'recognized' the regulation here considered is not in conflict with §§ 115(l), 111, 112, and 113. 16 The regulation is valid. The respondent can include in its equity invested capital only that portion of its profits from installment payments which it has actually received and on which it has already paid income taxes in the years of receipt. 17 Reversed. 18 Mr. Justice DOUGLAS and Mr. Justice BURTON dissent. 1 H.R. No. 2894, 76th Cong., 3d Sess., 1—2. 2 Other adjustments not here material are provided, but the chief deduction or 'aj ustment' is the one noted above. 3 The straight 8% figure of 1940 was modified in several respects not here material in 1941 and subsequent years. 55 Stat. 699, 56 Stat. 911, 58 Stat. 55. 4 In its 1943 return respondent also reported the amount of such unrealized profits shown on its books as of the end of the two preceding years for purposes of calculating the excess profits credit carryover authorized by § 710(c). 5 The Kimbrell case was subsequently reversed but not on the contention here urged. 4 Cir., 159 F.2d 608. 6 Section 29.115—3 of Regulations 111: 'Earnings or Profits. In determining the amount of earnings or profits (whether of the taxable year, or accumulated prior to March 1, 1913) due consideration must be given to the facts, and, while mere bookkeeping entries increasing or decreasing surplus will not be conclusive, the amount of the earnings or profits in any case will be dependent upon the method of accounting properly employed in computing net income. For instance, a corporation keeping its books and filing its income tax return under sections 41, 42, and 43 on the cash receipts and disbursements basis may not use the accrual basis in determining earnings and profits; a corporation computing income on the installment basis as provided in section 44 shall, with respect to the installment transactions, compute earnings and profits on such basis; * * *.' 7 The meaning of all terms used in the subchapter dealing with the income tax was expressly made applicable to terms used in the excess profits subchapter. § 728. Treasury Regulations 112 provided: '* * * In general, the concept of 'accumulated earnings and profits' for the purpose of the excess profits tax is the same as for the purpose of the income tax.' § 35.718—2. See also H.R.No.2894, 76th Cong., 3d Sess., 41. 8 This part of the regulation was added as an amendment to Reg. 103, § 19.115—3, now § 29.115—3 of Reg. 111, after adoption of the 1940 Excess Profits Tax Law. T.D. 5059, July 8, 1941. 9 G.C.M. 2951, VII—I Cum. Bull. 160 (1928); I.T. 3253, 1939—1 Cum.Bull. 178; Appeal of Consolidated Asphalt Co., 1 B.T.A. 79, 82; Appeal of Henry Reubel, Executor, 1 B.T.A. 676, 678—680; Appeal of B. B. Todd, Inc., 1 B.T.A. 762, 766; Appeal of Bank of Hartsville, 1 B.T.A. 920, 921; Appeal of Atlantic Coast Line R. Co., 2 B.T.A. 892, 894, 895; United States v. Anderson, 269 U.S. 422, 440, 46 S.Ct. 131, 134, 70 L.Ed. 347; Jacob Bros. Co. v. Com'r, 2 Cir., 50 F.2d 394, 396; Jenkins v. Bitgood, D.C., 22 F.Supp. 16, 17, 18, affirmed, 2 Cir., 101 F.2d 17. 10 Schmoller & Mueller Piano Co. v. United States, 67 Ct.Cl. 428; John M. Brant Co. v. United States, 40 F.2d 126, 69 Ct.Cl. 516; Standard Computing Scale Co. v. United States, 52 F.2d 1018, 72 Ct.Cl. 619; Jacob Bros. v. Com'r, 2 Cir., 50 F.2d 394; Tull & Gibbs v. United States, 9 Cir., 48 F.2d 148; Appeal of Blum's, Inc., 7 B.T.A. 737, 771; New England Furniture & Carpet Co. v. Com'r, 9 B.T.A. 334; Green Furniture Co. v. Com'r, 14 B.T.A. 508; S. Davidson & Bros., Inc., v. Com'r, 21 B.T.A. 638, 644; Federal Street & Pleasant Valley Passenger R. Co. v. Com'r, 24 B.T.A. 262, 266. 11 Article 117 of Regulations 33 (Revised) promulgated Jan. 2, 1918, and Article 42 of Regulations 45, promulgated April 17, 1919. 12 Appeal of B. B. Todd, Inc., 1 B.T.A. 762; Appeal of H. B. Graves Co., Inc., 1 B.T.A. 859; Appeal of Hoover Bond Co., 1 B.T.A. 929; Appeal of Six Hundred and Fifty West End Avenue Co., 2 B.T.A. 958. 13 S.Rep.No.52, 69th Cong., 1st Sess., 19, the Senate Finance Committee's report on Revenue Act of 1926, 44 Stat. 9, 23. 14 S.Rep.No.52, 69th Cong., 1st Sess. 19; Willcuts v. Gradwohl, 8 Cir., 58 F.2d 587, 589, 590. 15 Section 115(l) provides: 'The gain or loss realized from the sale or other disposition * * * of property by a corporation—* * * '(2) for the purpose of the computation of earnings and profits of the corporation for any period beginning after February 28, 1913, shall be determined by using as the adjusted basis the adjusted basis (under the law applicable to the year in which the sale or other disposition was made) for determining gain. 'Gain or loss so realized shall increase or decrease the earnings and profits to, but not beyond, the extent to which such a realized gain or loss was recognized in computing net income under the law applicable to the year in which such sale or disposition was made.' 16 The Conference Committee report on the Second Revenue Act of 1940, 54 Stat. 974, said with reference to § 115(l): 'The provisions in the House and Senate bills, that gain or loss so realized shall increase or decrease the earnings and profits to, but not beyond, the extent recognized in computing net income under the law applicable to the year in which such sale or disposition was made, are retained. As used in this subsection the term 'recognized' relates to a realized gain or loss which is recognized pursuant to the provisions of law, for example, see section 112 of the Internal Revenue Code. It does not relate to lossess disallowed or not taken into account.' Conf.Rep.No.3002, 76th Cong., 3d Sess., 60.
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333 U.S. 507 68 S.Ct. 665 92 L.Ed. 840 WINTERSv.PEOPLE OF STATE OF NEW YORK. No. 3. Reargued Nov. 10, 1947. Decided March 29, 1948. Appeal from the Court of Special Sessions of the City of New York, State of New York. Mr. Arthur N. Seiff, of New York City, for appellant. Mr. Whitman Knapp, of New York City, for appellee. Mr. Justice REED delivered the opinion of the Court. 1 Appellant is a New York City bookdealer, convicted, on information,1 of a misdemeanor for having in his possession with intent to sell certain magazines charged to violate subsection 2 of § 1141 of the New York Penal Law, Consol.Laws, c. 40. It reads as follows: 2 's 1141. Obscene prints and articles 3 '1. A person * * * who, 4 '2. Prints, utters, publishes, sells, lends, gives away, distributes or shows, or has in his possession with intent to sell, lend, give away, distribute or show, or otherwise offers for sale, loan, gift or distribution, any book, pamphlet, magazine, newspaper or other printed paper devoted to the publication, and principally made up of criminal news, police reports, or accounts of criminal deeds, or pictures, or stories of deeds of bloodshed, lust or crime; 5 'Is guilty of a misdemeanor, * * *.' Upon appeal from the Court of Special Sessions, the trial court, the conviction was upheld by the Appellate Division of the New York Supreme Court, 268 App.Div. 30, 48 N.Y.S.2d 230, whose judgment was later upheld by the New York Court of Appeals. 294 N.Y. 545, 63 N.E.2d 98. 6 The validity of the statute was drawn in question in the state courts as repugnant to the Fourteenth Amendment to the Constitution of the United States in that it denied the accused the right of freedom of speech and press, protected against state interference by the Fourteenth Amendment. Gitlow v. New York, 268 U.S. 652, 666, 45 S.Ct. 625, 629, 69 L.Ed. 1138; Pennekamp v. Florida, 328 U.S. 331, 335, 66 S.Ct. 1029, 1031, 90 L.Ed. 1295. The principle of a free press covers distribution as well as publication. Lovell v. City of Griffin, 303 U.S. 444, 452, 58 S.Ct. 666, 669, 82 L.Ed. 949. As the validity of the section ws upheld in a final judgment by the highest court of the state against this constitutional challenge, this Court has jurisdiction under Judicial Code, § 237(a), 28 U.S.C.A. § 344(a). This appeal was argued at the October 1945 Term of this Court and set down for reargument before a full bench at the October 1946 Term. It was then reargued and again set down for further reargument at the present term. 7 The appellant contends that the subsection violates the right of free speech and press because it is vague and indefinite. It is settled that a statute so vague and indefinite, in form and as interpreted, as to permit within the scope of its language the punishment of incidents fairly within the protection of the guarantee of free speech is void, on its face, as contrary to the Fourteenth Amendment. Stromberg v. People of State of California, 283 U.S. 359, 369, 51 S.Ct. 532, 535, 75 L.Ed. 1117, 73 A.L.R. 1484; Herndon v. Lowry, 301 U.S. 242, 258, 57 S.Ct. 732, 739, 81 L.Ed. 1066. A failure of a statute limiting freedom of expression to give fair notice of what acts will be punished and such a statute's inclusion of prohibitions against expressions, protected by the principles of the First Amendment violates an accused's rights under procedural due process and freedom of speech or press. Where the alleged vagueness of a state statute had been cured by an opinion of the state court, confining a statute, Rem. & Bal. Code, § 2564, punishing the circulation of publications 'having a tendency to encourage or incite the commission of any crime' to 'encouraging an actual breach of law,' this Court affirmed a conviction under the stated limitation of meaning. The accused publication was read as advocating the commission of the crime of indecent exposure. Fox v. Washington, 236 U.S. 273, 277, 35 S.Ct. 383, 384, 59 L.Ed. 573. 8 We recognize the importance of the exercise of a state's police power to minimize all incentives to crime, particularly in the field of sanguinary or salacious publications with their stimulation of juvenile delinquency. Although we are dealing with an aspect of a free press in its relation to public morals, the principles of unrestricted distribution of publications admonish us of the particular importance of a maintenance of standards of certainty in the field of criminal prosecution for violation of statutory prohibitions against distribution. We do not accede to appellee's suggestion that the constitutional protection for a free press applies only to the exposition of ideas. The line between the informing and the entertaining is too elusive for the protection of that basic right. Everyone is familiar with instances of propaganda through fiction. What is one man's amusement, teaches another's doctrine. Though we can see nothing of any possible value to society in these magazines, they are as much entitled to the protection of free speech as the best of literature. Cf. Hannegan v. Esquire, 327 U.S. 146, 153, 158, 66 S.Ct. 456, 460, 462, 90 L.Ed. 586. They are equally subject to control if they are lewd, indecent, obscene or profane. Ex parte Jackson, 96 U.S. 727, 736, 24 L.Ed. 877; Chaplinsky v. State of New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031. 9 The section of the Penal Law, § 1141(2), under which the information was filed is a part of the 'indecency' article of that law. It comes under the caption 'Obscene prints and articles.' Other sections make punishable various acts of indecency. For example, § 1141(1), a section not here in issue but under the same caption, punishes the distribution of obscene, lewd, lascivious, filthy, indecent or disgusting magazines.2 Section 1141(2) originally was aimed at the protection of minors from the distribution of publications devoted principally to criminal news and stories of bloodshed, lust or crime.3 It was later broadened to include all the population and other phases of production and possession. 10 Although many other states have similar statutes, they, like the early statutes restricting paupers from changing residence, have lain dormant for decades. Edwards v. People of State of California, 314 U.S. 160, 176, 62 S.Ct. 164, 168, 86 L.Ed. 119. Only two other state courts, whose reports are printed, appear to have construed language in their laws similar to that here involved. In Strohm v. People of State of Illinois, 160 Ill. 582, 43 N.E. 622, a statute to suppress exhibiting to any minor child publications of this character was considered. The conviction was upheld. The case, however, apparently did not involve any problem of free speech or press or denial of due process for uncertainty under the Fourteenth Amendment. 11 In State v. McKee, 73 Conn. 18, 46 A. 409, 413, 49 L.R.A. 542, 84 Am.St.Rep. 124, the court considered a conviction under a statute which made criminal the sale of magazines 'devoted to the publication or principally made up of criminal news, police reports, or pictures, and stories of deeds of bloodshed, lust, or crime.' The gist of the offense was thought to be a 'selection of immoralities so treated as to excite attention and interest sufficient to command circulation for a paper devoted mainly to the collection of such matters.' 73 Conn. at page 27, 46 A. at page 413, 49 L.R.A. 542, 84 Am.St.Rep. 124. It was said, apropos of the state's constitutional provision as to free speech, that the act did not violate any constitutional provision relating to the freedom of the press. It was held, in 73 Conn. at page 31, 46 A. at page 414, 49 L.R.A. 542, 84 Am.St.Rep. 124, that the principal evil at which the statute was directed was 'the circulation of this massed immorality.' As the charge stated that the offense might be committed 'whenever the objectionable matter is a leading feature of the paper, or special attention is devoted to the publication of the prohibited items,' the court felt that it failed to state the full meaning of the statute and reversed. As in the Strohm case, denial of due process for uncertainty was not raised. 12 On its face, the subsection here involved violates the rule of the Stromberg and Herndon cases, supra, that statutes which include prohibitions of acts fairly within the protection of a free press are void. It covers detective stories, treatises on crime, reports of battle carnage, et cetera. In recognition of this obvious defect, the New York Court of Appeals limited the scope by construction. Its only interpretation of the meaning of the pertinent subsection is that given in this case. After pointing out that New York statutes against indecent or obscene publications have generally been construed to refer to sexual impurity, it interpreted the section here in question to forbid these publications as 'indecent or obscene' in a different manner. The Court held that collections of criminal deeds of bloodshed or lust 'can be so massed as to become vehicles for inciting violent and depraved crimes against the person and in that case such publications are indecent or obscene in an admissible sense, * * *.' 294 N.Y. at page 550, 63 N.E.2d at page 100. 'This idea,' its opinion goes on to say, 'was the principal reason for the enactment of the statute.' The Court left open the question of whether 'the statute extends to accounts of criminal deeds not characterized by bloodshed or lust' because the magazines in question 'are nothing but stories and pictures of criminal deeds of bloodshed and lust.' As the statute in terms extended to other crimes, it may be supposed that the reservation was on account of doubts as to the validity of so wide a prohibition. The court declared: 'In short, we have here before us accumulations of details of heinous wrongdoing which plainly carried an appeal to that portion of the public who (as many recent records remind us) are disposed to take to vice for its own sake.' Further, the Court of Appeals, 294 N.Y. at page 549, 63 N.E.2d at page 99, limited the statute so as not to 'outlaw all commentaries on crime from detective tales to scientific treatises' on the ground that the legislature did not intend such literalness of construction. It thought that the magazines the possession of which caused the filing of the information were indecent in the sense just explained. The Court had no occasion to and did not weigh the character of the magazine exhibits by the more frequently used scales of § 1141(1), printed in note 2. It did not interpret § 1141(2) to punish distribution of indecent or obscene publications, in the usual sense, but that the present magazines were indecent and obscene because they 'massed' stories of bloodshed and lust to incite crimes. Thus interpreting § 1141(2) to include the expanded concept of indecency and obscenity stated in its opinion, the Court of Appeals met appellant's contention of invalidity from indefiniteness and uncertainty of the subsection by saying, 294 N.Y. at page 551, 63 N.E.2d at pages 100, 101, 13 'In the nature of things there can be no more precise test of written indecency or obscenity than the continuing and changeable experience of the community as to what types of books are likely to bring about the corruption of public morals or other analogous injury to the public order. Consequently, a question as to whether a particular publication is indecent or obscene in that sense is a question of the times which must be determined as matter of fact, unless the appearances are thought to be necessarily harmless from the stand-point of public order or morality.' 14 The opinion went on to explain that publication of any crime magazine would be no more hazardous under this interpretation than any question of degree and concluded, 294 N.Y. at page 552, 63 N.E.2d at page 101. 15 'So when reasonable men may fairly classify a publication as necessarily or naturally indecent or obscene, a mistaken view by the publisher as to its character or tendency is immaterial.' 16 The Court of Appeals by this authoritative interpretation made the subsection applicable to publications that, besides meeting the other particulars of the statute, so massed their collection of pictures and stories of bloodshed and of lust 'as to become vehicles for inciting violent and depraved crimes against the person.' Thus, the statute forbids the massing of stories of bloodshed and lust in such a way as to incite to crime against the person. This construction fixes the meaning of the statute for this case. The interpretation by the Court of Appeals puts these words in the statute as definitely as if it had been so amended by the legislature. Hebert v. State of Louisiana, 272 U.S. 312, 317, 47 S.Ct. 103, 104, 71 L.Ed. 270, 48 A.L.R. 1102; Skiriotes v. Florida, 313 U.S. 69, 79, 61 S.Ct. 924, 930, 85 L.Ed. 1193. We assume that the defendant, at the time he acted, was chargeable with knowledge of the scope of subsequent interpretation. Compare Lanzetta v. State of New Jersey, 306 U.S. 451, 59 S.Ct. 618, 83 L.Ed. 888. As lewdness in publications is punishable under § 1141(1) and the usual run of stories of bloodshed, such as detective stories, are excluded, it is the massing as an incitation to crime that becomes the important element. 17 Acts of gross and open indecency or obscenity, injurious to public morals, are indictable at common law, as violative of the public policy that requires from the offender retributionf or acts that flaunt accepted standards of conduct. 1 Bishop, Criminal Law, 9th Ed., § 500; Wharton, Criminal Law, 12th Ed., § 16. When a legislative body concludes that the mores of the community call for an extension of the impermissible limits, an enactment aimed at the evil is plainly within its power, if it does not transgress the boundaries fixed by the Constitution for freedom of expression. The standards of certainty in statutes punishing for offenses is higher than in those depending primarily upon civil sanction for enforcement. The crime 'must be defined with appropriate definiteness.' Pierce v. United States, 314 U.S. 306, 311, 62 S.Ct. 237, 239, 86 L.Ed. 226; Cantwell v. State of Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352. There must be ascertainable standards of guilt. Men of common intelligence cannot be required to guess at the meaning of the enactment.4 The vagueness may be from uncertainty in regard to persons within the scope of the act, Lanzetta v. State of New Jersey, 306 U.S. 451, 59 S.Ct. 618, 83 L.Ed. 888, or in regard to the applicable tests to ascertain guilt.5 18 Other states than New York have been confronted with similar problems involving statutory vagueness in connection with free speech. In State v. Diamond, 27 N.Mex. 477, 202 P. 988, 989, 20 A.L.R. 1527, a statute punishing 'any act of any kind whatsoever which has for its purpose or aim the destruction of organized government, federal, state or municipal, or to do or cause to be done any act which is antagonistic to or in opposition to such organized government, or incite or attempt to incite revolution or opposition to such organized government' was construed. The court said, 27 N.Mex. at page 479, 202 P. at page 989, 20 A.L.R. 1527: 'Under its terms no distinction is made between the man who advocates a change in the form of our government by constitutional means, or advocates the abandonment of organized government by peaceful methods, and the man who advocates the overthrow of our government by armed revolution, or other form of force and violence.' Later in the opinion the statute was held void for uncertainty, 27 N.Mex. at page 485, 202 P. at page 991, 20 A.L.R. 1527: 19 'Where the statute uses words of no determinative meaning, or the language is so general and indefinite as to embrace not only acts commonly recognized as reprehensible, but also others which it is unreasonable to presume were intended to be made criminal, it will be declared void for uncertainty.' 20 Again in State v. Klapprott, 127 N.J.L. 395, 22 A.2d 877, a statute was held invalid on an attack against its constitutionality under state and federal constitutional provisions that protect an individual's freedom of expression. The statute read as follows, 127 N.J.L. at page 396, 22 A.2d at page 878: 21 'Any person who h all, in the presence of two or more persons, in any language, make or utter any speech, statement or declaration, which in any way incites, counsels, promotes, or advocates hatred, abuse, violence or hostility against any group or groups of persons residing or being in this state by reason of race, color, religion or manner of worship, shall be guilty of a misdemeanor.' 22 The court said, 127 N.J.L. at pages 401, 402, 22 A.2d at page 881: 23 'It is our view that the statute, supra, by punitive sanction, tends to restrict what one may say lest by one's utterances there be incited or advocated hatred, hostility or violence against a group 'by reason of race, color, religion or manner of worship.' But additionally and looking now to strict statutory construction, is the statute definite, clear and precise so as to be free from the constitutional infirmity of the vague and indefinite? That the terms 'hatred,' 'abuse,' 'hostility,' are abstract and indefinite admits of no contradiction. When do they arise? Is it to be left to a jury to conclude beyond reasonable doubt when the emotion of hatred or hostility is aroused in the mind of the listener as a result of what a speaker has said? Nothing in our criminal law can be invoked to justify so wide a discretion. The Criminal Code must be definite and informative so that there may be no doubt in the mind of the citizenry that the interdicted act or conduct is illicit.' 24 This Court goes far to uphold state statutes that deal with offenses, difficult to define, when they are not entwined with limitations on free expression.6 We have the same attitude toward federal statutes.7 Only a definite conviction by a majority of this Court that the conviction violates the Fourteenth Amendment justifies reversal of the court primarily charged with responsibility to protect persons from conviction under a vague state statute. 25 The impossibility of defining the precise line between permissible uncertainty in statutes caused by describing crimes by words well understood through long use in the criminal law obscene, lewd, lascivious, filthy, indecent or disgusting—and the unconstitutional vagueness that leaves a person uncertain as to the kind of prohibited conduct—massing stories to incite crime—has resulted in three arguments of this case in this Court. The legislative bodies in draftsmanship obviously have the same difficulty as do the judicial in interpretation. Nevertheless despite the difficulties, courts must do their best to determine whether or not the vagueness is of such a character 'that men of common intelligence must necessarily guess at its meaning.' Connally v. General Constr. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322. The entire text of the statute or the subjects dealt with may furnish an adequate standard.8 The present case as to a vague statute abridging free speech involves the circulation of only vulgar magazines. The next may call for decision as to free expression of political views in the light of a statute intended to punish subversive activities. 26 The subsection of the New York Penal Law, as now interpreted by the Court of Appeals prohibits distribution of a magazine principally made up of criminal news or stories of deeds of bloodshed, or lust, so massed as to become vehicles for inciting violent and depraved crimes against the person. But even considerin the gloss put upon the literal meaning by the Court of Appeals' restriction of the statute to collections of stories 'so massed as to become vehicles for inciting violent and depraved crimes against the person * * * not necessarily * * * sexual passion,' we find the specification of publications, prohibited from distribution, too uncertain and indefinite to justify the conviction of this petitioner. Even though all detective tales and treatises on criminology are not forbidden, and though publications made up of criminal deeds not characterized by bloodshed or lust are omitted from the interpretation of the Court of Appeals, we think fair use of collections of pictures and stories would be interdicted because of the utter impossibility of the actor or the trier to know where this new standard of guilt would draw the line between the allowable and the forbidden publications. No intent or purpose is required—no indecency or obscenity in any sense heretofore known to the law. 'So massed as to incite to crime' can become meaningful only by concrete instances. This one example is not enough. The clause proposes to punish the printing and circulation of publications that courts or juries may think influence generally persons to commit crime of violence against the person. No conspiracy to commit a crime is required. See Musser v. State of Utah, 68 S.Ct. 397, this Term. It is not an effective notice of new crime. The clause has no technical or common law meaning. Nor can light as to the meaning be gained from the section as a whole or the Article of the Penal Law under which it appears. As said in the Cohen Grocery Co. case, supra, 255 U.S. at page 89, 41 S.Ct. at page 300, 65 L.Ed. 516, 14 A.L.R. 1045: 27 'It leaves open, therefore, the widest conceivable inquiry, the scope of which no one can foresee and the result of which no one can foreshadow or adequately guard against.' 28 The statute as construed by the Court of Appeals does not limit punishment to the indecent and obscene, as formerly understood. When stories of deeds of bloodshed, such as many in the accused magazines, are massed so as to incite to violent crimes, the statute is violated. it does not seem to us that an honest distributor of publications could know when he might be held to have ignored such a prohibition. Collections of tales of war horrors, otherwise unexceptionable, might well be found to be 'massed' so as to become 'vehicles for inciting violent and depraved crimes.' Where a statute is so vague as to make criminal an innocent act, a conviction under it cannot be sustained. Herndon v. Lowry, 301 U.S. 242, 259, 57 S.Ct. 732, 739, 81 L.Ed. 1066. 29 To say that a state may not punish by such a vague statute carries no implication that it may not punish circulation of objectionable printed matter, assuming that it is not protected by the principles of the First Amendment, by the use of apt words to describe the prohibited publications. Section 1141, subsection 1, quoted in note 2, is an example. Neither the states nor Congress are prevented by the requirement of specificity from carrying out their duty of eliminating evils to which, in their judgment, such publications give rise. 30 Reversed. 31 Mr. Justice FRANKFURTER, joined by Mr. Justice JACKSON and Mr. Justice BURTON, dissenting. 32 By today's decision the Court strikes down an enactment that has been part of the laws of New York for more than sixty years,1 and New York is but one of twenty States having such legislation. Four more States have statutes of like tenor which are brought into question by this decision, but variations of nicety preclude one from saying that these four enactments necessarily fall within the condemnation of this decision. Most of this legilsation is also more than sixty years old. The latest of the statutes which cannot be differentiated from New York's law, that of the State of Washington, dates from 1909. It deserves also to be noted that the legislation was judicially apl ied and sustained nearly fifty years ago. See State v. McKee, 73 Conn. 18, 46 A. 409, 49 L.R.A. 542, 84 Am.St.Rep. 124. Nor is this an instance where the pressure of proximity or propaganda led to the enactment of the same measure in a concentrated region of States. The impressiveness of the number of States which have this law on their statute books is reinforced by their distribution throughout the country and the time range of the adoption of the measure.2 Cf. Hughes, C.J., in West Coast Hotel Co. v. Parrish, 300 U.S. 379, 399, 57 S.Ct. 578, 585, 81 L.Ed. 703, 108 A.L.R. 1330. 33 These are the statutes that fall by this decision:3 34 1. Gen.Stat.Conn.1930, c. 329, § 6245, derived from L.1885, c. 47, § 2.* 35 2. Ill.Ann.Stat.Smith-Hurd, c. 38, § 106, derived from Act of June 3, 1889, p. 114, § 1 (minors). 36 3. Iowa Code 1946, § 725.8, derived from 21 Acts, Gen.Assembly, c. 177, § 4 (1886) (minors). 37 4. Gen.Stat.Kan.1935, § 21—1102, derived from L.1886, c. 101, § 1. 38 5. Ky.Rev.Stat.1946, § 436.110, derived from L.1891—93, c. 182, § 217 (1893) (similar). 39 6. Rev.Stat.Maine 1944, c. 121, § 27, derived from L.1885, c. 348, § 1 (minors). 40 7. Ann.Code Md.1939, Art. 27, § 496, derived from L.1894, c. 271, § 2. 41 8. Ann.Laws Mass. 1933, c. 272, § 30, derived from Acts and Resolves 1885, c. 305 (minors). 42 9. Mich.Stat.Ann.1938, § 28.576, Pub. Laws 1931, Act 328, § 344, derived from L.1885, No. 138. 43 10. Minn.St.1945 and M.S.A., § 617.72, derived from L. 1885, c. 268, § 1 (minors). 44 11. Mo.Rev.Stat.1939 § 4656, Mo.R.S.A., derived from Act of April 2, 1885, p. 146, § 1 (minors). 45 12. Rev.Code Mont.1935, § 11134, derived from Act of March 4, 1891, p. 255, 13. Rev.Stat.Neb.1943, § 28-924, derived 46 13. Rev.Stat.Neb.1943, § 28-924, derived from L.1887, c. 113, § 4 (minors). 47 14. N.Y.Consol.L. c. 40 (1944), Penal Law, Art. 106, § 1141(2), derived from L.1884, c. 380. 48 15. N.D.Rev.Code 1943, § 12-2109, derived from L.1895, c. 84, § 1 (similar). 49 16. Ohio Code Ann.Throckmorton 1940, § 13035, derived from 82 Sess.L. p. 184 (1885) (similar). 50 17. Or.Comp.L.Ann.1940, § 23-924, derived from Act of Feb. 25, 1885, p. 126 (similar). 51 18. 18 Pa.Stat.Ann. § 4524, derived from L.1887, P.L. 84, § 2. 52 19. Rev.Stat.Wash.Remington, 1932, § 2459(2), derived from L.1909, c. 249, § 207(2). 53 20. Wis.Stat.1945, § 351.38(4), derived from L.1901, c. 256. 54 The following statutes are somewhat similar, but may not necessarily be rendered unconstitutional by the Court's decision in the instant case: 55 1. Colo.Stat.Ann.1935, c. 48, § 217, derived from Act of April 9, 1885, p. 172, § 1. 56 2. Ind.Stat.Ann.1934, § 2607, Burns' Ann.St. § 10-2805, derived from L.1895, c. 109. 57 3. S.D.Code 1939, § 13.1722(4), derived from L.1913, c. 241, § 4. 58 4. Tex.Stat.Vernon, 1936, Penal Code, Art. 527, derived from Acts 1897, c. 116. 59 This body of laws represents but one of the many attempts by legislatures to solve what is perhaps the most persistent, intractable, elusive, and demanding of all problems of society—the problem of crime, and, more particularly, of its prevention. By this decision the Court invalidates such legislation of almost half the States of the Union. The destructiveness of the decision is even more far-reaching. This is not one of those situations where power is denied to the States because it belongs to the Nation. These enactments are invalidated on the ground that they fall within the prohibitions of the 'vague contours' of the Due Process Clause. The decision thus operates equally as a limitation upon Congressional authority to deal with crime, and, more especially, with juvenile delinquency. These far-reaching consequences result from the Court's belief that what New York, among a score of States, has prohibited, is so empty of meaning that no one desirous of obeying the law could fairly be aware that he was doing that which was prohibited. 60 Fundamental fairness of course requires that people be given notice of what to avoid. If the purpose of a statute is undisclosed, if the legislature's will has not been revealed, it offends reason that punishment should be meted out for conduct which at the time of its commission was not forbidden to the understanding of those who wished to observe the law. This requirement of fair notice that there is a boundary of prohibited conduct not to be overstepped is included in the conception of 'due process of law.' The legal jargon for such failure to give forewarning is to say that the statute is void for 'indefiniteness.' 61 But 'indefiniteness' is not a quantitative concept. It is not even a technical concept of definite components. It is itself an indefinite concept. There is no such thing as 'indefiniteness' in the abstract, by which the sufficiency of the requirement expressed by the term may be ascertained. The requirement is fair notice that conduct may entail punishment. But whether notice is or is not 'fair' depends upon the subject matter to which it relates. Unlike the abstract stuff of mathematics, or the quantitatively ascertainable elements of much of natural science, legislation is greatly concerned with the multiform psychological complexities of individual and social conduct. Accordingly, the demands upon legislation, and its responses, are variable and multiform. That which may appear to be too vague and even meaningless as to one subject matter may be as definite as another subject matter of legislation permits, if the legislative power to dealw ith such a subject is not to be altogether denied. The statute books of every State are full of instances of what may look like unspecific definitions of crime, of the drawing of wide circles of prohibited conduct. 62 In these matters legislatures are confronted with a dilemma. If a law is framed with narrow particularity, too easy opportunities are afforded to nullify the purposes of the legislation. If the legislation is drafted in terms so vague that no ascertainable line is drawn in advance between innocent and condemned conduct, the purpose of the legislation cannot be enforced because no purpose is defined. It is not merely in the enactment of tax measures that the task of reconciling these extremes—of avoiding throttling particularity or unfair generality is one of the most delicate and difficult confronting legislators. The reconciliation of these two contradictories is necessarily an empiric enterprise largely depending on the nature of the particular legislative problem. 63 What risks do the innocent run of being caught in a net not designed for them? How important is the policy of the legislation, so that those who really like to pursue innocent conduct are not likely to be caught unaware? How easy is it to be explicitly particular? How necessary is it to leave a somewhat penumbral margin but sufficiently revealed by what is condemned to those who do not want to sail close to the shore of questionable conduct? These and like questions confront legislative draftsmen. Answers to these questions are not to be found in any legislative manual nor in the work of great legislative draftsmen. They are not to be found in the opinions of this Court. These are questions of judgment, peculiarly within the responsibility and the competence of legislatures. The discharge of that responsibility should not be set at naught by abstract notions about 'indefiniteness.' 64 The action of this Court today in invalidating legislation having the support of almost half the States of the Union rests essentially on abstract notions about 'indefiniteness.' The Court's opinion could have been written by one who had never read the issues of 'Headquarters Detective' which are the basis of the prosecution before us, who had never deemed their contents as relevant to the form in which the New York legislation was cast, had never considered the bearing of such 'literature' on juvenile delinquency, in the allowable judgment of the legislature. Such abstractions disregard the considerations that may well have moved and justified the State in not being more explicit than these State enactments are. Only such abstract notions would reject the judgment of the States that they have outlawed what they have a right to outlaw, in the effort to curb crimes of lust and violence, and that they have not done it so recklessly as to occasion real hazard that other publications will thereby be inhibited, or also be subjected to prosecution. 65 This brings our immediate problem into focus. No one would deny, I assume, that New York may punish crimes of lust and violence. Presumably also, it may take appropriate measures to lower the crime rate. But he must be a bold man indeed who is confident that he knows what causes crimes. Those whose lives are devoted to an understanding of the problem are certain only that they are uncertain regarding the role of the various alleged 'causes' of crime. Bibliographies of criminology reveal a depressing volume of writings on theories of causation. See e.g., Kuhlman, A Guide to Material on Crime and Criminal Justice (1929) Item Nos. 292 to 1211; Culver, Bibliography of Crime and Criminal Justice (1927—1931) and Item Nos. 877—1475, (1932—1937) Item Nos. 799—1560. Is it to be seriously questioned, however, that the State of New York, or the Congress of the United States, may make incitement to crime itself an offense? He too would indeed be a bold man who denied that incitement may be caused by the written word no less than by the spoken. If 'the Fourteent Amendment does not enact Mr. Herbert Spencer's Social Statics' (Holmes, J., dissenting in Lochner v. State of New York, 198 U.S. 45, 75, 25 S.Ct. 539, 546, 49 L.Ed. 937, 3 Ann.Cas. 1133) neither does it enact the psychological dogmas of the Spencerian era. The painful experience which resulted from confusing economic dogmas with constitutional edicts ought not to be repeated by finding constitutional barriers to a State's policy regarding crime, because it may run counter to our inexpert psychological assumptions or offend our presuppositions regarding incitements to crime in relation to the curtailment of utterance. This Court is not ready, I assume, to pronounce on causative factors of mental disturbance and their relation to crime. Without formally professing to do so, it may actually do so by invalidating legislation dealing with these problems as too 'indefinite.' 66 Not to make the magazines with which this case is concerned part of the Court's opinion is to play 'Hamlet' without Hamlet. But the Court sufficiently summarizes one aspect of what the State of New York here condemned when it says 'we can see nothing of any possible value to society in these magazines.' From which it jumps to the conclusion that, nevertheless, 'they are as much entitled to the protection of free speech as the best of literature.' Wholly neutral futilities, of course, come under the protection of free speech as fully as do Keats' poems or Donne's sermons. But to say that these magazines have 'nothing of any possible value to society' is only half the truth. This merely denies them goodness. It disregards their mischief. As a result of appropriate judicial determination, these magazines were found to come within the prohibition of the law against inciting 'violent and depraved crimes against the person,' and the defendant was convicted because he exposed for sale such materials. The essence of the Court's decision is that it gives publications which have 'nothing of any possible value to society' constitutional protection but denies to the States the power to prevent the grave evils to which, in their rational judgment, such publications give rise. The legislatures of New York and the other States were concerned with these evils and not with neutral abstractions of harmlessness. Nor was the New York Court of Appeals merely resting, as it might have done, on a deepseated conviction as to the existence of an evil and as to the appropriate means for checking it. That court drew on its experience, as revealed by 'many recent records' of criminal convictions before it for its understanding of the practical concrete reasons that led the legislatures of a score of States to pass the enactments now here struck down. 67 The New York Court of Appeals thus spoke out of extensive knowledge regarding incitements to crimes of violence. In such matters, local experience, as this Court has said again and again, should carry the greatest weight against our denying a State authority to adjust its legislation to local needs. But New York is not peculiar in concluding that 'collections of pictures or stories of criminal deeds of bloodshed or lust unquestionably can be so massed as to become vehicles for inciting violent and depraved crimes against the person.' 294 N.Y. at page 550, 63 N.E.2d at page 100. A recent murder case before the High Court of Australia sheds light on the considerations which may well have induced legislation such as that now before us, and on the basis of which the New York Court of Appeals sustained its validity. The murder was committed by a lad who had just turned seventeen years of age, and the victim was the driver of a taxicab. I quote the following from the opinion of Mr. Justice Dixon: 'In his evidence on the voir dire Graham (a friend of the defendant and apparently a very reliable witness) said that he knew Boyd Sinclair (the murderer) and his moods very well and that he just left him; that Boyd had on a number of occasions outlined plans for embarking on a life of crime, plan based mainly on magazine thrillers which he was reading at the time. They included the obtaining of a motor car and an automatic gun.' Sinclair v. The King, 73 Comm.L.R. 316, 330. 68 'Magazine thrillers' hardly characterizes what New York has outlawed. New York does not lay hold of publications merely because they are 'devoted to and principally made up of criminal news or police reports or accounts of criminal deeds, regardless of the manner of treatment.' So the Court of Appeals has authoritatively informed us. 294 N.Y. at 549, 63 N.E.2d at 99. The aim of the publication must be incitation to 'violent and depraved crimes against the person' by so massing 'pictures and stories of criminal deeds of bloodshed or lust' as to encourage like deeds in others. It would be sheer dogmatism in a field not within the professional competence of judges to deny to the New York legislature the right to believe that the intent of the type of publications which it has proscribed is to cater to morbid and immature minds—whether chronologically or permanently immature. It would be sheer dogmatism to deny that in some instances, as in the case of young Boyd Sinclair, deeply embedded, unconsicious impulses may be discharged into destructive and often fatal action. 69 If legislation like that of New York 'has been enacted upon a belief of evils that is not arbitrary we cannot measure their extent against the estimate of the legislature.' Tanner v. Little, 240 U.S. 369, 385, 36 S.Ct. 379, 384, 60 L.Ed. 691. The Court fails to give enough force to the influence of the evils with which the New York legislature was concerned 'upon conduct and habit, not enough to their insiduous potentialities.' Rast v. Van Deman & Lewis Co., 240 U.S. 342, 364, 36 S.Ct. 370, 377, 60 L.Ed. 679, L.R.A.1917A, 421 Ann.Cas.1917B, 455. The other day we indicated that, in order to support its constitutionality, legislation need not employ the old practice of preambles, nor be accompanied by a memorandum of explanation setting forth the reasons for the enactment. See Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144, 68 S.Ct. 421, 424. Accordingly, the New York statute, when challenged for want of due process on the score of 'indefiniteness,' must be considered by us as though the legislature had thus spelled out its convictions and beliefs for its enactment: 70 Whereas, we believe that the destructive and adventurous potentialities of boys and adolescents, and of adults of weak character or those leading a drab existence are often stimulated by collections of pictures and stories of criminal deeds of bloodshed or lust so massed as to incite to violent and depraved crimes against the person; and 71 Whereas, we believe that such juveniles and other susceptible characters do in fact commit such crimes at least partly because incited to do so by such publications, the purpose of which is to exploit such susceptible characters; and 72 Whereas, such belief, even though not capable of statistical demonstration, is supported by our experience as well as by the opinions of some specialists qualified to express opinions regarding criminal psychology and not disproved by others; and 73 Whereas, in any event there is nothing of possible value to society in such publications, so that there is no gain to the State, whether in edification or enlightenment or amusement or good of any kind; and 74 Whereas, the possibility of harm by restricting free utterance through harmless publications is too remote and too negligible a consequence of dealing with the evil publications with which we are here concerned; 75 Be it therefore enacted that— 76 Unless we can say that such beliefs are intrinsically not reasonably entertainable by a legislature, or that the record disproves them, or that facts of which we must take judicial notice preclude the legislature from entertaining such views, we must assume that the legislature was dealing with a real problem touching the commission of crime and not with fanciful evils, and that te measure was adapted to the serious evils to which it was addressed. The validity of such legislative beliefs or their importance ought not to be rejected out of hand. 77 Surely this Court is not prepared to say that New York cannot prohibit traffic in publications exploiting 'criminal deeds of bloodshed or lust' so 'as to become vehicles for inciting violent and depraved crimes against the person.' Laws have here been sustained outlawing utterance far less confined. A Washington statute directed against printed matter tending to encourage and advocate disrespect for law was judged and found not wanting, on these broad lines: 78 'We understand the State court by implication at least to have read the statute as confined to encouraging an actual breach of law. Therefore the argument that this act is both an unjutifiable restriction of liberty and too vague for a criminal law must fail. It does not appear and is not likely that the statute will be construed to prevent publications merely because they tend to produce unfavorable opinions of a particular statute or of law in general. In this present case the disrespect for law that was encouraged was disregard of it—an overt breach and technically criminal act. It would be in accord with the usages of English to interpret disrespect as manifested disrespect, as active disregard going beyond the line drawn by the law. That is all that has happened as yet, and we see no reason to believe that the statute will be stretched beyond that point. 79 'If the statute should be construed as going no farther than it is necessary to go in order to bring the defendant within it, there is no trouble with it for want of definiteness.' Fox v. Washington, 236 U.S. 273, 277, 35 S.Ct. 383, 384, 59 L.Ed. 573. 80 In short, this Court respected the policy of a State by recognizing the practical application which the State court gave to the statute in the case before it. This Court rejected constitutional invalidity based on a remote possibility that the language of the statute, abstractly considered, might be applied with unbridled looseness. 81 Since Congress and the States may take measures against 'violent and depraved crimes,' can it be claimed that 'due process of law' bars measures against incitement to such crimes? But if they have power to deal with incitement, Congress and the States must be allowed the effective means for translating their policy into law. No doubt such a law presents difficulties in draftsmanship where publications are the instruments of incitement. The problem is to avoid condemnation so unbounded that neither the text of the statute nor its subject matter affords 'a standard of some sort.' United States v. Cohen Grocery Co., 255 U.S. 81, 92, 41 S.Ct. 298, 301, 65 L.Ed. 516, 14 A.L.R. 1045. Legislation must put people on notice as to the kind of conduct from which to refrain. Legislation must also avoid so tight a phrasing as to leave the area for evasion ampler than that which is condemned. How to escape, on the one hand, having a law rendered futile because no standard is afforded by which conduct is to be judged, and, on the other, a law so particularized as to defeat itself through the opportunities it affords for evasion, involves an exercise of judgment which is at the heart of the legislative process. It calls for the accommodation of delicate factors. But this accommodation is for the legislature to make and for us to respect, when it concerns a subject so clearly within the scope of the police power as the control of crime. Here we are asked to declare void the law which expresses the balance so struck by the legislature, on the ground that the legislature has not expressed its policy clearly enough. That is what it gets down to. 82 What were the alternatives open to the New York legislature? It could of course conclude that publications such as those before us could not 'become vehicles for inciting violent and depraved crimes.' But surely New York was entitled to believe otherwise. It is o t for this Court to impose its belief, even if entertained, that no 'massing of print and pictures' could be found to be effective means for inciting crime in minds open to such stimulation. What gives judges competence to say that while print and pictures may be constitutionally outlawed because judges deem them 'obscene,' print and pictures which in the judgment of half the States of the Union operate as incitements to crime, enjoy a constitutional prerogative? When on occasion this Court has presumed to act as an authoritative faculty of chemistry, the result has not been fortunate. See Burns Baking Co. v. Bryan, 264 U.S. 504, 44 S.Ct. 412, 68 L.Ed. 813, 32 A.L.R. 661, where this Court ventured a view of its own as to what is reasonable 'tolerance' in breadmaking. Considering the extent to which the whole domain of psychological inquiry has only recently been transformed and how largely the transformation is still in a pioneer stage, I should suppose that the Court would feel even less confidence in its views on psychological issues. At all events, it ought not to prefer its psychological views—for, at bottom, judgment on psychological matters underlies the legal issue in this case—to those implicit in an impressive body of enactments and explicitly given by the New York Court of Appeals, out of the abundance of its experience, as the reason for sustaining the legislation which the Court is nullifying. 83 But we are told that New York has not expressed a policy, that what looks like a law is not a law because it is so vague as to be meaningless. Suppose then that the New York legislature now wishes to meet the objection of the Court. What standard of definiteness does the Court furnish the New York legislature in finding indefiniteness in the present law? Should the New York legislature enumerate by name the publications which in its judgment are 'inciting violent and depraved crimes'? Should the New York legislature spell out in detail the ingredients of stories or pictures which accomplish such 'inciting'? What is there in the condemned law that leaves men in the dark as to what is meant by publications that exploit 'criminal deeds of bloodshed or lust' thereby 'inciting violent and depraved crimes'? What real risk do the Conan Doyles, the Edgar Allen Poes, the William Rougheads, the ordinary tribe of detective story writers, their publishers, or their booksellers run? 84 Insofar as there is uncertainty, the uncertainty derives not from the terms of condemnation, but from the application of a standard of conduct to the varying circumstances of different cases. The Due Process Clause does not preclude such fallibilities of judgment in the administration of justice by men. Our penal codes are loaded with prohibitions of conduct depending on ascertainment through fallible judges and juries of a man's intent or motive—on ascertainment, that is, from without of a man's inner thoughts, feelings and purposes. Of course a man runs the risk of having a jury of his peers misjudge him. Mr. Justice Holmes has given the conclusive answer to the suggestion that the Due Process Clause protects against such a hazard: 'the law is full of instances where a man's fate depends on his estimating rightly, that is, as the jury subsequently estimates it, some matter of degree. If his judgment is wrong, not only may he incur a fine or a short imprisonment, as here; he may incur the penalty of death.' Nash v. United States, 229 U.S. 373, 377, 33 S.Ct. 780, 781, 57 L.Ed. 1232. To which it is countered that such uncertainty not in the standard but in its application is not objectionable in legislation having a long history, but is inadmissible as to more recent laws. Is this not another way of saying that when new circumstances or new insights lead to new legislation the Due Process Clause denies to legislatures the power to frame legislation with such regard for the subject matter as legislatures had in the past? When neither the Constitution nor legislation has formulate legal principles for courts, and they must pronounce them, they find it impossible to impose upon themselves such a duty of definiteness as this decision exacts from legislatures. 85 The Court has been led into error, if I may respectfully suggest, by confusing want of certainty as to the outcome of different prosecutions for similar conduct, with want of definiteness in what the law prohibits. But diversity in result for similar conduct in different trials under the same statute, is an unavoidable feature of criminal justice. So long as these diversities are not designed consequences but due merely to human fallibility, they do not deprive persons of due process of law. 86 In considering whether New York has struck an allowable balance between its right to legislate in a field that is so closely related to the basic function of government, and the duty to protect the innocent from being punished for crossing the line of wrongdoing without awareness, it is relevant to note that this legislation has been upheld as putting law-abiding people on sufficient notice by a court that has been astutely alert to the hazards of vaguely phrased penal laws and zealously protective of individual rights against 'indefiniteness.' See, e.g., People v. Phyfe, 136 N.Y. 554, 32 N.E. 978, 19 L.R.A. 141; People v. Briggs, 193 N.Y. 457, 86 N.E. 522; People v. Shakun, 251 N.Y. 107, 167 N.E. 187, 64 A.L.R. 1066; People v. Grogan, 260 N.Y. 138, 183 N.E. 273, 86 A.L.R. 1266. The circumstances of this case make it particularly relevant to remind, even against a confident judgment of the invalidity of legislation on the vague ground of 'indefiniteness,' that certitude is not the test of certainty. If men may reasonably differ whether the State has given sufficient notice that it is outlawing the exploitation of criminal potentialities, that in itself ought to be sufficient, according to the repeated pronouncements of this Court, to lead us to abstain from denying power to the States. And it deserves to be repeated that the Court is not denying power to the States in order to leave it to the Nation. It is denying power to both. By this decision Congress is denied power, as part of its effort to grapple with the problems of juvenile delinquency in Washington, to prohibit what twenty States have seen fit to outlaw. Moreover, a decision like this has a destructive momentum much beyond the statutes of New York and of the other States immediately involved. Such judicial nullification checks related legislation which the States might deem highly desirable as a matter of policy, and this Court might not find unconstitutional. 87 Almost by his very last word on this Court, as by his first, Mr. Justice Holmes admonished against employing 'due process of law' to strike down enactments, which, though supported on grounds that may not commend themselves to judges, can hardly be deemed offensive to reason itself. It is not merely in the domain of economics that the legislative judgment should not be subtly supplanted by the judicial judgment. 'I cannot believe that the Amendment was intended to give us carte blanche to embody our economic or moral beliefs in its prohibitions.' So wrote Mr. Justice Holmes in summing up his protest for nearly thirty years against using the Fourteenth Amendment to cut down the constitutional rights of the States. Baldwin v. State of Missouri, 281 U.S. 586, 595, 50 S.Ct. 436, 439, 74 L.Ed. 1056, 72 A.L.R. 1303 (dissenting). 88 Indeed, Mr. Justice Holmes is a good guide in deciding this case. In three opinions in which, speaking for the Court, he dealt with the problem of 'indefiniteness' in relation to the requirement of due process, he indicated the directions to be followed and the criteria to be applied. Pursuit of those directions and due regard for the criteria require that we hold that the New York legislature has not offended the limitations which the Due Process Clause has placed upon the power of States to counteract avoidable incitements to violent and e praved crimes. 89 Reference has already been made to the first of the trilogy, Nash v. United States, supra. There the Court repelled the objection that the Sherman Law, 15 U.S.C.A. §§ 1—7, 15 note, 'was so vague as to be inoperative on its criminal side.' The opinion rested largely on a critical analysis of the requirement of 'definiteness' in criminal statutes to be drawn from the Due Process Clause. I have already quoted the admonishing generalization that 'the law is full of instances where a man's fate depends on his estimating rightly, that it, as the jury subsequently estimates it, some matter of degree.' 229 U.S. at page 377, 33 S.Ct. at page 781, 57 L.Ed. 1232. Inasmuch as 'the common law as to the restraint of trade' was 'taken up' by the Sherman Law, the opinion in the Nash case also drew support from the suggestion that language in a criminal statute which might otherwise appear indefinite may derive definiteness from past usage. How much definiteness 'the common law of restraint of trade' has imparted to 'the rule of reason,' which is the guiding consideration in applying the Sherman Law, may be gathered from the fact that since the Nash case this Court has been substantially divided in at least a dozen cases in determining whether a particular situation fell within the undefined limits of the Sherman Law.4 The Court's opinion in this case invokes this doctrine of 'permissible uncertainty' in criminal statutes as to words that have had long use in the criminal law, and assumes that 'long use' gives assurance of clear meaning. I do not believe that the law reports permit one to say that statutes condemning 'restraint of trade' or 'obscenity' are much more unequivocal guides to conduct than this statute furnishes, nor do they cast less risk of 'estimating rightly' what judges and juries will decide, than does this legislation. 90 The second of this series of cases, International Harvester Co. v. Kentucky, 234 U.S. 216, 34 S.Ct. 853, 855, 58 L.Ed. 1284, likewise concerned anti-trust legislation. But that case brought before the Court a statute quite different from the Sherman Law. However indefinite the terms of the latter, whereby 'it throws upon men the risk of rightly estimating a matter of degree,' it is possible by due care to keep to the line of safety. But the Kentucky statute was such that no amount of care would give safety. To compel men, wrote Mr. Justice Holmes 'to guess, on peril of indictment, what the community would have given for them (commodities) if the continually changing conditions were other than they are, to an uncertain extent; to divine prophetically what the reaction of only partially determinate facts would be upon the imaginations and desires of purchasers, is to exact gifts that mankind does not possess.' 234 U.S. at pages 223, 224, 34 S.Ct. at pages 855, 856, 58 L.Ed. 1284. The vast difference between this Kentucky statute and the New York law, so far as forewarnn g goes, needs no laboring. 91 The teaching of the Nash and the Harvester cases is that it is not violative of due process of law for a legislature in framing its criminal law to cast upon the public the duty of care and even of caution, provided that there is sufficient warning to one bent on obedience that he comes near the proscribed area. In his last opinion on this subject, Mr. Justice Holmes applied this teaching on behalf of a unanimous Court, United States v. Wurzbach, 280 U.S. 396, 399, 50 S.Ct. 167, 168, 169, 74 L.Ed. 508. The case sustained the validity of the Federal Corrupt Practices Act, 18 U.S.C.A. § 208. What he wrote is too relevant to the matter in hand not to be fully quoted: 92 'It is argued at some length that the statute, if extended beyond the political purposes under the control of Congress, is too vague to be valid. The objection to uncertainty concerning the persons embraced need not trouble us now. There is no doubt that the words include representatives, and if there is any difficulty, which we are far from intimating, it will be time enough to consider it when raised by someone whom it concerns. The other objection is to the meaning of 'political purposes.' This would be open even if we accepted the limitations that would make the law satisfactory to the respondent's counsel. But we imagine that no one not in search of trouble would feel any. Wherever the law draws a line there will be cases very near each other on opposite sides. The precise course of the line may be uncertain, but no one can come near it without knowing that he does so, if he thinks, and if he does so, it is familiar to the criminal law to make him take the risk. Nash v. United States, 229 U.S. 373, 33 S.Ct. 780, 57 L.Ed. 1232.' 93 Only a word needs to be said regarding Lanzetta v. State of New Jersey, 306 U.S. 451, 59 S.Ct. 618, 83 L.Ed. 888. The case involved a New Jersey statute, N.J.S.A. 2:136—4, of the type that seek to control 'vagrancy.' These statutes are in a class by themselves, in view of the familiar abuses to which they are put. See Note, 47 Col.L.Rev. 613, 625. Definiteness is designedly avoided so as to allow the net to be cast at large, to enable men to be caught who are vaguely undesirable in the eyes of police and prosecution, although not chargeable with any particular offense. In short, these 'vagrancy statutes,' and laws against 'gangs' are not fenced in by the text of the statute or by the subject matter so as to give notice of conduct to be avoided. 94 And so I conclude that New York, in the legislation before us, has not exceeded its constitutional power to control crime. The Court strikes down laws that forbid publications inciting to crime, and as such not within the constitutional immunity of free speech, because in effect it does not trust State tribunals, nor ultimately this Court, to safeguard inoffensive publications from condemnation under this legislation. Every legislative limitation upon utterance, however valid, may in a particular case serve as an inroad upon the freedom of speech which the Constitution protects. See, e.g., Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352, and Mr. Justice Holmes' dissent in Abrams v. United States, 250 U.S. 616, 624, 40 S.Ct. 17, 20, 63 L.Ed. 1173. The decision of the Court is concerned solely with the validity of the statute, and this opinion is restricted to that issue. 1 The counts of the information upon which appellant was convicted charged, as the state court opinions show, violation of subsection 2 of § 1141. An example follows: 'Fourth Count 'And I, the District Attorney aforesaid, by this information, further accuse the said defendant of the Crime of Unlawfully Possessing Obscene Prints, committed as follows: 'The said defendant, on the day and in the year aforesaid, at the city and in the county aforesaid, with intent to sell, lend, give away and show, unlawfully did offer for sale and distribution, and have in his possession with intent to sell, lend, give away and show, a certain obscene, lewd, lascivious, filthy, indecent and disgusting magazine entitled 'Headquarters Detective, True Cases from the Police Blotter, June 1940,' the same being devoted to the publication and principally made up of criminal news, police reports, and accounts of criminal deeds, and pictures and stories of deeds of bloodshed, lust and crime.' 2 '§ 1141. * * * 1. A person who sells, lends, gives away, distribue § or shows, or offers to sell, lend, give away, distribute, or show, or has in his possession with intent to sell, lend, distribute or give away, or to show, or advertises in any manner, or who otherwise offers for loan, gift, sale or distribution, any obscene, lewd, lascivious, filthy, indecent or disgusting book, magazine, pamphlet, newspaper, story paper, writing, paper, picture, drawing, photograph, figure or image, or any written or printed matter of an indecent character; 'Is guilty of a misdemeanor. * * *' 3 Ch. 380, New York Laws 1884; ch. 692, New York Laws 1887; ch. 925, New York Laws 1941. 4 Connally v. General Const. Co., 269 U.S. 385, 391, 392, 46 S.Ct. 126, 127—128, 70 L.Ed. 322: 'But it will be enough for present purposes to say generally that the decisions of the court, upholding statutes as sufficiently certain, rested upon the conclusion that they employed words or phrases having a technical or other special meaning, well enough known to enable those within their reach to correctly apply them, * * * or a well-settled common-law meaning, notwithstanding an element of degree in the definition as to which estimates might differ, * * * or, as broadly stated by Mr. Chief Justice White in United States v. L. Cohen Grocery Co., 255 U.S. 81, 92, 41 S.Ct. 298, 301, (65 L.Ed. 516, 14 A.L.R. 1045), 'that, for reasons found to result either from the text of the statutes involved or the subjects with which they dealt, a standard of some sort was afforded." 5 United States v. L. Cohen Grocery Co., 255 U.S. 81, 89—93, 41 S.Ct. 298, 300—301, 65 L.Ed. 516, 14 A.L.R. 1045; Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 242, 52 S.Ct. 559, 567, 76 L.Ed. 1062, 86 A.L.R. 403; Smith v. Cahoon, 283 U.S. 553, 564, 51 S.Ct. 582, 586, 75 L.Ed. 1264. 6 Omaechevarria v. State of Idaho, 246 U.S. 343, 38 S.Ct. 323, 62 L.Ed. 763; Waters-Pierce Oil Co. v. State of Texas, 212 U.S. 86, 29 S.Ct. 220, 53 L.Ed. 417. 7 United States v. Petrillo, 332 U.S. 1, 67 S.Ct. 1538; Gorin v. United States, 312 U.S. 19, 61 S.Ct. 429, 85 L.Ed. 488. 8 Hygrade Provision Co. v. Sherman, 266 U.S. 497, 501, 45 S.Ct. 141, 142, 69 L.Ed. 402; Mutual Film Corporation v. Ohio Industrial Commission, 236 U.S. 230, 245, 246, 35 S.Ct. 387, 391, 392, 59 L.Ed. 552, Ann.Cas.1916C, 296; Screws v. United States, 325 U.S. 91, 94—100, 65 S.Ct. 1031, 1032—1035, 89 L.Ed. 1495, 162 A.L.R. 1330. 1 The original statute, N.Y.L. 1884, c. 380, has twice since been amended in minor details. N.Y.L. 1887, c. 692; N.Y.L. 1941, c. 925. In its present form, it reads as follows: § 1141. Obscene prints and articles '1. A person who '2. Prints, utters, publishes, sells, lends, gives away, distributes or shows, or has in his possession with intent to sell, lend, give away, distribute or show, or otherwise offers for sale, loan, gift or distribution, any book, pamphlet, magazine, newspaper or other printed paper devoted to the publication, and principally made up of criminal news, police reports, or accounts of criminal deeds, or pictures, or stories of deeds of bloodshed, lust or crime; 'Is guilty of a misdemeanor * * *.' That this legilsation was neither a casual enactment nor a passing whim is shown by the whole course of its history. The original statute was passed as the result of a campaign by the New York Society for the Supression of Vice and the New York Society for the Prevention of Cruelty to Children. See 8th Ann.Rep., N.Y. Soc. for the Suppression of Vice (1882) p. 7; 9th id. (1883) p. 9; 10th id. (1884) p. 8; 11th id. (1885) pp. 7—8. The former organization, at least, had sought legislation covering many more types of literature and conduct. See 8th id. (1882) pp. 6—9; 9th id. (1883) pp. 9—12. On the other hand, in 1887, the limitation of the statute to sales, etc., to children was removed. N.Y.L. 1887, c. 692. More recently, it has been found desirable to add to the remedies available to the State to combat this type of literature. A 1941 statute conferred jurisdiction upon the Supreme Court, at the instance of the chief executive of the community, to enjoin the sale or distribution of such literature. N.Y.L. 1941, c. 925, § 2, N.Y. Code Crim.Proc. § 22-a. (The additional constitutional problems that might be raised by such injunctions, cf. Near v. State of Minnesota ex rel. Olson, 283 U.S. 697, 51 S.Ct. 625, 75 L.Ed. 1357, are of course not before us.) * Since this opinion was filed, Conn.L.1935, c. 216, repealing this provision, has been called to my attention. 2 Of course we have no statistics, or other reliable knowledge, as to the incidence of violations of these laws nor as to the extent of their enforcement. Suffice it to say that the highest courts of three of the most industrialized States Connecticut, Illinois, and New York—have had this legislation before them. 3 This assumes a similar construction for essentially the same laws. 4 See, e.g., United States v. United Shoe Machinery Co., 247 U.S. 32, 38 S.Ct. 473, 62 L.Ed. 968; United States v. United States Steel Corporation, 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121; United States v. Reading Co., 253 U.S. 26, 40 S.Ct. 425, 64 L.Ed. 760; American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S.Ct. 114, 66 L.Ed. 284, 21 A.L.R. 1093; Maple Flooring Mfrs' Ass'n v. United States, 268 U.S. 563, 45 S.Ct. 578, 69 L.Ed. 1093; Cement Mfrs' Protective Ass'n v. United States, 268 U.S. 588, 45 S.Ct. 586, 69 L.Ed. 1104; United States v. Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989; Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440; Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013; United States v. Line Material Co., 333 U.S. 287, 68 S.Ct. 550.
23
333 U.S. 586 68 S.Ct. 702 92 L.Ed. 894 SHADEv.DOWNING et al. No. 448. Argued Feb. 11, 1948. Decided April 5, 1948. Mr. Kelly Brown, of Muskogee, Okl., for Peggy Shade. Mr. Forrester Brewster, of Muskogee, Okl., for Lucy Downing and others. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The Circuit Court of Appeals for the Tenth Circuit, acting under Judicial Code § 239, 28 U.S.C. § 346, 28 U.S.C.A. § 346, has certified the following question for our determination: '(1) Is the United States a necessary party to a proceeding to determine the heirship of a deceased citizen allottee of the Five Civilized Tribes brought under the Act of June 14, 1918, 40 Stat. 606?' 2 On January 4, 1935, the County Court of Cherokee County, Oklahoma, decreed that the sole and only heirs of Thompson Downing, a full-blood Cherokee, were his three daughters, the appellees below. Some time thereafter Peggy Shade brought this suit in an Oklahoma court to claim, as the only heir of Downing's second wife, an undivided one-fourth interest in Downing's allotted lands. She attacked the 1935 decree on the ground, among others, that no notice of the pendency of the heirship proceedings had been served on the Superintendent for the Five Civilized Tribes under the Act of April 12, 1926, 44 Stat. 239, 240—241.1 Notice of the pendency of the present action was duly served upon the Superintendent and on hism otion the cause was removed to the District Court for the Eastern District of Oklahoma. Judgment was entered for defendants on June 6, 1945, the court holding that the United States was not a necessary party to the 1935 heirship proceedings, and that notice under the 1926 Act was not necessary to the validity of that decree. On appeal, the court below certified the above question for our determination. 3 The Act of June 14, 1918, 40 Stat. 606, 25 U.S.C. §§ 375, 355, 25 U.S.C.A. §§ 375, 355,2 vested in the Oklahoma courts jurisdiction to determine heirship of restricted Indian lands and to entertain proceedings to partition such lands.3 See §§ 1 and 2. It is a jurisdictional statute only (see United States v. Hellard, 322 U.S. 363, 365, 64 S.Ct. 985, 986, 88 L.Ed. 1326) and leaves open the question whether the United States is a necessary or indispensable party to proceedings under either section. 4 We held in United States v. Hellard, supra, that the United States is a necessary party to partition proceedings brought under § 2 of that Act. That holding was based upon the direct and important interests of the government in the course and outcome of partition proceedings, interests flowing from the statutory restrictions on alienation of allotted lands. Lands partitioned in kind to full-blood Indians remain restricted under § 2. Thus the United States, as guardian of the Indians, is directly interested in obtaining a partition in kind, where that course conforms to its policy of preserving restricted lands for the Indians, or, if a sale is desirable, in insuring that the best possible price is obtained. Moreover, if the lands are both restricted and tax-exempt, it has an interest in the reinvestment of the proceeds of the sale in similarly tax-exempt and restricted lands. Act of June 30, 1932, 47 Stat. 474, 25 U.S.C. § 409a, 25 U.S.C.A. § 409a. And there is a further interest in protecting the preferential right of the Secretary of the Interior to purchase the land for another Indian under § 2 of the Act of June 26, 1936, 49 Stat. 1967, 25 U.S.C.A. § 502. For these reasons we held in United States v. Hellard, supra, that the United States was a necessary party to the partition proceedings, even absent a statutory requirement to that effect. 5 Heirship proceedings, however, present quite different considerations. They involve no governmental interests of the dignity of those involved in partition proceedings. Restrictions on alienation do not prevent inheritance. United States v. Hellard, supra, at page 365 of 322 U.S., at page 986 of 64 S.Ct. Death of the allottee operates to remove the statutory restrictions on alienation; and the determination of heirship does not of itself involve a sale of land.4 The heirship proceeding involves only 'a determination of the question of fact as to who are the heirs of any deceased citizen allottee of the Five Civilized Tribes.'5 As such, it is little more than an identification of those who by law are entitled to the lands in question and does not directly affect the restrictions on the land or the land itself. Important as these proceedings may be to the stability of Indian Land titles,6 they are of primary interest only to the immediate parties. The United States is, indeed, hardly more than a stakeholder in the litigation. 6 That is the distinction between partition and heirship proceedings which we recognized in United States v. Hellard, supra, at pages 365, 366, of 322 U.S., at supra, 322 U.S. at pages 365, 366, 64 S.Ct., at pages 986, 987. We adhere to it.7 Accordingly the question certified is answered 'No.' 7 So ordered. 8 Question answered. 9 Mr. Justice REED, Mr. Justice FRANKFURTER and Mr. Justice JACKSON would answer the question in the affirmative because, in their view, the purpose of Congress was to permit the intervention of the United States in cases in which a restricted member of the Five Civilized Tribes is a party and therefore the United States is a necessary party to the proceedings. 1 Sec. 3 of the Act, so far as material here, provides: 'Any one or more of the parties to a suit in the United States courts in the State of Oklahoma or in the State courts of Oklahoma to which a restricted member of the Five Civilized Tribes in Oklahoma, or the restricted heirs or grantees of such Indian are parties, as plaintiff, defendant, or intervenor, and claiming or entitled to claim title to or an interest in lands allotted to a citizen of the Five Civilized Tribes or the proceeds, issues, rents, and profits derived from the same, may serve written notice of the pendency of such suit upon the Superintendent for the Five Civilized Tribes, and the United States may appear in said cause within twenty days thereafter, or within such extended time as the trial court in its discretion may permit, and after such appearance or the expiration of said twenty days or any extension thereof the proceedings and judgment in said cause shall bind the United States and the parties thereto to the same extent as though no Indian land or question were involved. * * * Provided, That within twenty days after the service of such notice on the Superintendent for the Five Civilized Tribes or within such extended time as the trial court in its discretion may permit the United States may be, and hereby is, given the right to remove any such suit pending in a State court to the United States district court by filing in such suit in the State court a petition for the removal of such suit into the said United States district court, to be held in the district where such suit is pending, together with the certified copy of the pleadings in such suit served on the Superintendent for the Five Civilized Tribes as hereinbefore provided. It shall then be the duty of the State court to accept such petition and proceed no further in said suit. * * *' See United States v. Rice, 327 U.S. 742, 66 S.Ct. 835, 90 L.Ed. 982; Cf. Pub.L. No. 336, 80th Cong., 1st Sess. (Aug. 4, 1947) § 3(c); H.R.Rep. No. 740, 80th Cong., 1st Sess., p. 4. 2 Sec. 1 provides: 'That a determination of the question of fact as to who are the heirs of any deceased citizen allottee of the Five Civilized Tribes of Indians who may die or may have heretofore died, leaving restricted heirs, by the probate court of the State of Oklahoma having jurisdiction to settle the estate of said deceased, conducted in the manner provided by the laws of said State for the determination of heirship in closing up the estates of deceased persons, shall be conclusive of said question. * * *' Sec. 2 provides: 'That the lands of full-blood members of any of the Five Civilized Tribes are hereby made subject to the laws of the State of Oklahoma, providing for the partition of real estate. Any land allotted in such proceedings to a full-blood Indian, or conveyed to him upon his election to take the same at the appraisement, shall remain subject to all restrictions upon alienation and taxation obtaining prior to such partition. In case of a sale under any decree, or partition, the conveyance thereunder shall operate to relieve the land described of all restrictions of every character.' 3 It isw ell-settled that Congress has authority to select state agencies to perform such functions. United States v. Hellard, supra, at page 365 of 322 U.S., at page 986 of 64 S.Ct. 4 The Act of April 12, 1926, provides in part: 'The death of any allottee of the Five Civilized Tribes shall operate to remove all restrictions upon the alienation of said allottee's land: Provided, That hereafter no conveyance by any full-blood Indian of the Five Civilized Tribes of any interest in lands restricted by section 1 of this Act acquired by inheritance or devise from an allottee of such lands shall be valid unless approved by the county court having jurisdiction of the settlement of the estate of the deceased allottee or testator. * * *' See also Pub.L. No. 336, 80th Cong., 1st Sess., Aug. 4, 1947, § 1, 61 Stat. 731. We do not have before us the question as to whether or not the United States is a necessary party to a proceeding to obtain court approval of a deed under the 1926 Act. 5 See § 1 of the 1918 Act, note 2, supra. 6 See Sen.Rep. No. 330, 65th Cong., 2d Sess., p. 1. 7 Subsequent to the institution of these heirship proceedings, and after the decision in the Hellard case, Congress marked this distinction by providing that the Oklahoma state courts should have exclusive jui sdiction in all actions to determine heirship under § 1 of the 1918 Act and that the United States is not a necessary or indispensable party to such proceedings. § 3(a) and (b) of Pub.L. No. 336, 80th Cong., 1st Sess., Aug. 4, 1947, 61 Stat. 732. Moreover, Congress by § 3 of the Act of July 2, 1945, 59 Stat. 313, 314, provided that no order, judgment or decree in partition made subsequent to the 1918 Act and prior to the 1945 Act and involving inherited restricted lands of enrolled and unenrolled members of the Five Civilized Tribes nor any conveyance pursuant thereto should be invalid because the United States was not a party or was not served with any notice or process in connection therewith.
12
333 U.S. 571 68 S.Ct. 708 92 L.Ed. 886 PARKERv.PEOPLE OF STATE OF ILLINOIS. No. 270. Argued Feb. 13, 1948. Decided April 5, 1948. Rehearing Denied May 3, 1948. Mr. Harrison Parker, pro se. Mr. William C. Wines, of Chicago, Ill., for respondent. Mr. Justice DOUGLAS, delivered the opinion of the Court. 1 Petitioner, who was engaged in litigation in the Illinois courts with one Shamberg, was ordered on a motion for discovery to produce certain documents. He produced them by filing them with the clerk of the Illinois courts. Shamberg thereupon moved that petitioner be punished for contempt because the documents reflected on the integrity of the court. After a hearing petitioner was adjudged guilty of contempt. The court held that the order required only that petitioner produce the documents, not that he file them in court so as to make them public records; and that the filing of the documents containing statements deemed to be scurrilous constituted an obstruction of justice and an abuse of the processes of the court, tending to lessen the court's dignity and authority.1 Petitioner was sentenced to jail for 90 days. That was on January 15, 1945. Petitioner thereupon sought a writ of error in the Illinois Supreme Court for review of the order of January 15. The writ ofe rror was refused on January 23, 1945. Later in the same day the trial court, over petitioner's objection and in his presence, issued an amended order adjudging him guilty of contempt and sentencing him to jail for 90 days. This amendment was made, it is said, to cure certain defects in the order of January 15 and to bring it into conformity with the requirements of Illinois law. 2 The amended order of January 23 is the one before us. Petitioner did not seek to take it directly to the Illinois Supreme Court. Rather, he took it first to the Appellate Court of Illinois where he sought to attack it on the grounds, inter alia, that it violated the First and Fourteenth Amendments of the Federal Constitution. But the Illinois Appellate Court did not consider those constitutional questions. It sustained the amended order of January 23 on state grounds. 328 Ill.App. 46, 65 N.E.2d 457. On writ of error the Illinois Supreme Court affirmed the judgment of the Appellate Court. 396 Ill. 583, 72 N.E.2d 848. It likewise did not consider the constitutional questions which petitioner presented. For it is well-settled law in Illinois that if an appellant takes his case to the Appellate Court where errors are assigned of which that court has jurisdiction, he is deemed to have waived any constitutional questions. People v. Rosenthal, 370 Ill. 244, 247, 18 N.E.2d 450, 125 A.L.R. 1271; People v. McDonnell, 377 Ill. 568, 569, 37 N.E.2d 159. That was the reason neither of the courts below passed on the federal constitutional questions tendered by petitioner.2 See 328 Ill.App. 46, 55, 65 N.E.2d 457; 396 Ill. 583, 587, 72 N.E.2d 848. The circumstance that the petitioner had taken the order of January 15 directly to the Illinois Supreme Court did not cause that Court to except this case from that well-settled rule of Illinois practice. 3 This Court held in Central Union Telephone Co. v. City of Edwardsville, 269 U.S. 190, 46 S.Ct. 90, 70 L.Ed. 229, that federal constitutional questions which Illinois held had been waived for failure to follow its procedure would not be entertained here. The nature of the questions presented in the present case seemed to us to warrant a grant of the petition for writ of certiorari to determine whether the rule of the Edwardsville case was applicable to the peculiar circumstances presented here. 4 When federal rights are involved, it is of course, for this Court finally to determine whether the failure to follow the procedure designed by a State for their protection constitutes a waiver of them. Davis v. O'Hara, 266 U.S. 314, 45 S.Ct. 104, 69 L.Ed. 303; Central Union Telephone Co. v. City of Edwardsville, supra. The Court said in the Edwardsville case that when the waiver is founded on a failure to comply with the appellate practiceof a State the question turns on whether that practice gives litigants 'a reasonable opportunity to have the issue as to the claimed right heard and determined' by the state court. 269 U.S. pages 194, 195, 46 S.Ct. at page 91, 70 L.Ed. 229. It was there held that the Illinois practice of requiring constitutional questions to be taken directly to the Illinois Supreme Court and of refusing to review them if review was first sought in the Appellate Court satisfied the requirement. We adhere to that decision. The channel through which the constitutional questions, raised by petitioner in his attack on the amended order, could have been taken all the wy to this Court was not only clearly marked, it was also open and unobstructed. 5 Petitioner appears here pro se. But at the critical stages of this litigation he was represented by counsel of record. For the lawyer the choice was plain. Under these circumstances petitioner plainly had a reasonable opportunity to have his federal questions passed upon by the state court. When petitioner acting through counsel decided to seek review in the Appellate Court he made a choice which involved abandonment of the constitutional issues which he had raised in the proceedings. There is a suggestion that petitioner deemed it useless to try to take the amended order of January 23 to the Illinois Supreme Court since access to that court had been denied him when review of the order of January 15 was sought. But even though the attempt may have seemed futile,3 it was only by first seeking review in the Illinois Supreme Court that he could bring to this Court the constitutional questions raised under the amended order of January 23. It is not an answer to say that he went to the Illinois Supreme Court for review of the order of January 15.4 That is not the order under which he stands committed; it is not the order reviewed by the Illinois Supreme Court in this case. Nor could denial by the Illinois Supreme Court of his petition for a review of that earlier order have been the foundation for this petition for certiorari. Review of that order was denied by the Illinois Supreme Court on January 23, 1945. Petition for certiorari was filed here August 15, 1947. His petition for certiorari is not timely if it challanges the earlier order.5 It presents federal questions which have been waived if it involves, as it plainly does, the amended order. 6 The result is no different if the orders are treated as being the same in substance though separate in point of time and form. For if the January 15 order be regarded as merely an interlocutory version of the amended order of January 23, the fact remains that the latter order was not taken directly to the Illinois Supreme Court but to the Illinois Appellate Court, with the consequences we have indicated. We find it no more unreasonable for Illinois to require a second appeal than for this Court to do so, as it does when it refuses to review the judgment of a lower state court absent a second appeal to the highest court of the State, though that be a mere formality because governed by the law of the case established in an earlier appeal. McComb v. County Commissioners of Knox County, 91 U.S. 1, 23 L.Ed. 185; Great Western Telegraph Co. v. Burnham, 162 U.S. 339, 16 S.Ct. 850, 40 L.Ed. 991. 7 It is suggested that in this case there could be no final judgment within the meaning of § 237 of the Judicial Code, 28 U.S.C. § 344, 28 U.S.C.A. § 344, which could be brought here by certiorari until all questions of state law had been resolved by the Illinois courts. But there would be nothing other than ministerial acts left to be done by the trial court once the Illinois Supreme Court denied direct review of the order. Cf. Richfield Oil Corporation v. State Board of Equalization, 329 U.S. 69, 72, 73, 67 S.Ct. 156, 158. Any further proceedings in the Illinois courts would be solely at the option of petitioner. In these circumstances, a judgment is no less final for purposes of our jurisdictional statute because it has been sustained solely on federal constitutional grounds.6 That consequence is inherent in the rule formulated in Central Union Telephone Co. v. Cityo f Edwardsville, supra. 8 Affirmed. 9 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK and Mr. Justice MURPHY agree, dissenting. 10 Petitioner has been held in contempt and sentenced to imprisonment for complying with an order of court to produce specified documents. Technically he was ordered to show cause why the documents should not be produced. After his objections to that order were overruled he complied by bringing the documents into court and filing them with the clerk.1 Thereupon he was cited for contempt because the documents reflected on the court's integrity and was sentenced to 90 days in jail. 11 Whether or not the documents would have given ground for punishment if they had been published voluntarily by petitioner,2 the effect of the contempt judgment coupled with that of the order for production3 has been first to compel petitioner to publish the statements by filing them and then to send him to jail for obeying the court's order. Cf. Entick v. Carrington, 19 How.St.Tr. 1029, 1073. I know of no constitutional power which permits a state to force a citizen into such a dilemma, and I think the most elementary conception of due process under the Fourteenth Amendment forbids any such action. 12 Yet this Court now acquiesces in this substantial and unconstitutional deprivation of petitioner's liberty by accepting an asserted procedural waiver of petitioner's substantive rights which, in my opinion, no more comports with basic conceptions of due process than does the substantive order for commitment. Constitutional rights may be nullified quite as readily and completely by hypertechnical procedural obstructions to their effective assertion and maintenance as by outright substantive denial. Marino v. Ragen, 332 U.S. 561, concurring opinion at page 563, 68 S.Ct. 240, at page 241. 13 The entire basis of the Court's action is that the original contempt order of January 15 and the so-called amended order of January 23 are different orders; petitioner is deemed to have waived his constitutional rights by taking an appeal from the latter order to the Illinois Appellate Court rather than to the Illinois Supreme Court. The case seems simple because it is said to be 'wel -settled Illinois law' that both federal and state constitutional rights are waived by taking this appellate route, and because this Court has previously determined that this appellate practice gives litigants a reasonable opportunity to be heard. See Central Union Telephone Co. v. City of Edwardsville, 269 U.S. 190, 194, 195, 46 S.Ct. 90, 91, 70 L.Ed. 229. 14 I cannot accept this hypertechnical procedural nullification of constitutional rights in a case involving the liberty of the individual. The original order of January 15 and the so-called amended order are in reality the same order. Moreover, prior to this case there was no 'well-settled Illinois law' to apprise petitioner that his appeal to the intermediate court would constitute a waiver of his rights in circumstances such as these, where he had already sought review of his federal questions in the state supreme court. And finally, even if the contrary had been true, I would not consider this appellate practice reasonable within the doctrine of the Central Union case. 15 Petitioner filed the 'scurrilous affidavits' which led to the contempt order on two different occasions. The first was on January 4 in response to the motion to produce them for inspection. The second was on January 15 as part of his answer to Shamberg's motion for a rule to show cause why he should not be adjudged in contempt for filing documents which he was only required to produce for inspection. On this second occasion the documents were included in the pleadings because relevant to his defense that the statements made therein were true.4 The court adjudged petitioner in contempt for both filings.5 16 In the original contempt order of January 15 the court specifically referred to the fact that the documents had been filed twice before, identified them carefully and stated that they 'should be by reference incorporated in this order and made a part hereof for greater certainty.' At a a ter point in the order the documents were again listed and adjudged to be 'hereby incorporated by reference in this order and made a part hereof with the same force and effect as if set forth herein.' Thus the documents which gave rise to the contempt order were twice made a matter of public record and twice incorporated in the original contempt order. 17 The so-called amended order of January 23 is absolutely identical with the original order with the immaterial exception that the documents in addition to being incorporated in the order by reference were also 'made a part hereof and marked Exhibits 'A' and 'B' respectively.' The reason for the change is probably explained by Illinois cases such as People v. Hogan, 256 Ill. 496, 100 N.E. 177, holding that the record on review of a contempt order is limited to the order itself. But respondent has not called our attention to any Illinois cases holding that incorporation of matter of public record into an order by reference is insufficient to make that matter part of the order. Indeed this very proceeding indicates that this requirement is not strictly applied. For the Illinois Appellate Court set aside one order adjudging petitioner in contempt for the tone of his answer to a certain pleading filed by Shamberg on the ground that the charges in Shamberg's pleading, which was not made a part of the contempt order justified the tone of the answer. 328 Ill.App. 46, 60—68, 65 N.E.2d 457. But even if it is assumed that the amendment was necessary to satisfy the requirements of Illinois law it was of such a trivial and ministerial nature that it obviously did not affect the merits of petitioner's constitutional allegations. 18 When petitioner sought review of the original contempt order in the Supreme Court of Illinois he obtained the only review of those constitutional contentions which the state procedure offered him. That court by denying the writ of error must be presumed to have passed on the merits of the constitutional questions in the case. It is inconceivable that the supreme court would have passed on them any differently if review of the so-called amanded order had later been requested. For, as far as that court is concerned, it is likely that the law of the case as to the constitutional issues was already settled. But even if it were taken that the supreme court might have reversed its decision, the fact remains that the so-called amended order was the same order as the original January 15 order of which review had already been denied. Petitioner is deemed to have waived his federal constitutional rights not because he failed to seek review in the supreme court, but because he failed to do so twice. 19 It is definitely not 'well-settled Illinois law' that a waiver results in these circumstances. In all of the cases cited in the opinion of the Court and in respondent's brief the petitioner initially sought review in the intermediate appellate court. In none did he do so only after having the state supreme court deny as application for review. There is no 'well-settled Illinois law' to the effect that two applications to the state supreme court must be made in order to avoid waiver of constitutional rights. And if such a requirement did exist it certainly would not be reasonable.6 Consequently I am unable to agree that the doctrine of waiver applied here to deprive a man of his personal freedom in violation of his constitutional rights is a reasonable state procedure within the Central Union case.7 20 By stating that the petition for certiorari is not timely if it challenges the original order, the Court repeats its mistake of treating the so-called amended order as something entirely separate and distinct from the original contempt order. But with the two orders viewed as the same, there is clearly no question of timeliness. For the denial of writ of error by the Illinois Supreme Court left state issues that went to the core of the litigation for determination by appeal through the intermediate state court. The situation therefore is not the one presented in Richfield Oil Corporation v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156, where the only things remaining to be done were ministerial acts in the trial court. Here, even if nothing more was left for the trial court to do, a great deal more was left to be done by the Illinois Appellate Court, namely, to review and determine all questions of state law presented in the case.8 The Richfield decision had no relation to a split procedure for review in the state courts such as this, sending federal questions to one tribunal and state questions to another. Until the final judgment was entered by the Supreme Court of Illinois on May 19, 1947, in review of the Illinois Appellate Court's judgment, the core of the litigation had not been terminated 'by fully determining the rights of the parties.' Gospel Army v. City of Los Angeles, 331 U.S. 543, 546, 67 S.Ct. 1428, 1430. For only then were the state questions finally adjudicated. Hence any earlier application for certiorari would have met with the insuperable obstacle that we were without jurisdiction, for want of any final judgment.9 21 Petitioner was thus placed in a second dilemma, arising in the appellate stage of the state proceedings. He first followed the only course afforded by the state procedure for securing review of his federal constitutional questions. When they were determined against him he was barred from coming here because state questions remained to be decided by the intermediate appellate court and thus as a matter of federal law under our decisions the judgment was not final. In order to surmount this jurisdictional hurdle petitioner then went to the only place he could go, the intermediate appellate court. When it decided the state issues against him, he took the necessary further step of going again to the state supreme court. Its adverse decision finally closed the trap upon him. For the first time a judgment dispositive of the whole controversy was rendered, and thus the way opened under federal law for review of the federal questions here. But at the same instant that door was closed, by application of the Illinois rule that taking appeal to the intermediate court 'waived' petitioner's federal rights. And that ruling held on his application for rehearing. 22 I can imagine no better way to annihilate constitutional rights, both substantively and procedurally, than thus dovetailing federal jurisdictional limitations with state procedural ones. To secure review of federal questions here, petitioner mus exhaust his state remedies. But if he exhausts those remedies he 'waives' the federal questions. 23 This is not waiver. It is nullification. I do not think Congress intended to countenance such a denial by the requirement of finality or that its effect in conjunction with state procedures, should be to cut off the very rights which the jurisdictional authorization for reviewing final judgments was enacted to safeguard. 24 The issue of federal procedure in this case is not one of timeliness. It is rather one of finality, now applied to deny rather than to assure review in protection of personal liberty from invasion by unconstitutional state action. Central Union Telephone Co. v. City of Edwardsville, supra, contemplated no such paradox.10 Nor, to my knowledge, has any other decision of this Court. As a matter of federal procedure petitioner did not waive his constitutional rights either by failing to seek certiorari from the Illinois Supreme Court's judgment of January 23, 1945, or by taking the necessary steps to seek the writ when he appealed to the state intermediate appellate court. 25 The judgment of the Illinois Supreme Court should be reversed. 1 The contents of the documents are reviewed in 328 Ill.App. 46, 50—54, 65 N.E.2d 457. 2 Constitutional questions are to be reviewed directly by the Illinois Supreme Court. Ill.Rev.Stat. c. 110, § 199 (1947). As held in this case those include questions arising under the Federal Constitution. And see Central Union Telephone Co. v. City of Edwardsville, 269 U.S. 190, 194, 46 S.Ct. 90, 70 L.Ed. 229. The procedure is applicable in criminal as well as civil cases. People v. Terrill, 362 Ill. 61, 199 N.E. 97; People v. Rosenthal, supra; People v. McDonnell, supra. 3 Cf. Great Western Telegraph Co. v. Burnham, 162 U.S. 339, 16 S.Ct. 850, 40 L.Ed. 991. 4 The writ of error by which petitioner challenged the order of January 15 does not appear in the present record. We assume most favorably to petitioner that the same constitutional questions were presented there as petitioner seeks to have adjudicated here. 5 Sec. 8(a) of the Judiciary Act of February 13, 1925, 43 Stat. 936, 940, 28 U.S.C. § 350, 28 U.S.C.A. § 350. 6 If, on the other hand, direct review of the amended order were obtained in the Illinois Supreme Court, that court would pass not only upon the constitutional questions but upon all other questions as well. Groome v. Freyn Engineering Co., 374 Ill. 113, 28 N.E.2d 274; People v. Kelly, 367 Ill. 616, 618, 12 N.E.2d 612; Geiger v. Merle, 360 Ill. 497, 505, 507, 196 N.E. 497. 1 At this time petitioner was not represented by counsel and there was a slight deviation from a strictly accurate compliance with the court's directive. But even if he had had counsel, the deviation was minuscule. It could not have furnished a sufficient basis, without more, for sustaining an order of contempt and commitment as for disobedience. The court's order indeed did not rest on any such ground. It rested rather on the grounds that the 'filing of said scurrilous affidavit and exhibits * * * constitutes an obstruction of justice and an abuse of the (court's) processes, and tended to lessen (its) dignity and authority * * *.' Obviously the mere filing of documents not scurrilous could have given no ground for entering or sustaining such an order. Cf. note 3. 2 Cf. Craig v. Harney, 331 U.S. 367, 67 S.Ct. 1249; Pennekamp v. Florida, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295; Bridges v. State of California, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346. 3 The state makes a weak effort to avoid the order's effect by attempting to distinguish between an order to show cause why the documents should not be produced and one for their production. We have been cited to no authority holding that in Illinois the order to show cause does not have the effect of an order for production if cause is not shown or, in that event, would not support an order of contempt for failing to produce. 4 Petitioner never obtained a hearing on the truth of the statements in the documents even though that issue was relevant to the merits of the slander action against Shamberg which gave rise to the contempt proceedings. Since this slander action was dismissed on the merits without trial, it is of interest that the Illinois Appellate Court pointed out in review of the contempt order discussed in note 5 infra: 'When Shamberg's petition is considered in the light of the fact that Parker had demanded a jury trial in the slander case, it seems reasonably clear that the trial court should not have ruled Parker to answer the petition, as the evident purpose of that pleading was to have the trial court prejudge facts that Parker insisted should be submitted to a jury.' 328 Ill.App. 46, 63, 65 N.E.2d 457, 464. 5 On January 23 the court also issued an additional contempt order based on the tone of petitioner's answer to still another motion filed by Shamberg asking that petitioner be placed in contempt for not producing all of the documents listed in the motion to produce. This contempt order was set aside by the Illinois Appellate Court. See note 4 supra. Among other things that court stated: '(Shamberg's) petition is a highly provocative pleading, and Shamberg probably intended that it should have that effect. There is some force in the contention of Parker that the petition was designed to provoke him into making some answer or statement that would subject him to criminal prosecution or contempt proceedings. There is also force in Parker's argument that if the statements he made in his answer, upon which Shamberg now relies, constitute contempt of court, why did not the many charges made against Parker in the petition also constitute contempt of court? * * * We think that when the statements made by Parker in his answer are considered in the light of the serious charges that were made against Parker and the Puritan Church in the petition, the answer seems to be a fairly temperate pleading.' 328 Ill.App. 46, 67, 68, 65 N.E.2d 457, 466. 6 Even the opinions of the Illinois appellate courts in this proceeding would not enlighten future litigants because they do not mention the fact that writ of error was denied by the supreme court before review in the appellate court was sought. See 328 Ill.App. 46, 65 N.E.2d 457 and 396 Ill. 583, 72 N.E.2d 848. 7 That case declared that the state procedure 'should bind us, unless so unfair or unreasonable in its application to those asserting a federal right as to obstruct it.' 269 U.S. 190, 195, 46 S.Ct. 90, 91,7 0 L.Ed. 229. 8 These questions are discussed in 328 Ill.App. 46, 65 N.E.2d 457 and 396 Ill. 583, 72 N.E.2d 848. 9 Cf. Prudential Ins. Co. of America v. Cheek, 252 U.S. 567, 40 S.Ct. 343, 64 L.Ed. 719; Id., 259 U.S. 530, 42 S.Ct. 516, 66 L.Ed. 1044, 27 A.L.R. 27. It has been suggested that on the record we cannot ascertain whether the Illinois Supreme Court's denial of review of the order of January 15th was on federal or state grounds. But when the only purpose of review under state law can be to secure decision of federal questions and no more appears from the state court's order than that the application for review was denied, this Court has refused to allow a presumption that the denial was on state grounds only to cut off review here of federal constitutional questions determinative of the citizen's liberty. Williams v. Kaiser, 323 U.S. 471, 478, 65 S.Ct. 363, 367, 89 L.Ed. 398, and authorities cited. 10 It is suggested that the Central Union case implicitly held that a judgment of the Illinois Supreme Court adjudicating the federal issues in a case is final even though state issues remain unresolved. That case, however, was decided on the express assumption that the Illinois Supreme Court would pass on the federal question 'together with all the other questions in the case.' 269 U.S. 190, 195, 46 S.Ct. 90, 91, 70 L.Ed. 229. (Emphasis added.) Of course the state supreme court judgment is final when it settles all the state issues as well as the federal issues.
34
333 U.S. 591 68 S.Ct. 715 92 L.Ed. 898 COMMISSIONER OF INTERNAL REVENUEv.SUNNEN. No. 227. Argued Dec. 17, 1947. Decided April 5, 1948. [Syllabus from pages 591-593 intentionally omitted] Mr. Arnold Raum, of Washington, D.C., for petitioner. Mr. C. Powell Fordyce, of St. Louis, Mo., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 The problem of the federal income tax consequences of intra-family assignments of income is brought into focus again by this case. 2 The stipulated facts concern the taxable years 1937 to 1941, inclusive, and may be summarized as follows: 3 The respondent taxpayer was an inventor-patentee and the president of the Sunnen Products Company, a corporation engaged in the manufacture and sale of patented grinding machines and other tools. He held 89% or 1,780 out of a total of 2,000 shares of the outstanding stock of the corporation. His wife held 200 shares, the vice-president held 18 shares and two others connected with the corporation held one share each. The corporation's board of directors consisted of five members, including the taxpayer and his wife. This board was elected annually by the stockholders. A vote of three directors was required to take binding action. 4 The taxpayer had entered into several non-exclusive agreements whereby the corporation was licensed to manufacture and sell various devices on which he had applied for patents.1 In return, the corporation agreed to pay to the taxpayer a royalty equal to 10% of the gross sales price of the devices. These agreements did not require the corporation to manufacture and sell any particular number of devices; nor did they specify a minimum amount of royalties. Each party had the right to cancel the licenses, without liability, by giving the other party written notice of either six months or a year.2 In the absence of cancellation, the agreements were to continue in force for ten years. The board of directors authorized the corporation to execute each of these contracts. No notices of cancellation were given. Two of the agreements were in effect throughout the taxable years 1937— 1941, while the other two were in existence at all pertinent times after June 20, 1939. 5 The taxpayer at various times assigned to his wife all his right, title and interest in the various license contracts.3 She was given exclusive title and power over the royalties accruing under these contracts. All the assignments were without consideration and were made as gifts to the wife, those occurring after 1932 being reported by the taxpayer for gift tax purposes. The corporation was notified of each assignment. 6 In 1937 the corporation, pursuant to this arrangement, paid the wife royalties in the amount of $4,881.35 on the license contract made in 1928; no other royalties on that contract were paid during the taxable years in question. The wife received royalties from other contracts totaling $15,518,68 in 1937, $17,318.80 in 1938, $25,243.77 in 1939, $50,492,50 in 1940, and $149,002.78 in 1941. She included all these payments in her income tax returns for those years, and the taxes she paid thereon have not been refunded. 7 Relying upon its own prior decision in Estate of Dodson v. Commissioner, 1 T.C. 416,4 the Tax Court held that, with one exception, all the royalties paid to the wife from 1937 to 1941 were part of the taxable income of the taxpayer. 6 T.C. 431. The one exception concerned the royalties of $4,881.35 paid in 1937 under the 1928 agreement. In an earlier proceeding in 1935, the Board of Tax Appeals dealt with the taxpayer's income tax liability for the years 1929—1931; it concluded that he was not taxable on ther oyalties paid to his wife during those years under the 1928 license agreement. This prior determination by the Board caused the Tax Court to apply the principle of res judicata to bar a different result as to the royalties paid pursuant to the same agreement during 1937. 8 The Tax Court's decision was affirmed in part and reversed in part by the Eighth Circuit Court of Appeals. 161 F.2d 171. Approval was given to the Tax Court's application of the res judicata doctrine to exclude from the taxpayer's income the $4,881.35 in royalties paid in 1937 under the 1928 agreement. But to the extent that the taxpayer had been held taxable on royalties paid to his wife during the taxable years of 1937-1941, the decision was reversed on the theory that such payments were not income to him. Because of that conclusion, the Circuit Court of Appeals found it unnecessary to decide the taxpayer's additional claim that the res judicata doctrine applied as well to the other royalties (those accruing apart from the 1928 agreement) paid in the taxable years. We then brought the case here on certiorari, the Commissioner alleging that the result below conflicts with prior decisions of this Court. 9 If the doctrine of res judicata is properly applicable so that all the royalty payments made during 1937-1941 are governed by the prior decision of the Board of Tax Appeals, the case may be disposed of without reaching the merits of the controversy. We accordingly cast our attention initially on that possibility, one that has been explored by the Tax Court and that has been fully argued by the parties before us. 10 It is first necessary to understand something of the recognized meaning and scope of res judicata, a doctrine judicial in origin. The general rule of res judicata applies to repetitious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound 'not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.' Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195. The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment. See von Moschzisker, 'Res Judicata,' 38 Yale L.J. 299; Restatement of the Law of Judgments, §§ 47, 48. 11 But where the second action between the same parties is upon a different cause or demand, the principle of res judicata is applied much more narrowly. In this situation, the judgment in the prior action operates as an estoppel, not as to matters which might have been litigated and determined, but 'only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.' Cromwell v. County of Sac, supra, 353 of 94 U.S. And see Russell v. Place, 94 U.S. 606, 24 L.Ed. 214; Southern Pacific R. Co.v . United States, 168 U.S. 1, 48, 18 S.Ct. 18, 27, 42 L.Ed. 355; Mercoid Corp. v. Mid-Continent Co., 320 U.S. 661, 671, 64 S.Ct. 268, 273, 88 L.Ed. 376. Since the cause of action involved in the second proceeding is not swallowed by the judgment in the prior suit, the parties are free to litigate points which were not at issue in the first proceeding, even though such points might have been tendered and decided at that time. But matters which were actually litigated and determined in the first proceeding cannot later be relitigated. Once a party has fought out a matter in litigation with the other party, he cannot later renew that duel. In this sense, res judicata is usually and more accurately referred to as estoppel by judgment, or collateral estoppel. See Restatement of the Law of Judgments, §§ 68, 69, 70; Scott, 'Collateral Estoppel by Judgment,' 56 Harv.L.Rev. 1. 12 These same concepts are applicable in the federal income tax field. Income taxes are levied on an annual basis. Each year is the origin of a new liability and of a separate cause of action. Thus if a claim of liability or non-liability relating to a particular tax year is litigated, a judgment on the merits is res judicata as to any subsequent proceeding involving the same claim and the same tax year. But if the later proceeding is concerned with a similar or unlike claim relating to a different tax year, the prior judgment acts as a collateral estoppel only as to those matters in the second proceeding which were actually presented and determined in the first suit. Collateral estoppel operates, in other words, to relieve the government and the taxpayer of 'redundant litigation of the identical question of the statute's application to the taxpayer's status.' Tait v. Western Md. R. Co., 289 U.S. 620, 624, 53 S.Ct. 706, 707, 77 L.Ed. 1405. 13 But collateral estoppel is a doctrine capable of being applied so as to avoid an undue disparity in the impact of income tax liability. A taxpayer may secure a judicial determination of a particular tax matter, a matter which may recur without substantial variation for some years thereafter. But a subsequent modification of the significant facts or a change or development in the controlling legal principles may make that determination obsolete or erroneous, at least for future purposes. If such a determination is then perpetuated each succeeding year as to the taxpayer involved in the original litigation, he is accorded a tax treatment different from that given to other taxpayers of the same class. As a result, there are inequalities in the administration of the revenue laws, discriminatory distinctions in tax liability, and a fertile basis for litigious confusion. Compare United States v. Stone & Downer Co., 274 U.S. 225, 235, 236, 47 S.Ct. 616, 71 L.Ed. 1013. Such consequences, however, are neither necessitated nor justified by the principle of collateral estoppel. That principle is designed to prevent repetitious lawsuits over matters which have once been decided and which have remained substantially static, factually and legally. It is not meant to create vested rights in decisions that have become obsolete or erroneous with time, thereby causing inequities among taxpayers. 14 And so where two cases involve income taxes in different taxable years, collateral estoppel must be used with its limitations carefully in mind so as to avoid injustice. It must be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged. Tait v. Western Md. R. Co., supra. If the legal matters determined in the earlier case differ from those raised in the second case, collateral estoppel has no bearing on the situation. See Travelers Ins. Co. v. Commissioner, 2 Cir., 161 F.2d 93. And where the situation is vitally altered between the time of the first judgment and the second, the prior determination is not conclusv e. See State Farm Ins. Co. v. Duel, 324 U.S. 154, 162, 65 S.Ct. 573, 577, 89 L.Ed. 812; 2 Freeman on Judgments, 5th Ed. 1925, § 713. As demonstrated by Blair v. Commissioner, 300 U.S. 5, 9, 57 S.Ct. 330, 331, 81 L.Ed. 465, a judicial declaration intervening between the two proceedings may so change the legal atmosphere as to render the rule of collateral estoppel inapplicable.5 But the intervening decision need not necessarily be that of a state court, as it was in the Blair case. While such a state court decision may be considered as having changed the facts for federal tax litigation purposes, a modification or growth in legal principles as enunciated in intervening decisions of this Court may also effect a significant change in the situation. Tax inequality can result as readily from neglecting legal modulations by this Court as from disregarding factual changes wrought by state courts. In either event, the supervening decision cannot justly be ignored by blind reliance upon the rule of collateral estoppel. Henricksen v. Seward, 9 Cir., 135 F.2d 986, 988, 989, 150 A.L.R. 1; Pelham Hall Co. v. Hassett, 1 Cir., 147 63, 68, 69; Commissioner v. Arundel-Brooks Concrete Corp., 4 Cir., 152 F.2d 225, 227, 162 A.L.R. 1200; Corrigan v. Commissioner, 6 Cir., 155 F.2d 164, 165; and see West Coast Life Ins. Co. v. Merced Irr. Dist., 9 Cir., 114 F.2d 654, 661, 662; contra: 'Commissioner v. Western Union Tel. Co., 2 Cir., 141 F.2d 774, 778. It naturally follows that an interposed alternation in the pertinent statutory provisions or Treasury regulations can make the use of that rule unwarranted. Tait v. Western Md. R. Co., supra, 625 of 289 U.S., 53 S.Ct. 706.6 15 Of course, where a question of fact essential to the judgment is actually litigated and determined in the first tax proceeding, the parties are bound by that determination in a subsequent proceeding even though the cause of action is different. See Evergreens v. Nunan, 2 Cir., 141 F.2d 927. And if the very same facts and no others are involved in the second case, a case relating to a different tax year, the prior judgment will be conclusive as to the same legal issues which appear, assuming no intervening doctrinal change. But if the relevant facts in the two cases are separable, even though they be similar or identical, collateral estoppel does not govern the legal issues which recur in the second case.7 Thus the second proceeding may involve an instrument or transaction identical with, but in a form separable from, the one dealt with in the first proceeding. In that situation, a court is free in the second proceeding to make an independent examination of the legal matters at issue. It may then reach a different result or, if consistency in decision is considered just and desirable, reliance may be placed upon the ordinary rule of stare decisis. Before a party can invoke the collateral estoppel doctrine in these circumstances, the legal matter raised in the second proceeding must involve the same set of events or documents and the same bundle of legal principles that contributed to the rendering of the first judgment. Tait v. Western Maryland R. Co., supra. And see Griswold, 'Res Judicata in Federal Tax Cases,' 46 Yale L.J. 1320; Paul and Zimet, 'Res Judicata in Federal Taxation,' appearing in Paul, Selected Studies in Federal Taxation, 2d series, 1938, p. 104. 16 It is readily apparent in this case that the royalty payments growing out of the license contracts which were not involved in the earlier action before the Board of Tax Appeals and which concerned different tax years are free from the effects of the collateral estoppel doctrine. That is true even though those contracts are identical in all important respects with the 1928 contract, the only one that was before the Board, and even though the issue as to those contracts is the same as that raised by the 1928 contract. For income tax purposes, what is decided as to one contract is not conclusive as to any other contract which is not then in issue, however similar or identical it may be. In this respect, the instant case thus differs vitally from Tait v. Western Md. R. Co., supra, where the two proceedings involved the same instruments and the same surrounding facts. 17 A more difficult problem is posed as to the $4,881.35 in royalties paid to the taxpayer's wife in 1937 under the 1928 contract. Here there is complete identity of facts, issues and parties as between the earlier Board proceeding and the instant one. The Commissioner claims, however, that legal principles developed in various intervening decisions of this Court have made plain the error of the Board's conclusion in the earlier proceeding, thus creating a situation like that involved in Blair v. Commissioner, supra. This change in the legal picture is said to have been brought about by such cases as Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788; Helvering v. Horst, 311 U.S. 112, 61 S.Ct. 144, 85 L.Ed. 75, 131 A.L.R. 655; Helvering v. Eubank, 311 U.S. 122, 61 S.Ct. 149, 85 L.Ed. 81; Harrison v. Schaffner, 312 U.S. 579, 61 S.Ct. 759, 85 L.Ed. 1055; Commissioner v. Tower, 327 U.S. 280, 66 S.Ct. 532, 90 L.Ed. 670; and Lusthaus v. Commissioner, 327 U.S. 293, 66 S.Ct. 539, 90 L.Ed. 679. These cases all imposed income tax liability on transferors who had assigned or transferred various forms of income to others within their family groups, although none specifically related to the assignment of patent license contracts between members of the same family. It must therefore be determined whether this Clifford-Horst line of cases represents an intervening legal development which is pertinent to the problem raised by the assignment of the 1928 agreement and which makes manifest the error of the result reached in 1935 by the Board. If that is the situation, the doctrine of collateral estoppel becomes inapplicable. A difference result is then permissible as to the royalties paid in 1937 under the agreement in question. But to determine whether the Clifford-Horst series of cases has such an effect on the instant proceeding necessarily requires inquiry into the merits of the controversy growing out of the various contract assignments from the taxpayer to his wife. To that controversy we now turn.8 payments accruing thereunder, such payments would clearly have been taxable income to him. It has long been established that the mere assignment of the right to receive income is not enough to insulate the assignor from income tax liability. Lucas v. Earl, 281 U.S. 111, 50 S.Ct. 241, 74 L.Ed. 731; Burnet v. Leininger, 285 U.S. 136, 52 S.Ct. 345, 76 L.Ed. 665. As long as the assignor actually earns the income or is otherwise the source of the right to receive and enjoy the income, he remains taxable. The problem here is whether any different result follows because the taxpayer assigned the underlying contracts to his wife in addition to giving her the right to receive the royalty payments. 18 It is the taxpayer's contention that the license contracts rather than the patents and the patent applications were the ultimate source of the royalty payments and constituted income-producing property, the assignment of which freed the taxpayer from further income tax liability. We deem it unnecessary, however, to meet that contention in this case. It is not enough to trace income to the property which is its true source, a matter which may become more metaphysical than legal. Nor is the tax problem with which we are concerned necessarily answered by the fact that such property, if it can be properly identified, has been assigned. The crucial question remains whether the assignor retains sufficient power and control over the assigned property or over receipt of the income to make it reasonable to treat him as the recipient of the income for tax purposes. As was said in Corliss v. Bowers, 281 U.S. 376, 378, 50 S.Ct. 336, 74 L.Ed. 916; 'taxation is not so much concerned with the refinements of title as it is with actual command over the property taxed—the actual benefit for which the tax is paid.' 19 It is in the realm of intra-family assignments and transfers that the Clifford-Horst line of cases has peculiar applicability. While specifically relating to short-term family trusts, the Clifford case makes clear that where the parties to a transfer are members of the same family group special scrutiny is necessary 'lest what is in reality but one economic unit be multiplied into two or more by devices which, though valid under state law, are not conclusive so far as § 22(a) is concerned.' 309 U.S. at page 335, 60 S.Ct. at page 556, 84 L.Ed. 788. That decision points out various kinds of documented and direct benefits which, if retained by the transferor of property, may cause him to remain taxable on the income therefrom. And it also recognizes that the fact that the parties are intimately related, causing the income to remain within the family group, may make the transfer give rise to informal and indirect benefits to the transferor so as to make it even more clear that it is just to tax him. Even more directly pertinent, however, is the Horst case, together with the accompanying Eubank case. See 2 Mertens, Law of Federal Income Taxation (1942), §§ 18.02, 18.14. It was there held that the control of the receipt of income, which causes an assignor of property to remain taxable, is not limited to situations where the assignee's realization of income depends upon the future rendition of services by the assignor. See Lucas v. Earl, supra; Burnet v. Leininger, supra. Such may also be the case where the assignor controls the receipt of income through acts or services preceding the transfer. Or it may be evidenced by the possibility of some subsequent act by the assignor, or some failure to act, causing the income or property to revert to him. Moreover, the Horst case recognizes that the assignor may realize income if he controls the disposition of that which he could have received himself and diverts payment from himself to the assignee as a means of procuring the satisfaction of his wants, the receipt of income by the assignee mee ly being the fruition of the assignor's economic gain. 20 In Harrison v. Schaffner, supra, 312 U.S. at page 582, 61 S.Ct. at page 761, 85 L.Ed. 1055, it was again emphasized that 'one vested with the right to receive income did not escape the tax by any kind of anticipatory arrangement, however skillfully devised, by which he procures payment of it to another, since, by the exercise of his power to command the income, he enjoys the benefit of the income on which the tax is laid.' And it was also noted that 'Even though the gift of income be in form accomplished by the temporary disposition of the donor's property which produces the income, the donor retaining every other substantial interest in it, we have not allowed the form to obscure the reality.' 312 U.S. at page 583, 61 S.Ct. at page 762, 85 L.Ed. 1055. Commissioner v. Tower, supra, and its companion case, Lusthaus v. Commissioner, supra, reiterated the various principles laid down in the earlier decisions and applied them to income arising from family partnerships. 21 The principles which have thus been recognized and developed by the Clifford and Horst cases, and those following them, are directly applicable to the transfer of patent license contracts between members of the same family. They are guideposts for those who seek to determine in a particular instance whether such an assignor retains sufficient control over the assigned contracts or over the receipt of income by the assignee to make it fair to impose income tax liability on him. 22 Moreover, the clarification and growth of these principles through the Clifford-Horst line of cases constitute, in our opinion, a sufficient change in the legal climate to render inapplicable in the instant proceeding, the doctrine of collateral estoppel relative to the assignment of the 1928 contract. True, these cases did not originate the concept that an assignor is taxable if he retains control over the assigned property or power to defeat the receipt of income by the assignee. But they gave much added emphasis and substance to that concept, making it more suited to meet the 'attenuated subtleties' created by taxpayers. So substantial was the amplification of this concept as to justify a reconsideration of earlier Tax Court decisions reached without the benefit of the expanded notions, decisions which are now sought to be perpetuated regardless of their present correctness. Thus in the earlier litigation in 1935, the Board of Tax Appeals was unable to bring to bear on the assignment of the 1928 contract the full breadth of the ideas enunciated in the Clifford-Horst series of cases. And, as we shall see, a proper application of the principles as there developed might well have produced a different result, such as was reached by the Tax Court in this case in regard to the assignments of the other contracts. Under those circumstances collateral estoppel should not have been used by the Tax Court in the instant proceeding to perpetuate the 1935 viewpoint of the assignment. 23 The initial determination of whether the assignment of the various contracts rendered the taxpayer immune from income tax liability was one to be made by the Tax Court. That is the agency designated by law to find and examine the facts and to draw conclusions as to whether a particular assignment left the assignor with substantial control over the assigned property or the income which accrues to the assignee. And it is well established that its decision is to be respected on appeal if firmly grounded in the evidence and if consistent with the law. Commissioner v. Scottish American Co., 323 U.S. 119, 65 S.Ct. 169, 89 L.Ed. 113; Dobson v. Commissioner, 320 U.S. 489, 60 S.Ct. 239, 88 L.Ed. 248. That is the standard, therefore, for measuring the propriety of the Tax Court's decision on the merits of the controversy in this case. 24 The facts relative to the assignments of the contracts are undisputed. As to the legal foundation of the Tax Court's judgment on the tax consequences of h e assignments, we are unable to say that its inferences and conclusions from those facts are unreasonable in the light of the pertinent statutory or administrative provisions or that they are inconsistent with any of the principles enunciated in the Clifford-Horst line of cases. Indeed, due regard for those principles leads one inescapably to the Tax Court's result. The taxpayer's purported assignment to his wife of the various license contracts may properly be said to have left him with something more than a memory. He retained very substantial interests in the contracts themselves, as well as power to control the payment of royalties to his wife, thereby satisfying the various criteria of taxability set forth in the Clifford-Horst group of cases. That fact is demonstrated by the following considerations: 25 (1) As president, director and owner of 89% of the stock of the corporation, the taxpayer remained in a position to exercise extensive control over the license contracts after assigning them to his wife. The contracts all provided that either party might cancel without liability upon giving the required notice. This gave the taxpayer, in his dominant position in the corporation, power to procure the cancellation of the contracts in their entirety. That power was nonetheless substantial because the taxpayer had but one of the three directors' votes necessary to sanction such action by the corporation. Should a majority of the directors prove unamenable to his desires, the frustration woudl last no longer than the date of the next annual election of directors by the stockholders, an election which the taxpayer could control by reason of his extensive stock holdings. The wife, as assignee and as a party to contracts expressly terminable by the corporation without liability, could not prevent cancellation provided that the necessary notice was given. 26 And it is not necessary to assume that such cancellation would amount to a fraud on the corporation, a fraud which could be enjoined or otherwise prevented. Cancellation conceivably could occur because the taxpayer and his corporation were ready to make new license contracts on terms more favorable to the corporation, in which case no fraud would necessarily be present. All that we are concerned with here is the power to procure cancellation, not with the possibility that such power might be abused. And once it is evident that such power exists, the conclusion is unavoidable that the taxpayer retained a substantial interest in the license contracts which he assigned. 27 (2) The taxpayer's controlling position in the corporation also permitted him to regulate the amount of royalties payable to his wife. The contracts specified no minimum royalties and did not bind the corporation to manufacture and sell any particular number of devices. Hence, by controlling the production and sales policies of the corporation, the taxpayer was able to increase or lower the royalties; or he could stop those royalties completely by eliminating the manufacture of the devices covered by the royalties without cancelling the contracts. 28 (3) The taxpayer remained the owner of the patents and the patent applications. Since the licenses which he gave the corporation were non-exclusive in nature, there was nothing to prevent him from licensing other firms to exploit his patents, thereby diverting some or all of the royalties from his wife. 29 (4) There is absent any indication that the transfer of the contracts effected any substantial change in the taxpayer's economic status. Despite the assignments, the license contracts and the royalty payments accruing thereunder remained within the taxpayer's intimate family group. He was able to enjoy, at least indirectly, the benefits received by his wife. And when that fact is added to the legal controls which he retained over the contracts and the royalties, it can fairly be said that the taxpayer retained the substance of all the rights which he had prior to the assignments. See Hev ering v. Clifford, supra, 309 U.S. at pages 335, 336, 60 S.Ct. at pages 556, 557, 84 L.Ed. 788. 30 There factors make reasonable the Tax Court's conclusion that the assignments of the license contracts merely involved a transfer of the right to receive income rather than a complete disposition of all the taxpayer's interest in the contracts and the royalties. The existence of the taxpayer's power to terminate those contracts and to regulate the amount of the royalties rendered ineffective for tax purposes his attempt to dispose of the contracts and royalties. The transactions were simply a reallocation of income within the family group, a reallocation which did not shift the incidence of income tax liability. 31 The judgment below must therefore be reversed and the case remanded for such further proceedings as may be necessary in light of this opinion. 32 Reversed. 33 Mr. Justice FRANKFURTER and Mr. Justice JACKSON believe the judgment of the Tax Court is based on substantial evidence and is consistent with the law, and would affirm that judgment for reasons stated in Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239, 88 L.Ed. 248, and Commissioner v. Scottish American Co., 323 U.S. 119, 65 S.Ct. 169, 89 L.Ed. 113. 1 The various devices involved were as follows: (1) A cylinder grinder. The taxpayer applied for a patent on Nov. 17, 1927, and was issued one on Dec. 4, 1934. The royalty agreement to manufacture and sell this device was dated Jan. 10, 1928. This agreement expired on Jan. 10, 1938; a renewal agreement in substantially the same terms was then executed for the balance of the life of the patent, which ends on Dec. 4, 1951. (2) A pinhole grinder. The taxpayer applied for a patent on Dec. 4, 1931, and was issued one on June 13, 1933. The royalty agreement to manufacture and sell this device was dated Dec. 5, 1931. (3) A crankshaft grinder. The taxpayer applied for a patent on May 22, 1939, and was issued one on May 6, 1941. The royalty agreement to manufacture and sell this device was dated June 20, 1939. (4) Another crankshaft grinder. The taxpayer applied for a patent on Dec. 29, 1939. He assigned this application to his wife on Dec. 29, 1942, and she was issued a patent on Jan. 26, 1943. The royalty agreement to manufacture and sell this device was dated June 20, 1939. The taxpayer remained the owner of the first three patents throughout the year 1941, and he remained the owner of the patent application on the fourth device throughout that year. 2 Six months' notice was provided in the agreement dated Jan. 10, 1928, covering the cylinder grinder. The other three agreements provided for one year's notice of cancellation. 3 On Jan. 8, 1929, the taxpayer assigned to his wife 'all my rights, title and interest in and to the Royalty Which shall accrue hereafter to me' upon the royalty contract of Jan. 10, 1928, with respect to the cylinder grinder device. Since the Commissioner of Internal Revenue raised some question as to the sufficiency and completeness of this assignment, the taxpayer executed a further assignment on Dec. 21, 1931. This second assignment confirmed the first one and stated further that his wife was assigned 'all of my right, title and interest in and to said royalty contract of January 10, 1928 * * * And I hereby state that the royalties accruing under said royalty contract have heretofore been and are hereafter the sole and exclusive property of the said Cornelia Sunnen (his wife), and hereby declare that said royalties shall be paid to the said Cornelia Sunnen or to her order, and that she shall have the sole right to collect, receive, receipt for, retain or sue for said royalties.' 'Assignments similar in form and substance to the assignment of Dec. 21, 1931, were made as to the other three royalty contracts. 4 In the Dodson case, Dodson owned 51% of the stock of a corporation and his wife owned the other 49%. He was the owner of a formula and trade mark. Pursuant to a contract which he made with the corporation, the corporation was given the exclusive use of the formula and trade mark for 5 years, renewable for a like period. Dodson was to receive in return a royalty measured by a certain percentage of the net sales. He then assigned a one-half interest in the contract to his wife, retaining his full interest in the formula and trade mark. The Tax Court held that his dominant stock position permitted him to cancel or modify the contract at any time, thus rendering him taxable on the income flowing from his wife's share in the contract. 5 See also Henricksen v. Seward, 9 Cir., 135 F.2d 986; Monteith Bros. Co. v. United States, 7 Cir., 142 F.2d 139; Pelham Hall Co. v. Hassett, 1 Cir., 147 F.2d 63; Commissioner v. Arundel-Brooks Concrete Corp., 4 Cir., 152 F.2d 225; Corrigan v. Commissioner, 6 Cir., 155 F.2d 164. Compare Grandview Dairy v. Jones, 2 Cir., 157 F.2d 5. 6 And see Commissioner v. Security-First Nat. Bank, 9 Cir., 148 F.2d 937. 7 Stoddard v. Commissioner, 2 Cir., 141 F.2d 76, 80; Campana Corporation v. Harrison, 7 Cir., 135 F.2d 334; Engineer's Club of Philadelphia v. United States, 42 F.Supp. 182, 95 Ct.Cl. 92. 8 The pertinent statutory provisions are of little help to the matter in issue. Section 22(a) of the Revenue Act of 1936, 49 Stat. 1648, and § 22(a) of the Revenue Act of 1938, 52 Stat. 447, cover the taxable years in question. Those sections, which are identical with the current § 22(a) of the Internal Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 22(a), define 'gross income' to include 'gains, profits, and income derived from salaries, wages, or compensation for personal service * * *, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or for gains or profits and income derived from any source whatever.' See also Art. 22(a)-1 of Treasury Regulations 94, promulgated under the 1936 Act; Art. 22(a)-1 of Treasury Regulations 101, promulgated under the 1938 Act; and § 19.22(a)-1 of Treasury Regulations 103, promulgated under the Internal Revenue Code. Had the taxpayer retained the various license contracts and assigned to his wife the right to receive the royalty
89
333 U.S. 640 68 S.Ct. 763 92 L.Ed. 986 BUTEv.PEOPLE OF STATE OF ILLINOIS. No. 398. Argued Feb. 12, 1948. Decided April 19, 1948. [Syllabus from pages 640-642 intentionally omitted] Mr. Victor Brudney, of New York City, for petitioner. Mr. William C. Wines, of Chicago, Ill., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 In the Circuit Court of La Salle County, Illinois, the petitioner, Roy Bute, pleaded guilty to the crime of 'taking indecent liberties with children' as charged in each of two indictments and, on each plea, was sentenced to confinement in the Illinois State Penitentiary for not less than one nor more than 20 years, the sentences to run consecutively. Each common law record is silent on the subject of counsel for the petitioner's defense. The issue here is whether or not each state sentence shall be held to have been imposed in violation of the due process clause of the Fourteenth Amendment to the Constitution of the United States1 because each common law record shows that the petitioner appeared 'in his own proper person' and does not show that the court inquired as to the petitioner's desire to be represented by counsel, or his ability to procure counsel, or his desire to have counsel assigned to him to assist him in his defense, or that such counsel was offered or assigned to him. We hold that such a silence in the respective records does not suffice to invalidate the sentences. We hold further that, in the absence of any showing beyond that in these records, the due process clause of the Fourteenth Amn dment did not require the Illinois court to make the inquiries or the offer or assignment of counsel now claimed to have been the right of the petitioner. 2 At the time of these indictments, June 17, 1938, the petitioner was 57 years old. Each indictment, in its first count, charged him with taking indecent liberties on May 19, 1938, with a girl under the age of 15, and, in is second count, with attempting to do so. The first indictment related to a girl of eight and the second to a girl of 11. The offenses charged were violations of Ill.Rev.Stat. c. 38, § 109 (1937).2 3 The intelligibility of the indictments is evident from the following language quoted from the first: 4 'That Roy Bute late of said County, on to wit: the 19th day of May in the year of our Lord one thousand nine hundred and thirty-eight at and within the said County of La Salle, the said Roy Bute being a male person of the age of seventeen (17) years and upwards, did then and there unlawfully and feloniously take certain immoral, improper and indecent liberties with a certain female child, under the age of fifteen (15) years, and of the age of eight (8) years, to-wit, * * * with intent of arousing, appealing to and gratifying the lust, passion and sexual desires of him the said Roy Bute contrary to the form of the statute in such case made and provided, and against the peace and dignity of the same People of the State of Illinois.'3 5 The material portions of the records in these cases are identical, except for the names and ages of the children. They contain all that was before the Supreme Court of Illinois or that is before this Court. The following appears in each: 6 'Arraignment and plea of guilty—June 20, 1938 7 'Now on this day come the said People by Taylor E. Wilhelm, State's Attorney, and the said defendant in his own proper person also comes; Whereupon the said defendant is furnished with a copy of the indictment, a list of witnesses and jurors herein. 8 'And the said defendant being now arraigned before the bar of this Court moves the Court for leave to enter his plea of Guilty of the crime of taking indecent liberties with children in manner and form as charged in the first count of the indictment herein; and the Court having admonished and explained to the said defendant the consequences and penalties, which will result from said plea, and the said defendant still persisting in his desire to enter his plea of guilty to the crime oft aking indecent liberties with children, in manner and form as charged in the first count of the indictment herein, the court grants such leave. 9 'Thereupon the said defendant enters his plea of guilty of the crime of taking indecent liberties with children, in manner and form as charged in the first count of the indictment herein. 10 'Thereupon the Court finds the age of the said defendant to be fifty-seven (57) years. 11 'Judgment 12 'Now again on this day come the said People by Taylor E. Wilhelm, State's Attorney, and the said defendant Roy Bute, in his own proper person also comes, and the said defendant, Roy Bute, not saying anything further why the judgment of the Court should not now be pronounced against him on his plea of guilty of the crime of taking indecent liberties with children in manner and form as charged in the first count of the indictment herein, heretofore entered herein. 13 'Whereupon it is Ordered by the Court that the said defendant, Roy Bute, be and he is hereby sentenced on said plea of guilty as aforesaid to confinement in the Illinois State Penitentiary at Joliet for a period of not less than one (1) year, nor more than twenty (20) years.' 14 In October, 1946, the petitioner, while serving his sentence in the Illinois State Penitentiary, and appearing pro se, filed in the Supreme Court of Illinois motions asking leave 'to Sue as a Poor Person for Writ of Error * * *' to review each of the original proceedings. These were granted and he filed his petitions, pro se, based upon the common law records in the respective cases. He relied particularly upon the claim that he had been denied representation by counsel, that the trial court had not advised him of his rights or of his right to the assistance of counsel and that he had been rushed to trial with such expedition as to deprive him of a fair and impartial trial, all of which rights he claimed were guaranteed to him by the State and Federal Constitutions. 15 The Supreme Court of Illinois affirmed both judgments. 396 Ill. 588, 72 N.E.2d 813. It denied expressly each of the abovementioned claims and denied a rehearing. We granted certiorari in recognition of the frequently arising constitutional principle involved. 332 U.S. 756, 68 S.Ct. 40. The petitioner's presentations, pro se, were marked with professional accuracy and clarity but the petition for certiorari states that the petitioner is ignorant of the law as he was at the time of his trial, and that the documents filed by him pro se had been prepared for him. We appointed a member of the Bar of this Court to act as counsel for the petitioner here and the petitioner's claims have been fully and competently presented to this Court. 16 Effect of Fourteenth Amendment. 17 The cases turn upon the meaning of 'due process of law' under the Fourteenth Amendment in relation to the assistance of counsel for the defense of the accused in state criminal trials such as these. In Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527, this Court granted relief in a group of capital cases which demonstrated the essential need for applying the full force of the Fourteenth Amendment to the invalidation of purportedly valid judgments rednered in a state court under the circumstances there shown. Those and other less extreme casses have well illustrated the kind of service to the cause of justice which can be rendered by this Court in thus giving effect to the Fourteenth Amendment. 18 'The due process of law clause in the Fourteenth Amendment does not take up the statutes of the several states and make them the test of what it requires; nor does it enable this court to revise the decisions of the state courts on questions of state law. What it does require is that state action, whether through one agency or another, shall be consistent with the fundamental principles of liberty and justice which lie at the base of all our civil and political institutions and not infrequently are designated as 'law of the land.' Those prn ciples are applicable alike in all the states and do not depend upon or vary with local legislation.' Hebert v. Louisiana, 272 U.S. 312, 316, 317, 47 S.Ct. 103, 104, 71 L.Ed. 270, 48 A.L.R. 1102. 19 'This court has never attempted to dofine with precision the words 'due process of law,' nor is it necessary to do so in this case. It is sufficient to say that there are certain immutable principles of justice, which inhere in the very idea of free government, which no member of the Union may disregard, as that no man shall be condemned in his person or property without due notice and an opportunity of being heard in his defence.' Holden v. Hardy, 169 U.S. 366, 389, 390, 18 S.Ct. 383, 387, 42 L.Ed. 780. 20 The foregoing statements were referred to with approval in Powell v. Albama, supra, 287 U.S. at pages 67, 71, 72, 53 S.Ct. at pages 63, 65. 21 The present case, on the other hand, illustrates equally well he kind of judgments by a state court that should not be invalidated as lacking in the due process of law required by the Fourteenth Amendment. This is so, although the precedure followed, in 1938, by the state court in the instant cases, as to counsel for the accused might not have satisfied the practice then required of a federal court in the case of comparable federal crimes. The Fourteenth Amendment, however, does not say that no state shall deprive any person of liberty without following the federal process of law as prescribed for the federal courts in comparable federal cases. It says merely 'nor shall any State deprive any person of life, liberty, or property, without due process of law; * * *.' This due process is not an equivalent for the process of the federal courts or for the process of any particular state. It has reference rather to a standard of process that may cover many varieties of processes that are expressive of differing combinations of historical or modern, local or other juridical standards, provided they do not conflict with the 'fundamental principles of liberty and justice which lie at the base of all our civil and political institutions * * *.' Hebert v. Louisiana, supra, 272 U.S. at page 316, 47 S.Ct. at page 104. This clause in the Fourteenth Amendment leaves room for much of the freedom which, under the Constitution of the United States and in accordance with its purposes, was originally reserved to the states for their exercise of their own police powers and for their control over the procedure to be followed in criminal trials in their respective courts. It recognizes that differences arise naturally between the procedures in the state courts and those in the federal courts.4 22 One of the major contributions to the science of government that was made by the Constitution of the United States was its division of powers between the states and the Federal Government. The compromise between state rights and those of a central government was fully considered in securing the ratification of the Constitution in 1787 and 1788.5 It was emphasized in the 'Bill of Rights,' ratified in 1791. In the ten Amendments constituting such Bill, additional restrictions were placed upon the Federal Government and particularly upon procedure int he federal courts.6 None were placed upon the states. On the contrary, the reserved powers of the states and of the people were emphasized in the Ninth and Tenth Amendments.7 The Constitution was conceived in large part in the spirit of the Declaration of Independence which declared that to secure such 'unalienable Rights' as those of 'Life, Liberty and the pursuit of Happiness. * * * Governments are instituted among Men, deriving their just powers from the consent of the governed, * * *.' It sought to keep the control over individual rights close to the people through their states. While there have been modifications made by the States, the Congress and the courts in some of the relations between the Federal Government and the people, there has been no change that has taken from the states their underlying control over their local police powers and state court procedures. They retained this control from the beginning and, in some states, local control of these matters long antedated the Constitution. The states and the people still are the repositories of the 'powers not delegated to the United States by the Constitution, nor prohibited by it to the States * * *.'8 The underlying control over the procedure in any state court, dealing with distinctly local offenses such as those here involved, consequently remains in the state. The differing needs and customs of the respective states and even of the respective communities within each state emphasize the principle that familiarity with, and complete understanding of, local characteristics, customs and standards are foundation stones of successful self-government. Local processes of law are an essential part of any government conducted by the people. No national authority, however benevolent, that governs over 130,000,000 people in 48 states, can be as closely in touch with those who are governed as can the local authorities in the several states and their subdivisions. The principle of 'Home Rule' was an axiom among the authors of the Constitution. After all, the vital test of self-government is not so much its satisfactoriness weighed in the scales of outsiders as it is its satisfactoriness weighed in the scales of 'the governed.'9 While, under the Constitution of the United States, the Federal Government, as well as each state government, is at bottom a government by the people, nevertheless, the federal sphere of government has been largely limited to certain delegated powers. The burden of establishing a delegation of power to the United States or the prohibition of power to the states is upon those making the claim. This point of view is material in the instant cases in interpreting the limitation which the Fourteenth Amendment places upon the processes of law that may be practiced by the several states, including Illinois. In our opinion this limitation is descriptive of a broad regulatory power over each state and not of a major transfer by the states to the United States of the primary and pre-existing power of the states over court procedures in state criminal cases. 23 Until the taking effect of the Fourteenth Amendment in 1868, there was no question but that the states were free to establish their own court procedures. This freedom included state practice as to the assistance of counsel to be permitted or assigned to the accused for his defense in state criminal cases. Because the Constitution of the United States, during nearly 80 formative years, thus permitted each state to establish, maintain and accustom its people to that state's own forms of 'due process of law,' a substantial presumption arises in favor of, rather than against, the lawfulness of those procedures and in favor of their right to continued recognition by the Federal Government as 'due process of law.' While such a presumption does not arise in favor of any practice against which the Fourteenth Amendment was particularly directed, there is no reason to feel that, in 1868, such Amendment was particularly directed against the practice now before us. Illinois Constitutional Provisions. 24 From the inception of their statehood, the people of Illinois have recognized their own responsibility for the preservation of local due process of law and of the civil rights of individuals within the jurisdiction of that State. They dealt at length with such matters in their original constitution of 1818, Smith-Hurd Stats. In Article VIII they provided— 25 'That the general, great and essential principles of liberty and free government may be recognized and unalterably established, we declare: 26 's 9. That in all criminal prosecutions, the accused hath a right to be heard by himself and counsel; to e mand the nature and cause of the accusation against him; to meet the witnesses face to face; to have compulsory process to compel the attendance of witnesses in his favor; and in prosecutions by indictment or information, a speedy public trial by an impartial jury of the vicinage, and that he shall not be compelled to give evidence against himself.'10 Reprinted in Ill.Rev.Stat. (1937). 27 The Illinois Constitution of 1848 contained a comparable 'Declaration of Rights' in Article XIII. Among that Article's 26 sections were §§ 8 and 9, substantially readopting language used in §§ 8 and 9 of Article VIII of the original constitution.11 28 In the Illinois Constitution of 1870, Smith-Hurd Stats. a 'Bill of Rights' was set forth in Article II dealing with these subjects and including §§ 2 and 9 in the following form: 29 's 2. No person shall be deprived of life, liberty or property, without due process of law. 30 's 9. In all criminal prosecutions the accused shall have the right to appear and defend in person and by counsel, to demand the nature and cause of the accusation and to have a copy thereof, to meet the witnesses face to face, and to have process to compel the attendance of witnesses in his behalf, and a speedy public trial by an impartial jury of the county or district in which the offense is alleged to have been committed. Reprinted in Ill.Rev.Stat. (1937). 31 These latter provisions were in effect in Illinois at the time of the trial of the instant cases. There is and can be no question raised here but that the procedure in the instant cases conformed to the Illinois Constitution as interpreted by the Supreme Court of that State. 32 The Constitution of the United States thus left the power to regulate the procedure as to the assistance of counsel for the defense of the accused in state criminal cases to the discretion of the respective states, at least until 1868. The Fourteenth Amendment then was adopted to meet the crying needs of that time.12 33 Judicial Interpretation of Fourteenth Amendment. 34 After exhaustive consideration of the subject, this Court has decided that the Fourteenth Amendment does not, through its due process clause or otherwise, have the effect of requiring the several states to conform the procedure of their state criminal trials to the precise procedure of the federal courts, even to the extent that the procedure of federal courts is prescribed by the Federal Constitution or Bill of Rights. There is nothing in the Fourteenth Amendment specifically stating that the long recognized and then existing power of the states over the procedure of their own courts in criminal cases was to be prohibited or even limited. Unlike the Bill of Rights, the Fourteenth Amendment made no mention of any requirement of grand jury presentments or indictments as a preliminary step in certain criminal prosecutions; any universal prohibition against the accused being compelled, in a criminal case, to be a witness against himself; any jurisdictional requirement of juries in all criminal trials; any guaranty to the accused that he have a right to the assistance of counsel for his defense in all criminal prosecutions; or any need to observe the rules of the common law in the re-examination of all facts tried by a jury.13 In spite of such omissions, it is claimed here, on behalf of the petitioner, that even though the failure of the state court in these cases to inquire of the accused as to his desire to be represented by counsel, or his ability to procure counsel, or his desire to have counsel assigned to him to assist him in his defense, and even though the failure of the state court in these cases to offer or assign counsel to the accused for his defense may have satisfied the Illinois law and have amounted to 'due process of law' under the Illinois Constitution,14 yet such practices did not satisfy the 'due process of law' required of the states by the Fourteenth Amendment to the Constitution of the United States. 35 To sustain this claim, it is necessary for the petitioner to establish that, in spite of the constitutionality of the process of law developed by Illinois in its own criminal cases, prior to 1868, yet that same Illinois process of law, after 1868, no longer is constitutionally valid as 'due process of law' under the Fourteenth Amendment. We recognize that the Fourteenth Amendment, as part of the supreme law of the land under Article VI of the original Constitution, supersedes 'any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.' The important question remains, however: what shall be considered to be to the contrary? It is the established policy of both the State and Federal Governments to treat possible conflicts between their powers in such a manner as to produce as little conflict and friction as possible. So here the procedure followed by Illinois should not be held to violate the standard of permissible process of law broadly recognized by the Fourteenth Amendment unless the Illinois procedure violates 'the very essence of a scheme of ordered liberty' and that to continue it would 'violate a 'principle of justice so rooted in the traditions and conscience of our people as to be ranked as fundamental." Cardozo, J., in Palko v. Connecticut, 302 U.S. 319, 325, 58 S.Ct. 149, 152, 82 L.Ed. 288, with quotation from his opinion in Snyder v. Massachusetts, 291 U.S. 97, 105, 54 S.Ct. 330, 332, 78 L.Ed. 674, 90 A.L.R. 575. See Foster v. Illinois, 332 U.S. 134, 137, 67 S.Ct. 1716, 1718; Adamson v. California, 332 U.S. 46, concurring opinion at pages 61 67, 67 S.Ct. 1672, 1680—1683; Betts v. Brady, 316 U.S. 455, 465, 62 S.Ct. 1252, 1257, 86 L.Ed. 1595; Brown v. Mississippi, 297 U.S. 278, 285, 286, 56 S.Ct. 461, 464, 465, 80 L.Ed. 682; Powell v. Alabama, 287 U.S. 45, 61, 62, 67, 71, 72, 53 S.Ct. 55, 61, 63, 65, 77 L.Ed. 158, 84 A.L.R. 527; Hebert v. Louisiana, 272 U.S. 312, 316, 47 S.Ct. 103, 104, 71 L.Ed. 270, 48 A.L.R. 1102; Twining v. New Jersey, 211 U.S. 78, 29 S.Ct. 14, 53 L.Ed. 97; Holden v. Hardy, 169 U.S. 366, 389, 390, 18 S.Ct. 383, 387, 42 L.Ed. 780; Hurtado v. California, 110 U.S. 516, 532, 535, 537, 4 S.Ct. 111, 119—121, 28 L.Ed. 232. 36 It is natural for state procedures to differ from each other in many ways. It is permissible for the states to establish ways of safeguarding the respective interests of the prosecution and of the accused in their courts. These may differ from comparable practices developed in the courts of other states or of the United States. Before examining the Illinois practice and the precise facts of the cases before us, it is helpful to see what has been the practice in the courts of the United States and especially to see what such practice was in 1938, at the time of the trial of the instant cases. While such federal court practice does not establish a cn stitutional minimum standard of due process which must be observed in each state under the Fourteenth Amendment, yet such practice does afford an example approved by the courts of the United States. It thus contributes something toward establishing a general standard of due process currently and properly applicable to the states under the Fourteenth Amendment. 37 Practice in Federal Courts. 38 The practice in the federal courts as to the right of the accused to have the assistance of counsel is derived from the Sixth Amendment which expressly requires that, in all criminal prosecutions in the courts of the United States, the accused shall have the assistance of counsel for his defense.15 There is no proof possible that the same practice would have developed under the due process clause of the Fifth Amendment had there been no specific provision on the subject in the Sixth Amendment. It is obvious also that there is no specific provision in the Fourteenth Amendment comparable to that in the Sixth Amendment. Furthermore, at the time of the trial of this case in 1938, the rule of practice even in the federal courts was not as clear as it is today. The federal statutes were then, and they are now, in practically the same form as when they were enacted in 1789 and 1790. They provided merely for a right of representation in the federal courts by the accused's own counsel and required assignment of counsel by the court only on accusations for treason or other capital crimes.16 In fact, until the decision of this Court in May, 1938 (one month before the trial of the instant cases in the Illinois state court), in Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, there was little in the decisions of any courts to indicate that the practice in the federal courts, except in capital cases, required the appointment of counsel to assist the accused in his defense, as contrasted with the recognized right of the accused to be represented by counsel of his own if he so desired. That pre-1938 practice, however, was in the face of the language of the Sixth Amendment which has held in Johnson v. Zerbst, supra, to require the appointment of counsel in any federal criminal case where the accused had no counsel and did not waive the assistance of counsel.17 'The Sixth Amendment withholds from federal courts, in all criminal proceedings, the power and authority to deprive an accused of his life or liberty unless he has or waives the assistance of counsel.' Id., at page 463, of 304 U.S., at page 1022 of 58 S.Ct. See Powell v. Alabama, 287 U.S. 45, 68, 69, 53 S.Ct. 55, 63, 64, 77 L.Ed. 158, 84 A.L.R. 527 and Patton v. United States, 281 U.S. 276, 308, 50 S.Ct. 253, 261, 74 L.Ed. 854, 70 A.L.R. 263, as quoted in the Zerbst case. See also, Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830. 39 The view of this Court as to the practice best adapted to the needs of the federal courts and most responsive to the requirements of the Federal Constitution and statutes as well as to the decisions of this Court is now stated in Rule 44 of the Federal Rules of Criminal Procedure which became effective March 21, 1946.18 In view, however, of the applicability to the state courts of the Fourteenth rather than the Sixth Amendment, this new rule cannot be regarded as defining, even by analogy, the minimum requirement of due process for the states under the Fourteenth Amendment. The new rule is evidence only of what this Court considers suitable in the federal courts and the states, in their discretion, may or may not follow it. The states are free to determine their own practice as to the assistance of counsel, subject to the general limitation that such practice shall not deprive the accused of life, liberty or property without due process of law. Accordingly, the lack of conformity of Illinois practice in 1938 to the standards illustrated by the present Federal Rules of Criminal Procedure is by means determinative of the issue before us. 40 Practice in State Courts. 41 As throwing light on the general practice in the several states, the National Commission on Law Observance and Enforcement, ud er the chairmanship of George W. Wickersham, in its Report on Prosecution in 1931, said: 42 'In America counsel was allowed from an early date and State and Federal Constitutions guarantee to accused in all prosecutions 'the assistance of counsel for his defense,' in this or some equivalent language. It will be seen from this bit of history that, as indeed the courts have held, the right guaranteed is one of employing counsel, not one of having counsel provided by the Government. But in the spirit of the guaranty most of the States have by legislation authorized or even required the courts to assign counsel for the defense of indigent and unrepresented prisoners. As to capital cases, all the States so provide. Thirty-four States so provide for felonies and 28 for misdemeanors.' Vol. I, p. 30. 43 The foregoing suggests the existence of a gradual voluntary trend among the states toward the authorization by them of the appointment of counsel to assist the accused in his defense in all criminal prosecutions, with special consideration to the seriousness of the charge faced and to the actual needs of the accused under the circumstances of each case. Much of this trend has taken place since 1868. It is neither universal nor uniform. The above summary shows that 20 states, in 1931, and no statute authorizing such appointments of counsel in misdemeanor cases and 14 had none, even in felony cases, unless the charges were for capital offenses. Furthermore, some of these authorizations, as in Illinois, were subject to special limitations requiring an affirmative showing to be made by the accused of his inability to procure counsel for himself. 44 Another indication of the opinion of representative members of the Bench, Bar and law school faculties appears in the following quotation from § 203 of the Code of Criminal Procedure, approved by the American Law Institute in 1930: 45 'Before the defendant is arraigned on a charge of felony if he is without counsel the court shall, unless the defendant objects, assign him counsel to represent him in the cause. Counsel so assigned shall serve without cost to be defendant, and shall have free access to the defendant, in private, at all reasonable hours while acting as counsel for him. Assignment of counsel shall not deprive the defendant of the right to engage other counsel at any stage of the proceedings in substitution of counsel assigned him by the court.' At p. 88. 46 The Commentary of the Institute accompanying this Section shows that the assistance recommended for the accused in § 203 of the proposed Code was then far in advance of the statutes in most of the states. The Commentary also illustrates the variations existing among the processes adopted by the states in their search for a satisfactory process of law in this regard. It demonstrates that, up to 1930, but limited progress had been made by statute toward the standard now claimed by the petitioner to have become constitutionally essential to a valid judgment in the instant cases in 1938.19 It illustrates the wide difference naturally and constitutionally existing between what has been prescribed by the several states and what has been recommended to them by the Institute. We do not find in the Fourteenth Amendment authority for this Court to do what is asked of us here, namely, to require all the states to enforce in substance either Rule 44 of the new Federal Rules of Criminal Procedure or the proposed § 203 of the Code of Criminal Procedure recommended by the American Law Institute, all under penalty of the invalidation of every past and future nonconforming state judgment. 47 In reviewing the situation further, in 1942, this Court, in Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595, indicated that it did not regard it to be a violation of the Fourteenth Amendment for a Maryland trial court to refuse to appoint counsel to represent an indigent defendant charged with robbery under the circumstances of that case.20 We there stated the general principle as follows: 48 'The due process clause of the Fourteenth Amendment does not incorporate, as such, the specific guarantees found in the Sixth Amendment although a denial by a state of rights or privileges specifically embodied in that and others of the first eight amendments may, in certain circumstances, or in connection with other elements, operate, in a given case, to deprive a litigant of due process of law in violation of the Fourteenth. * * * Asserted denial (of counsel) is to be tested by an appraisal of the totality of facts in a given case. That which may, in one setting, constitute a denial of fundamental fairness, shocking to the universal sense of justice, may, in other circumstances, and in the light of other considerations, fall short of such denial. In the application of such a concept there is always the danger of falling into the habit of formulating the guarante into a set of hard and fast rules the application of which in a given case may be to ignore the qualifying factors therein disclosed.' Id., at pages 461, 462 of 316 U.S., at page 1256 of 62 S.Ct., 86 L.Ed. 1595.21 49 If, in the face of these widely varying state procedures, this Court were to select the rule contended for by the petitioner and hold invalid all procedure not reaching that standard, it not only would disregard the basic and historic power of the states to prescribe their own local court procedures (subject only to a broad constitutional prohibition in the Fourteenth Amendment against the abuse of that power) but it would introduce extraordinary confusion and uncertainty into local criminal procedure where clarity and certainty are the primary essentials of law and order. 50 Practice in Illinois Courts. 51 The precise question here is whether the sentences in the two Illinois cases before us violated the Fourteenth Amendment. The Supreme Court of Illinois has affirmed both sentences, supra, 396 Ill. 588, 72 N.E.2d 813. It has thus conclusively established their compliance with Illinois law. While such a finding of compliance with local law is not necessarily sufficient to satisfy the requirements of due process under the Fourteenth Amendment, we shall be helped, in measuring the compliance of these judgments with such due process, if we note exactly the requirements of Illinois law with which the Supreme Court of that State has found compliance. 52 The material Sections of the Illinois Constitution have been quoted. Illinois Constitution of 1870, Art. II, §§ 2 and 9, supra. They provided that no person should be deprived of life, liberty or property, without dur process of law and that, in all criminal prosecutions, the accused had the right to appear and defend in person and by counsel. The statutes of Illinois in effect in 1938 contained the following requirements as to the allowance and assignmen of counsel to a person charged with crime and differentiated between the procedure required in a capital case and that required in other cases: 53 'Every person charged with crime shall be allowed counsel, and when he shall state upon oath that he is unable to procure counsel, the court shall assign him competent counsel, who shall conduct his defense. In all cases counsel shall have access to persons confined, and shall have the right to see and consult such persons in private. 54 'Whenever it shall appear to the court that a defendant or defendants indicted in a capital case, is or are indigent and unable to pay counsel for his or her defense, it shall be the duty of the court to appoint one or more competent counsel for said defendant or defendants, * * *.' Ill.Rev.Stat. 1937, c. 38, § 730. 55 An Illinois statute also provided expressly for cases in which the party accused had pleaded 'guilty.' The record in the instant cases shows complete compliance with this provision which, in effect, placed upon the trial court primary responsibility for seeing to it that the procedure met all legal requirements, whether of state or federal origin. 56 'In cases where the party pleads 'guilty,' such plea shall not be entered until the court shall have fully explained to the accused the consequences of entering such plea; after which, if the party persist in pleading 'guilty,' such plea shall be received and recorded, and the court shall proceed to render judgment and execution thereon, as if he had been found guilty by a jury. In all cases where the court possesses any discretion as to the extent of the punishment, it shall be the duty of the court to examine witnesses as to the aggravation and mitigation of the offense.' Ill.Rev.Stat. 1937, c. 38, § 732. 57 Practice in the Instant Cases. 58 It is not our province to prescribe which procedure we consider preferable among many permissible procedures which lawfully could be followed by an Illinois or any other state court in connection with counsel for the defense of a party accused of a state crime. It is our province to decide whether the practice of the Illinois court in these cases, although admittedly in conformity with the law of Illinois, was so clearly at variance with procedure constituting 'due process of law' under the Fourteenth Amendment that these sentences must be completely invalidated. This brings us to an analysis of the precise facts presented by the records. Each crime was punishable by a mandatory sentence of from one to 20 years in the penitentiary. The charges were stated in simple terms, not ordinarily capable of being misunderstood by a 57-year old man, however, elementary or primitive his understanding. There is no claim that this petitioner failed to understand the charges. Before he pleaded guilty, the court 'admonished and explained to the said defendant the consequences and penalties, * * *' which would result from his plea of guilty if made. The records then recite, largely in the language of the statute, that 'the said defendant still persisting in his desire to enter his plea of guilty to the crime of taking indecent liberties with children, in manner and form as charged in the first count of the indictment herein, the court grants such leave.' We do not accept the argument that these records are to be considered unreliable because they are almost exactly in the language of the statute. The important point is not so much that a certain phraseology is used, as it is that the court actually represented the State at the trial and that the court did what the statute required of it. It cannot be argued, without factual support, that the court failed to do its full duty with an intelligent, competent and understanding appreciation of all of its state and federal obligations. In the light of all the circumstances which must have been obvious to the judge presiding in the courtroom, but are incapable of reproduction here, the court granted leave to the petitioner to enter his plea of guilty in each case. Before sentence was passed, the record shows that the State's attorney and the petitioner, in his own proper person, came before the court and the petitioner 'not saying anything further why the judgment of the Court should not now be pronounced * * *' the court pronounced, in each case, the mandatory sentence for the crime to which the petitioner had pleaded guilty. On the facts thus before us in these records, which must be our sole guides in these cases, there is no good reason to doubt either the due process or the propriety of the procedure followed by the trial court. There is nothing in the records on which to base a claim that the petitioner's conduct did not fit the charges made against him. There is nothing in them on which to base a claim of abnormality, intoxication, or insanity on the part of the petitioner or on which to base a claim that there was any indignation, prejudice or emotional influence affecting the conduct or thought of anyone connected with these trials. The presence of the judge, the State's attorney, and the petitioner, together with a natural wish on the part of the petitioner not to expand upon the shame of these crimes, provide no ground for a conclusion that there has been any failure, much less any constitutional failure, of fair judicial process. Doubts should be resolved in favor of the integrity, competence and proper performance of their official duties by the judge and the State's attorney. They were state officials lawfully chosen to discharge serious public responsibilities under their oaths of office. Especially in a self-governing state and nation, governmental stability depends upon the giving of full faith and credit in form, substance and spirit to public acts, records and judicial proceedings not only among the states but among individuals and between their State and Federal Governments. 59 Although the records disclose no affirmative basis for invalidating the sentences, it is suggested that an error of omission appears in the failure of the records to show either the presence of counsel for the accused, or an inquiry by the court as to counsel for the accused, or the appointment of counsel by the court to assist the accused. Here also if any presumption is to be indulged it should be one of regularity rather than that of irregularity. Eight years after the trial, in the complete absence of any showing to the contrary, such a presumption of regularity indicates that the court constitutionally discharged, rather than unconstitutionally disregarded, its state and federal duties to the petitioner, including those relating to his right, if any, to the assistance of counsel. People v. Fuhs, 390 Ill. 67, 60 N.E.2d 205. It is not necessary, however, for us to depend upon such a presumption. 60 In the light of the affirmance of the instant judgments by the Supreme Court of Illinois and in the absence of evidence to the contrary, it is clear that the trial court at least did not violate any express requirements of any state statutes calling for affirmative action by the court. People v. Russell, 394 Ill. 192, 67 N.E.2d 895; People v. Stack, 391 Ill. 15, 62 N.E.2d 807; People v. Fuhs, supra; People v. Braner, 389 Ill. 190, 58 N.E.2d 869; People v. Corrie, 387 Ill. 587, 56 N.E.2d 767; People v. Corbett, 387 Ill. 41, 55 N.E.2d 74; People v. Childers, 386 Ill. 312, 53 N.E.2d 878. In view of the statutory requirements previously quoted (Ill.Rev.Stat. 1937, c. 38, s 730), the silence of the records affords adequate ground for the minimum conclusions that the petitioner did not request counsel and did not, under oath, state that he, the petitioner, was 'unable to procure counsel.' In fact, the petitioner does not now claim that he did either of those things. The issue is, therefore, whether, in the absence of any request by the petitioner for counsel and, in the absence of any statement under oath by the petitioner that he was unable to procure counsel, the court violated due process of law undert he Fourteenth Amendment by the procedure which it took and which accorded with the procedure approved by Illinois for noncapital cases such as these. This procedure called upon the court to use its own judgment in the light of the nature of the offenses, the age, appearance, conduct and statements of the petitioner in court. These circumstances included the petitioner's plea of guilty, persisted in after the court's admonishment of him and explanation to him of the consequences and penalties involved in his plea. The court thereupon granted leave to the petitioner to enter a plea of guilty and such a plea was entered by the petitioner in each case. 61 In this view of the two cases before us it is not necessary to consider whether the petitioner, by his plea of guilty or otherwise, affirmatively waived any right to the assistance of counsel in his defense, for, under these circumstances, no constitutional right to such assistance had arisen in his favor. Under the procedure followed by the trial court, there was no affirmative duty upon it, either of state or federal origin, to do more than it did. In the present cases the state statute allowed the petitioner to be represented by counsel if the petitioner desired to be so represented. The state statute and practice, however, did not require that the accused must be so represented or that the trial court must initiate inquiry into the petitioner's desires. The statute did require that the court must assign counsel to conduct the defense for the accused if the accused stated under oath that he was unable to procure counsel. There is nothing in these records, however, either under oath or otherwise, to show that the petitioner, at the time of trial, either desired counsel or was unable to procure counsel. 62 The final question is therefore, whether, even in the absence of any state requirement to that effect, the provision requiring due process of law under the Fourteenth Amendment, in and of itself, required the court in these cases to initiate an inquiry into the desire of the accused to be represented by counsel, to inquire into the ability of the accused to procure counsel or, in the event of the inability of the accused to procure counsel, to assign competent counsel to the accused to conduct his defense. We recognize that, if these charges had been capital charges, the court would have been required, both by the state statute and the decisions of this Court interpreting the Fourteenth Amendment, to take some such steps. 63 These, however, were not capital charges. They were charges of the commission of two elementary offenses, carrying mandatory sentences of from one to 20 years each. We have considered the special circumstances as shown by these records. We do not find in them adequate ground for concluding that the state court, by failing to take the affirmative procedure suggested, violated due process of law under the Fourteenth Amendment. In reaching this conclusion it is not necessary for us to rely upon the statutory procedure of Illinois. It is appropriate, however, for us to consider the Illinois statutes and practice, as well as the statutes and practices of other states, as indicative that, in the judgment of the people of many of the states, it is not necessary to require further assurance of assistance of counsel to conduct the defense of a person accused of crimes of this character and under these circumstances. 64 It is established that it is permissible and well within 'due process of law' for a person, accused of such crimes, to waive his rights, if any, to the assistance of counsel for his defense, whether or not the accused also shall plead guilty.22 If such waiver is to be effective, it must be intelligently, competently, understandingly and voluntarily made. In the instant cases, the only evidence before us of any affirmative waiver of a right to the assistance of counsel, if any such right existed, appears in the petitioner's pleas of guilty. There was, however, no need n these cases for a waiver by the petitioner of additional action by the trial court because the petitioner had no state or federal right to such action. Consequently, it is not necessary to inquire into the effectiveness of the petitioner's pleas as amounting to waivers of counsel, as well as admissions of guilt. 65 It may be that the state laws of some other states would have required affirmative inquiries to have been made by the court. It may be that, some day, all of the states will have adopted practices corresponding to the new rule in the federal courts23 or to the recommendations of the American Law Institute, supra. However, as the matter now stands, the states have substantial discretion to determine in the light of their respective histories and needs, many practices in their criminal procedure, including this practice. 66 The issue in the instant cases is only whether or not the action taken by the state court violated the Fourteenth Amendment. In answering that question in the negative, this opinion follows the principles which have been announced by this Court in passing upon somewhat similar issues where the accused has been tried in a state court for a noncapital offense and where complaint has been made that there was violation of due process of law under the Fourteenth Amendment. Recently, this Court said that, although failure to assign counsel to assist an accused in his defense in a federal court for a noncapital crime might violate the express provisions of the Sixth Amendment, that did not mean that a like failure to do so in an Illinois prosecution for the noncapital felony of burglary would violate due process of law under the Fourteenth Amendment. Foster v. Illinois, 332 U.S. 134, 67 S.Ct. 1716. A comparable conclusion has been reached under the Fifth and Fourteenth Amendments as to self-incrimination by a defendant in a criminal case, particularly in relation to the right of counsel for the state to comment on the defendant's failure to testify. Adamson v. California, 332 U.S. 46, 67 S.Ct. 1672. Refusal by a Maryland court to appoint counsel requested by the accused to assist him in his defense against a charge of commission of the noncapital felony of robbery was held not to violate the Fourteenth Amendment. Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595. In that case the commission or nature of the offense charged was not the issue because the defense was merely that of an alibi. 67 On the other hand, this Court repeatedly has held that failure to appoint counsel to assist a defendant or to give a fair opportunity to the defendant's counsel to assist him in his defense where charged with a capital crime is a violation of due process of law under the Fourteenth Amendment. Carter v. Illinois, 329 U.S. 173, 67 S.Ct. 216; Hawk v. Olson, 326 U.S. 271, 66 S.Ct. 116, 90 L.Ed. 61; Tomkins v. Missouri, 323 U.S. 485, 65 S.Ct. 370, 89 L.Ed. 407; Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Moore v. Dempsey, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. See also, De Meerleer v. Michigan, 329 U.S. 663, 67 S.Ct. 596 (convicted of first degree murder and sentenced to life imprisonment). 68 In a noncapital state felony case, this Court has recognized the constitutional right of the accused to the assistance of counsel for his defense when there are special circumstances showing that, otherwise, the defendant would not enjoy that fair notice and adequate hearing which constitute the foundation of due process of law in the trial of any criminal charge. Rice v. Olson, 324 U.S. 786, 65 S.Ct. 989, 89 L.Ed. 637. In that case the immediate issue was one of waiver, but the underlying question involved a charge of burglary against an ignorant Indian, coupled with a complex legal issue arising from the claim that the crime was committed on an Indian reservation. For discussions bearing on the absence of due process resulting from the inability of the defendant, intelligently and competently, either to plead guilty or to defend himself in certain noncapital cases see Foster v. Illinois, 332 U.S. 134, 137, 138, 67 S.Ct. 1716, 1718; Canizio v. New York, 327 U.S. 82, 84, 85, 66 S.Ct. 452, 453, 90 L.Ed. 545 (robbery in the first degree); house v. Mayo, 324 U.S. 42, 45, 46, 65 S.Ct. 517, 519, 520, 89 L.Ed. 739 (burglary); Smith v. O'Grady, 312 U.S. 329, 332—334, 61 S.Ct. 572, 573, 574, 85 L.Ed. 859 (burglary); Powell v. Alabama, 287 U.S. 45, 70, 53 S.Ct. 55, 64, 77 L.Ed. 158, 84 A.L.R. 527 (dictum as to deportation cases). 69 For the foregoing reasons, and under the principles previously announced by this Court, the judgment of the Supreme Court of Illinois is affirmed. 70 Affirmed. 71 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK, Mr. Justice MURPHY and Mr. Justice RUTLEDGE concur, dissenting. 72 In considering cases like this and the ill-starred decision in Betts v. Brady,1 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595, we should ask ourselves this question: Of what value is the constitutional guaranty of a fair trial if an accused does not have counsel to advise and defend him? 73 The Framers deemed the right of counsel indispensable, for they wrote into the Sixth Amendment that in all criminal prosecutions the accused 'shall enjoy the right * * * to have the Assistance of Counsel for his defence.' Hence, if this case had been tried in the federal court appointment of counsel would have been mandatory, even though Bute did not request it. See Johnson v. Zerbst, 304 U.S. 458, 463, 58 S.Ct. 1019, 1022, 82 L.Ed. 1461. I do not think the constitutional standards of fairness depend on what court an accused is in. I think that the Bill of Rights is applicable to all courts at all times. Mr. Justice Black demonstrated in his dissent in Adamson v. California, 332 U.S. 46, 68, 71, 67 S.Ct. 1672, 1684, 1686, that a chief purpose of the Fourteenth Amendment was to protect the safeguards of the Bill of Rights against invasion by the states. If due process as defined in the Bill of Rights requires appointment of counsel to represent defendants in federal prosecutions, due process demands that the same be done in state prosecutions. The basic requirements for fair trials are those which the Framers deemed so important to procedural due process that they wrote them into the Bill of Rights and thus made it impossible for either legislatures or courts to tinker with them. I fail to see why it is due proe §§ to deny an accused the benefit of counsel in a state court when by constitutional standards that benefit could not be withheld from him in a federal court. 74 But if we take the view more hostile to the rights of the individual and assume that procedural due process guaranteed by the Fourteenth Amendment provides lesser safeguards than those of the Bill of Rights, the result should be the same. Then the question is whether the appointment of counsel for Bute was required 'by natural, inherent, and fundamental principles of fairness.' Betts v. Brady, supra, page 464 of 316 U.S., at page 1257 of 62 S.Ct. 75 Illinois allows counsel to everyone charged with crime. To obtain counsel, however, the accused has to ask for one and also to state upon oath that he is unable to procure counsel.2 People v. Van Horn, 396 Ill. 496, 498, 72 N.E.2d 187. But, as held by the Illinois Supreme Court in the present case, the court need not advise him of his right to counsel.3 The Illinois rule apparently proceeds from the premise that the average person knows of his right to counsel and resorts to an attorney in case he gets caught in the toils of the law. That view, if logically applied, would not require appointment of counsel in any case—capital or otherwise. For a man charged with murder usually knows whether or not it was his blow or shot that killed the deceased and therefore whether he is unjustly accused. And he certainly knows he is in serious trouble when he is faced with such a charge. The logic of the Illinois view would lead to the conclusion that the average man in those circumstances would know enough to demand a lawyer to defend him and that the court need not offer one to him. 76 Fortunately for the liberal tradition the law has followed a different course. At least where the offense charged is a capital one, due process requires appointment of counsel in state as well as in federal prosecutions. Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; De Meerleer v. Michigan, 329 U.S. 663, 67 S.Ct. 596. The reason is that the guilty as well as the innocent are entitled to a fair trial, that a layman without the experience and skill of counsel to guide him may get lost in the intricacies of the law and lose advantages which it extends to every accused, that without expert appraisal of the circumstances surrounding his arrest, detention, arraignment, and conviction the penalties he suffers may be aggravated by his own ignorance or by overreaching of the prosecution or police.4 Hence the need for counsel exists in capital cases whether the accused contests the charge against him or pleads guilty. Foster v. Illinois, 332 U.S. 134, 137, 67 S.Ct. 1716, 1718. 77 Those considerations are equally germane though liberty rather than life hangs in the balance. Certainly due process shows no less solicitude for liberty than for life. A man facing a prison term may, indeed, have as much at stake as life itself. 78 Bute was charged with a most repulsive crime. It may seem easy to say that it is a simple and uncomplicated one, and therefore that he should know whether he committed it and whether he stood in need of counsel. But it has long been recognized that the charge of taking indecent liberties with a child is, like rape, 'an accusation easily to be made and hard to be proved, and harder to be defended by the party accused, the never so innocent.' 1 Hale's Pleas of the Crown 634. As stated by the Illinois Supreme Court in People v. Freeman, 244 Ill. 590, 594, 91 N.E. 708, 709, 'Public indignation is even more apt to be aroused in prosecutions for crimes of this kind against children than when the charge is brought by an adult.' Certainly the appraisal of such imponderables, the weight of the prosecution's case, the character of the defense which is available5 are all questions which only a skilled lawyer can consider intelligently. A layman might rush to confession where counsel would see advantages in a trial before judge or jury. Counsel might see weakness in the prosecution's case which could be utilized either in standing trial or in pleading guilty to a lesser offense. These are the circumstances of the present case which Bute uses to appeal to our conscience. They without more convince me that we could be sure Bute had a fair trial only if counsel had stood at his side and guided him across the treacherous ground he had to traverse. 79 Betts v. Brady, supra, holds that we must determine case by case, rather than by the Sixth Amendment, whether an accused is entitled to counsel. A man who suffers up to 20 years in prison as a penalty is undergoing one of the most serious of all punishments. It might not be nonsense to draw the Betts v. Brady line somewhere between that case and the case of one charged with violation of a parking ordinance, and to say the accused is entitled to counsel in the former but not in the latter. But to draw the line between this case and cases where the maximum penalty is death is to make a distinction which makes no sense in terms of the absence or presence of need for counsel. Yet it is the need for counsel that establishes the real standard for determining whether the lack of counsel rendered the trial unfair. And the need for counsel, even by Betts v. Brady standards, is not determined by the complexities of the individual case or the ability of the particular person who stands as an accused before the court. That need is measured by the nature of the charge and the ability of the average man to face it alone, unaided by an expert in the law. As Powell v. Alabama, supra, indicates, the need for counsel in capital cases is great even though the defendant is an intelligent and educated layman. The need is equally as great when one stands accused of the serious charge confronting Bt e. 1 'No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any States deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.' U.S.Const.Amend. XIV, § 1. 2 '* * * any person of the age of seventeen years and upwards who shall take, or attempt to take, any immoral, improper or indecent liberties with any child of either sex, under the age of fifteen years, with the intent of arousing, appealing to or gratifying the lust or passions or sexual desires, either of such person or of such child, or of both such person and such child, * * * shall be imprisoned in the penitentiary not less than one year nor more than twenty years: * * *.' 3 An indictment stating this offense substantially in the language of the statute, though not setting out facts constituting the elements of the crime, was sufficient. People v. Rogers, 324 Ill. 224, 229, 154 N.E. 909, 911; People v. Butler, 268 Ill. 635, 641, 109 N.E. 677, 679; People v. Scattura, 238 Ill. 313, 314, 315, 87 N.E. 332, 333. A copy of each indictment, with both counts on the same sheet, was furnished to the petitioner and the devastating frankness of the second count in describing the acts complained of rendered impossible any misunderstanding of the charge. The petitioner does not contend that he failed to understand it. By leave of court, the State entered 'Nolle Prosequi' as to each second count. 4 One long recognized difference between the trial procedure in the federal courts and that in many state courts is the greater freedom that is allowed to a federal court, as compared with that allowed to a state court, to comment upon the evidence when submitting a case to a jury. See Quercia v. United States, 289 U.S. 466, 469, 53 S.Ct. 698, 699, 77 L.Ed. 1321; Patton v. United States, 281 U.S. 276, 288, 50 S.Ct. 253, 254, 74 L.Ed. 854, 70 A.L.R. 263; Simmons v. United States, 142 U.S. 148, 155, 12 S.Ct. 171, 172, 35 L.Ed. 968. The federal practice is based upon the rules of common law comparable to those mentioned in the Seventh Amendment. The federal and state practices have their respective proponents and opponents, but both practices unquestionably represent 'due process of law.' 5 See Federalist Papers, Number XLIV, Restrictions on the Authority of the Several States; Number XLV, The Aleged Danger from the Powers of the Union to the State Governments Considered; Number XLVI, The Influence of the State and Federal Governments Compared. 6 'The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. 'No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for h e same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any Criminal Case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. 'In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining Witnesses in his favor, and to have the Assistance of Counsel for his defence. 'In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law. 'Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.' U.S.Const. Amend. IV, V, VI, VII and VIII. 7 'The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. 'The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.' U.S.C.onst. Amend. IX and X. 8 U.S.Const. Amend. X, note 7, supra. 9 'Due process of law in the latter (i.e., the Fifth Amendment) refers to that law of the land which derives its authority from the legislative powers conferred upon congress by the constitution of the United States, exercised within the limits therein prescribed, and interpreted according to the principles of the common law. In the fourteenth amendment, by parity of reason, it refers to that law of the land in each state which derives its authority from the inherent and reserved powers of the state, exerted within the limits of those fundamental principles of liberty and justice which lie at the base of all our civil and political institutions, and the greatest security for which resides in the right of the people to make their own laws, and alter them at their pleasure.' Hurtado v. California, 110 U.S. 516, 535, 4 S.Ct. 111, 120, 28 L.Ed. 232. 10 Article VIII of the Illinois Constitution of 1818 contained 23 sections dealing with the types of matters that are found in the Federal Bill of Rights. On the subject of 'due process' it included the following: § 8. That no freeman shall be imprisoned or disseized of his freehold, liberties or privileges, or outlawed or exiled, or in any manner deprived of his life, liberty or property, but by the judgment of his peers or the law of the land. * * * 11 Article XIII of the Illinois Constitution of 1848 contained the following: 'That the general, great and essential principles of liberty and free government may be recognized and unalterably established, we declare: § 8. That no freeman shall be imprisoned or disseized of his freehold, liberties or privileges, or outlawed or exiled, or in any manner deprived of his life, liberty, or property, but by the judgment of his peers, or the law of the land. § 9. That in all criminal prosecutions the accused hath a right to be heard by himself and counsel; to demand the nature and cause of the accusation against him; to meet the witnesses face to face; to have compulsory process to compel the attendance of witnesses in his favor; and in prosecutions by indictment or information, to speedy public trial by an impartial jury of the county or district wherein the offense shall have been committed, which county or district shall have been previously ascertained by law, and that he shall not be compelled to give evidence against himself.' Reprinted in Ill.Rev.Stat. (1937). 12 For historical treatments of the Sixth and Fourteenth Amendments in decisions of this Court in relation to the general subject matter of the instant cases see especially, Adamson v. California, 332 U.S. 46, concurring opinion pages 61—68, dissenting opinion pages 68—123, 67 S.Ct. 1672, 1680, 1683; Betts v. Brady, 316 U.S. 455, 464—472, dissenting opinion pages 477—480, 62 S.Ct. 1252, 1257—1261, 1263—1265, 86 L.Ed. 1595; Johnson v. Zerbst, 304 U.S. 458, 462, 6 3, 58 S.Ct. 1019, 1022, 82 L.Ed. 1461; Palko v. Connecticut, 302 U.S. 319, 322—328, 58 S.Ct. 149 153, 82 L.Ed. 288; Powell v. Alabama, 287 U.S. 45, 59—69, 53 S.Ct. 55, 60—64, 77 L.Ed. 158, 84 A.L.R. 527; Hurtado v. California, 110 U.S. 516, 520—538, 4 S.Ct. 111, 113—122, 28 L.Ed. 232, dissenting opinion 110 U.S. pages 538—558, 4 S.Ct. 292—302, 28 L.Ed. 232; Davidson v. New Orleans, 96 U.S. 97, 100—104, 24 L.Ed. 616. 13 A classic statement of way it is due process to do many things in the state courts, particularly of a procedural nature, that may not be done in federal courts because of the specific procedural requirements of the Federal Bill of Rights was made by Mr. Justice Cardozo in the light of his long experience in state courts. 'We have said that in appellant's view the Fourteenth Amendment is to be taken as embodying the prohibitions of the Fifth. His thesis is even broader. Whatever would be a violation of the original bill of rights (Amendments I to VIII) if done by the federal government is now equally unlawful by force of the Fourteenth Amendment if done by a state. There is no such general rule. 'The Fifth Amendment provides, among other things, that no person shall be held to answer for a capital or otherwise infamous crime unless on presentment or indictment of a grand jury. This court has held that, in prosecutions by a state, presentment or indictment by a grand jury may give way to informations at the instance of a public officer. Hurtado v. California, 110 U.S. 516, 4 S.Ct. 111, 292, 28 L.Ed. 232; Gaines v. Washington, 277 U.S. 81, 86, 48 S.Ct. 468, 470, 72 L.Ed. 793. The Fifth Amendment provides also that no person shall be compelled in any criminal case to be a witness against himself. This court has said that, in prosecutions by a state, the exemption will fail if the state elects to end it. Twining v. New Jersey, 211 U.S. 78, 106, 111, 112, 29 S.Ct. (14, 22, 24, 25), 53 L.Ed. 97. Cf. Snyder v. Massachusetts, supra, 21 U.S. 97, at page 105, 54 S.Ct. 330, at page 332, 78 L.Ed. 674, 90 A.L.R. 575; Brown v. Mississippi, 297 U.S. 278, 285, 56 S.Ct. 461, 464, 80 L.Ed. 682. The Sixth Amendment calls for a jury trial in criminal cases and the Seventh for a jury trial in civil cases at common law where the value in controversy shall exceed twenty dollars. This court has ruled that consistently with those amendments trial by jury may be modified by a state or abolished altogether. Walker v. Sauvinet, 92 U.S. 90, 23 L.Ed. 678; Maxwell v. Dow, 176 U.S. 581, 20 S.Ct. 448, 494, 44 L.Ed. 597; New York Central R. Co. v. White, 243 U.S. 188, 208, 37 S.Ct. 247 (254), 61 L.Ed. 667, L.R.A.1917D, 1, Ann.Cas.1917D, 629; Wagner Electric Mfg. Co. v. Lyndon, 262 U.S. 226, 232, 43 S.Ct. 589, 591, 67 L.Ed. 961. As to the Fourth Amendment, one should refer to Weeks v. United States, 232 U.S. 383, 398, 34 S.Ct. 341, 346, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177, and as to other provisions of the Sixth, to West v. Louisiana, 194 U.S. 258, 24 S.Ct. 650, 48 L.Ed. 965.' Palko v. Connecticut, 302 U.S. 319, 323, 324, 58 S.Ct. 149, 151, 82 L.Ed. 288. 14 Art. II, § 2, of the Illinois Constitution of 1870, supra. 15 See note 6, supra. 'By virtue of that provision (in the Sixth Amendment), counsel must be furnished to an indigent defendant prosecuted in a federal court in every case, whatever the circumstances.' Foster v. Illinois, 332 U.S. 134, 136, 137, 67 S.Ct. 1716—1718. See also, Betts v. Brady, 316 U.S. 455, 461, 464, 465, 62 S.Ct. 1252, 1255, 1257, 86 L.Ed. 1595; Glasser v. United States, 315 U.S. 60, 70, 62 S.Ct. 457, 464, 86 L.Ed. 680; Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461; Palko v. Connecticut, 302 U.S. 319, 327, 58 S.Ct. 149, 152, 82 L.Ed. 288. 16 'In all the courts of the United States the parties may plead and manage their own causes personally, or by the assistance of such counsel or attorneys at law as, by the rules of the said courts, respectively, are permitted to manage and conduct causes therein.' Jud.Code, § 272, 36 Stat. 1164, 28 U.S.C. § 394, 28 U.S.C.A. § 394. This is almost verbatim as it was enacted as § 35 in the First Judiciary Act, September 24, 1789, 1 Stat. 92. 'Every person who is indicted of treason or other capital crime, shall be allowed to make his ful defense by counsel learned in the law; and the court before which he is tried, or some judge thereof, shall immediately, upon his request, assign to him such counsel, not exceeding two, as he may desire, and they shall have free access to him at all seasonable hours. * * *' R.S. § 1034, 18 U.S.C. § 563, 18 U.S.C.A. § 563. This conforms closely to § 29 in the first Federal Crimes Act, approved April 30, 1790, 1 Stat. 118, 18 U.S.C.A. § 562. 17 'It is probably safe to say that from its adoption in 1791 until 1938, the right conferred on the accused by the Sixth Amendment 'to have the assistance of counsel for his defense' was generally understood as meaning that in the Federal courts the defendant in a criminal case was entitled to be represented by counsel retained by him. It was not assumed that this constitutional privilege comprised the right of a prisoner to have counsel assigned to him by the court if, for financial or other reasons, he was unable to retain counsel. The Sixth Amendment was not regarded as imposing on the trial judge in a Federal court the duty to appoint counsel for an indigent defendant. 'The marked departure effected by the decision in Johnson v. Zerbst created a practical difficulty in respect to cases previously tried. No obstacle existed in connection with the application of this ruling to subsequent proceedings.' Holtzoff, The Right of Counsel Under the Sixth Amendment, 20 N.Y.U.L.Q.Rev. 1, 7—8, 10 (1944). At the time of making the above statement, Judge Holtzoff was the Secretary for the Advisory Committee on Federal Rules of Criminal Procedure. 18 'Rule 44. Assignment of Counsel. If the defendant appears in court without counsel, the court shall advise him of his right to counsel and assign counsel to represent him at every stage of the proceeding unless he elects to proceed without counsel or is able to obtain counsel.' Federal Rules of Criminal Procedure, effective March 21, 1946, 327 U.S. 866, 867, 18 U.S.C. § 1946 ed., following § 687, 18 U.S.C.A. following section 687. 'this rule is a restatement of existing law in regard to the defendant's constitutional right of counsel as defined in recent judicial decisions. * * * The present extent of the right of counsel has been defined recently in Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461; Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830, and Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680. The rule is a restatement of the principles enunciated in these decisions.' Notes to the Rules of Criminal Procedure for the District Courts of the United States, as prepared under the direction of the Advisory Committee on Rules of Criminal Procedure, March, 1945, p. 38. 19 The tabulations show that, as of 1930, 13 states 'provide that if the defendant appear for arraignment without counsel he shall be informed by the court that it is his right to have counsel before being arraigned, and he shall be asked if he desire the aid of counsel.' Six states 'provide that the accused has a right to counsel: * * *.' Eighteen states, including Illinois, provide under varying conditions 'that the court shall assign counsel if the accused desire it, and be unable to employ counsel: * * *.' Fifteen states, including Illinois, provide under varying conditions 'that the court shall assign counsel if the accused be unable to employ counsel: * * *.' Both Illinois and Louisiana required a showing of inability to be made by the accused under oath. Five states 'provide that the court shall assign counsel if accused desire it: * * *.' Three states provide that the court may appoint one or more attorneys to represent the accused and 14 'provide that the appointment of counsel by the court for the defense of the accused shall not exceed two: * * *.' Thirteen states 'provide that counsel for the defense shall have free access to the prisoner at all reasonable hours: * * *.' Code of Criminal Procedure, Commentary to $203 (1930) 630—634. 20 This Court summarized those circumstances as follows: 'In this case there was no question of the commission of a robbery. The State's case consisted of evidence identifying the petitioner as the perpetrator. The defense was an alibi. Petitioner called and examined witnesses to prove that he was at another place at the time of the commission of the offense. The simple issue was the veracity of the testimony for the State and that for the defendant. As Judge Bond says, the accused was not helpless, but was a man forty-three years old , of ordinary intelligence, and ability to take care of his own interests on the trial of that narrow issue. He had once before been in a criminal court, pleaded guilty to larceny and served a sentence and was not wholly unfamiliar with criminal procedure.' Id., at page 472 of 316 U.S., at page 1261 of 62 S.Ct., 86 L.Ed. 1595. 21 The Court also reviewed the material constitutional and statutory provisions of the thirteen original states. Id., at page 467 of 316 U.S., at page 1258 of 62 S.Ct., 86 L.Ed. 1595. It then summarized as follows other constitutional and statutory provisions currently in force: 'The constitutions of all the states, presently in force, save that of Virginia, contain provisions with respect to the assistance of counsel in criminal trials. Those of nine states may be said to embody a guarantee textually the same as that of the Sixth Amendment or of like import. In the fundamental law of most states, however, the language used indicates only that a defendant is not to be denied the privilege of representation by counsel of his choice. 'In eighteen states the statutes now require the court to appoint in all cases where defendants are unable to procure counsel. * * * And it seems to have been assumed by many legislatures that the matter was one for regulation from time to time as deemed necessary, since laws requiring appointment in all cases have been modified to require it only in the case of certain offenses.' Id., at pages 467, 468, 470, 471 of 316 U.S., at pages 1252, 1258, of 62 S.Ct., 86 L.Ed. 1595. Particularly from the failure of the states to treat the requirement of inquiry by the court as to counsel or the requirement of appointment of counsel, either uniformly or as a matter for incorporation in the state constitutions, the Court concluded— 'we are unable to say that the concept of due process incorporated in the Fourteenth Amendment obligates the states, the guarantee into a set of hard counsel in every such case. Every court has power, if it deems proper, to appoint counsel where that course seems to be required in the interest of fairness.' Id., at pages 471, 472, of 316 U.S., at page 1261 of 62 S.Ct., 86 L.Ed. 1595. The dissenting opinion also marshals the states and collects them under the following headings: 35 states, including Illinois, by constitutional or statutory provision or by judicial decision or established practice judicially approved, require 'that indigent defendants in non-capital as well as capital criminal cases be provided with counsel on request: * * *' (Italics supplied); of the remaining 13, nine 'are without constitutional provision, statutes, or judicial decisions clearly establishing this requirement: * * *'; there are two states 'in which dicta of judicial opinions are in harmony with the decision by the court below in this case: * * *' (here affirmed); and there are two states 'in which the requirement of counsel for indigent defendants in non-capital cases has been affirmatively rejected: * * *.' Id., at pages 477—480, of 316 U.S., at pages 1264, 1265 of 62 S.Ct., 86 L.Ed. 1595. For the instant cases, the important point is that this tabulation shows that only 35 states required the appointment of counsel for indigent defendants in noncapital cases, even upon the accused's request for such appointment. No such request was present here. 22 Carter v. Illinois, 329 U.S. 173, 174, 175, 67 S.Ct. 216, 218; Rice v. Olson, 324 U.S. 786, 788, 789, 65 S.Ct. 989—991, 89 L.Ed. 637; Adams v. United States ex rel. McCann, 317 U.S. 269, 267—279, 63 S.Ct. 236, 240, 241, 87 L.Ed. 268, 143 A.L.R. 435; Walker v. Johnston, 312 U.S. 275, 286, 61 S.Ct. 574, 579, 85 L.Ed. 830; Johnson v. Zerbst, 304 U.S. 458, 464, 467—469, 58 S.Ct. 1019, 1023, 1024, 1025, 82 L.Ed. 1461. See The Right to Benefit of Counsel Under the Federal Constitution, 42 Col.L.Rev. 271, 277-280 (1942). 23 See note 17, supra. 1 Betts v. Brady was decided June 1, 1942. Benjamin V. Cohen and Erwin N. Griswold, writing in the New York Times, August 2, 1942, stated: 'Most Americans—lawyers and laymen alike—before the decision in Betts v. Brady would have thought that the right of the accused to counsel in a serious criminal case was unquestionably a part of our own Bill of Rights. Certainly the majority of the Supreme Court which rendered the decision in Betts v. Brady would not wish their decision to be used to discredit the significance of that right and the importance of its observance. 'Yet at a critical period in world history, Betts v. Brady dangerously tilts the scales against the safeguarding of one of the most precious rights of man. For in a free world no man should be condemned to penal servitude for years without having the right to counsel to defend him. The right to counsel, for the poor as well as the rich, is an indispensable safeguard of freedom and justice under law.' 2 'Every person charged with crime shall be allowed counsel, and when he shall state upon oath that he is unable to procure counsel, the court shall assign him competent counsel, who shall conduct his defense. In all cases counsel shall have access to persons confined, and shall have the right to see and consult such persons in private. 'Whenever it shall appear to the court that a defendant or defendants indicted in a capital case, is or are indigent and unable to pay counsel for his or her defense, it shall be the duty of the court to appoint one or more competent counsel for said defendant or defendants, * * *.' Ill.Rev.Stat.1937, c. 38, § 730. 3 For a summary of the Illinois cases, see the dissenting opinion of Mr. Justice Rutledge in Foster v. Illinois, 332 U.S. 134, 143, 144, 67 S.Ct. 1716, 1721. 4 The classic statement is that of Mr. Justice Sutherland in Powell v. Alabama, supra, pages 68, 69, of 287 U.S., page 64 of 53 S.Ct.: 'The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defense, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence. If that be true of men of intelligence, how much more true is it of the ignorant and illiterate, or those of feeble intellect.' 5 The specific intent which is an ingredient of this offense may be disproved by a showing of intoxication (People v. Klemann, 383 Ill. 236, 48 N.E.2d 957) or insanity. Ill.Rev.Stat.1937, c. 38, §§ 590, 592.
01
333 U.S. 611 68 S.Ct. 747 92 L.Ed. 968 COMMONWEALTH OF MASSACHUSETTS et al.v.UNITED STATES. No. 157. Argued Dec. 10, 1947. Decided April 19, 1948. Mr. Alfred E. Lo Presti, of Boston, Mass., for petitioner. Mr. Albert E. Hallett, of Chicago, Ill., for the State of Illinois, as amicus curiae, by special leave of Court. Helen Goodner, of Washington, D.C., for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 This case is for all practical purposes a renewal of the litigation recently here in State of Illinois ex rel. v. United States, 328 U.S. 8, 66 S.Ct. 841, and the companion case of People of State of Illinois ex rel. Gordon v. Campbell, 329 U.S. 362, 67 S.Ct. 340. The former unanimously held that the United States has priority, by virtue of Rev.Stat. § 3466, 31 U.S.C. § 191, 32 U.S.C.A. § 191, for payment from ani nsolvent debtor's estate of federal insurance contribution taxes under Title 8 and unemployment compensation taxes under Title 9 of the Social Security Act, 49 Stat. 620, 42 U.S.C.A. §§ 1001 et seq., 1101 et seq., as against a state's claim for unemployment compensation taxes imposed by its statute conforming to the federal act's requirements. The Campbell case, which was reargued on other issues, rested on this ruling for disposition of the common issue concerning the effect of § 3466. 2 The facts are substantially identical with those in Illinois v. United States,1 except in two respects. One is that the fund available here for distribution is more than sufficient to pay either the Title 8 or the Title 9 taxes, though inadequate to pay both, while in Illinois v. United States the fund was not large enough to satisfy either tax in full. Here too the debtor's assignee has paid to the commonwealth the full amount of its claim,2 while in the Illinois cases the fund remained in the assignee's hands for distribution. 3 The District Court sustained the federal priority for capital stock and Title 8 taxes in full, and for 10 per cent of the Title 9 claim. It therefore deferred payment of any part of the state's claim until those claims were fully paid. But the court held the United States not entitled to priority for the remaining 90 per cent of the Title 9 claim, on the ground that Title 9, § 902,3 gives the assignee 'the alternative right' to pay that amount to an approved state unemployment fund. Accordingly the judgment ordered Massachusetts to pay over to the United States, from the $803.72 received from the assignee, sufficient funds to satisfy in full the federal priorities sustained, and to retain the small balance remaining after making those payments to apply on its claim for 90 per cent of the Title 9 taxes. 65 F.Supp. 763. This action was taken in the view that, while our previous decisions had sustained the federal priority for the capital stock and Title 8 taxes, they had not determined the question for Title 9 claims.4 4 However, on appeal by both parties, the Circuit Court of Appeals held the United States entitled, under the Illinois rulings, to priority for the full amount of all its claims, including the Title 9 taxes. That court therefore affirmed the District Court's judgment except insofar as it denied the Government's Title 9 claim. As to this it reversed the District Court's ruling. 160 F.2d 614. 5 Because of the obvious confusion concerning the effects of our prior decisions and the asserted differences betwen this case and the Illinois cases, certiorari was granted. 332 U.S. 754, 68 S.Ct. 66. I. 6 Massachusetts seeks to retain the entire $803.72 she has received, in priority to all the federal claims. She agrees with the district court that § 902 gives the taxpayer an 'optional right' of payment, but does not accept its allocation creating priorities for all federal claims except 90 per cent of the Title 9 taxes. To sustain this broad claim would require reversal of both of the Illinois decisions. In no other way, on the facts, could Massachusetts retain the whole amount she was paid.5 7 Illinois as amicus curiae takes a narrower position, conceding that the Illinois cases stand as decisive adjudications of priority for Title 8 taxes but disputing that effect for Title 9 claims.6 This position seeks an allocation paying the state's claim after the Title 8 and other federal claims, including 10 per cent of the Title 9 taxes, but before or rather in 'satisfaction' of the remaining 90 per cent of them.7 8 Notwithstanding their substantial differences, the two states rest their respective positions on the same basic arguments, which upon examination turn out to be identical with those vigorously presented by Illinois in the earlier cases, except for wording and detail. Much is made of the fact that here the debtor's assignee has paid to the commonwealth the full amount of its claim, while in Illinois v. United States, the fund remained in the assignee's hands. Both states urge that § 902 gives the taxpayer, and here his assignee, the 'optional right' of payment to the state. Moreover, with respect to the requirement of Rev.Stat. § 3466 that 'the debts due the United States shall be first satisfied,' it is said that payment to the state with resulting credit to the United States for 90 per cent of the Title 9 claim 'satisfies' the Government's debt as much as payment to it in cash. 9 In the Illinois cases the foundation for the state's claim to be paid in preference to any of the federal claims lay in the credit provision of § 902, which is the identical provision for 'optional payment.' There was no question whatever that § 902 gave the taxpayer the 'alternae right.' But the precise issue in both cases was whether that right had been cut off by Rev.Stat. § 3466 when he became insolvent. 10 Obviously there could have been but little point or effect to our decisions if, despite them, the assignee could have turned around immediately and deprived the Government of the priorities established simply by exercising a right to make the optional payment to the state. Nor would the decisions have been much more sensible or effective, had they purported to sustain the federal priorities when the assignee has retained the fund, but to disallow them, if he has paid the state before the federal claims are filed. We made no such ineffective or capricious rulings. The decision was broadly that by intervention of the insolvency and the consequent bringing of Rev.Stat. § 3466 into play, the taxpayer's right to pay the state and take federal credit had been cut off.8 11 Our decisions went to the merits of that right and not merely to rule that the state was not a proper party to enforce its exercise. The taxes due the United States were held to be debts; and by virtue of § 3466 the debtor's prior obligation attaching as of the date of his insolvency was to the Government, not to the state. It followed necessarily that the assignee could not 'satisfy' it by paying the state and giving the Government 'credit.' This was the very question at issue and the one adjudicated. The 'alternate right' contention and the one that 'satisfied' in § 3466 means 'credit' are only verbal redressings of the basic issue decided in the Illinois cases. II. 12 This is as true of the argument's bearing on Illinois' narrower position as it is for Massachusetts' broader one. But Illinois, apparently with Massachusetts' support, brings forward to sustain the less sweeping attack the additional contention that the Illinois decisions did not adjudicate Title 9 priority, although purporting to do so. Moreover, the facts present this narrower issue of distinguishing between Title 9 and other federal claims in sharper factual focus than did the Illinois cases. For if the capital stock and Title 8 claims are first paid in full, as the District Court required, a small balance of the fund will remain, to be applied either in part payment of the federal Title 9 claim or in some form of allocation between it and Massachusetts' claim. This was not true of Illinois v. United States, or indeed of Illinois v. Campbell, in the posture in which that case was brought here. 13 The principal argument is that the Title 9 taxes, though litigated in the Illinois courts, were not involved on the facts in the Illinois cases as they came to and were decided by this Court. Hence it is said we did not acquire jurisdiction over the Title 9 claims. The argument is correct concerning Illinois v. Campbell.9 But it is surprising as applied to Illinois v. United States, in view of the state supreme court's adverse decision on the Title 9 issue; Illinois' explicit application for certiorari on that issue and argument on the merits here to reverse the state court's decision;10 the necessity on the facts for the state to bring the question up and secure reversal in order to establish its claim;11 and finally our opinion's clear and explicit terms, indeed emphasis, in deciding the Title 9 issue, together with the Title 8 one, against Illinois.12 14 The idea that the state court decided only the Title 8 issue completely misconceives its action, and serves only to confuse the judgment in that case with the one in Illinois v. Campbell. Indeed it seeks to infuse into the former the latter's denial of Title 9 priority. Not only is this wholly incompatible with Illinois' earlier position; it ignores the fact that the state court disposed of the Title 9 issue in both cases, but in opposite ways on entirely different facts and legal issues. 15 In Illinois v. Campbell, the state court did not reach the basic question of the force of Rev.Stat. § 3466 to create priority for federal Title 9 claims; rather, it expressly avoided deciding that question. 391 Ill. 29, 32, 62 N.E.2d 537. This was because the insolvent's assets were in the hands of a court- appointed receiver, id. 391 Ill. at page 31, 62 N.E.2d at page 538, and in that situation § 602(b) of the Revenue Act of 1943, 58 Stat. 77,13 expressly allowed the receiver to pay the state and take credit up to 90 per cent of the Title 9 tax. The Illinois Supreme Court expressly so held, and on this ground alone denied the federal Title 9 claim. People v. Waste & Tx tile Co., 391 Ill. 29, 34, 62 N.E.2d 537, 539. The effect was to rule that § 602(b) created a legislative exception to § 3466, limited to payments by such receivers, within the times and for the tax periods specified, up to 90 per cent of the Title 9 taxes.14 16 But § 602(b) did not apply in Illinois v. United States, because the insolvent's assets were held by a common-law assignee, not a court-appointed official.15 So holding, 391 Ill. at page 37, 62 N.E.2d at page 541, the Illinois court went on to rule that the federal claims for Title 8 and Title 9 taxes were debts within the meaning of § 3466 and were therefore entitled to priority over the state's claim. It not only rejected the argument that the credit provision of Title 9, § 902, made that claim 'in reality a claim of the Nation * * * tantamount to a claim of the United States,'16 but also carefully guarded the wording of the opinion's dispositive paragraphs17 and the directions given the trial court for entering the judgments on remand so as to differentiate the two cases and to avoid any direction that the fund in Illinois v. United States apply on only one of the federal claims.18 The judgment thus left the United States free to apply it is partial satisfaction of either claim or both. 17 This was also the effect of our own decision and judgment. It generally and without distinction between the Title 8 and Title 9 claims adjudicated priority for both. As in the Illinois court's decision, no restriction was placed upon allocation of the fund, nor is any hint to be found in the opinion that such an allocation was intended. Indeed we were not asked to make one and to have done so would have disregarded the basic position of both parties, each of which sought a full and favorable disposition of the controversy including decision upon all the issues presented.19 18 It is true that, as in the Illinois Supreme Court, the decision and judgment could have been made on the narrower basis that the Title 8 claim was more than sufficient to exhaust the fund, and therefore to sustain the priority for that claim alone would dispose of the case. But this would have been equally true of the Title 9 claim. Neither claim was either more or less essential to decision than the other, indeed decision upon both was necessary to a judgment favorable to Illinois. To have eliminated either would have required some indication of that purpose. Since none was given, it cannot be said that the judgment rested on the one ground or claim more than the other. 19 While therefore the case is one which might have been decided on either of two independent grounds favorably to the Government, it is neither one in which that course was followed nor one which could have been determined the opposite way in that manner. Instead, as we were asked to do and rightly could do on the record and the issues, we decided both issues, and the judgment rested as much upon the one determination as the other. In such a case the adjudication is effective for both. United States v. Title Insurance & Trust Co., 265 U.S. 472, 44 S.Ct. 621, 68 L.Ed. 1110; Union Pac. R. Co. v. Mason City & Ft. D.R. Co., 199 U.S. 160, 26 S.Ct. 19, 50 L.Ed. 134; see Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 340, 48 S.Ct. 194, 195, 72 L.Ed. 303. III. 20 Finally, it is urged that in Illinois v. United States we had no occasion to consider and hence our opinion did not discuss whether in a case like this, where the fund is more than sufficient to pay all federal claims execept 100 per cent of the Title 9 claim, the balance remaining after paying those other claims must go first to pay the federal Title 9 claim in full, or may be allocated between that claim and the state claim to pay 10 per cent of the federal claim first and then to apply what remains on the state claim.20 21 Closely related to this, though not involved on the facts in Illinois v. United States or here,21 is the Government's apparent concession that if all the federal claims are paid in full, including 100 per cent of the Title 9 claim, and any balance then remains in the fund, the insolvent taxpayer is nevertheless given the right by § 902 to pay that balance to the state and receive credit on his federal Title 9 tax. In such a case, it is said, the Government would be overpaid on Title 9 taxes and obligated to refund the excess. Then the taxpayer could apply the amount received in further payment of the state claim, with corresponding federal credit, overpayment and refund, only to start the cycle again and repeat it until he had paid the state its claim in full and received the entire 90 per cent credit.22 Hence in this situation, it is said, short-cut distribution might well be made to the state in the first place, to eliminate the cycle. 22 The effect of the concession, if it is valid, goes for toward cutting the ground from beneath the Government's basic position.23 That effect is heightened by the further surprising statement in its brief that in a case like this, not covered by the concession, compliance with the credit conditions of § 902 becomes impossible 'not because Section 3466 operates to exclude Section 902 or to nullify it, but because the terms of Section 902 itself deny it (credit) where no payment can be made.' The statement would be understandable, if it had been that § 3466 and § 902 both work to deny the credit in this situation. But to say that § 3466 has no effect to cut off the right to credit either in the present situation or in the different hypothetical one stated is to take away the basic grounding of all federal priority as against the state's claim. 23 The concessions cannot be accepted. In the first place, the effect of § 3466 depends on the fact of insolvency, not on the degree of it as the first concession seems to contemplate. And it is only by force of § 3466 that the Government has any priority at all. Section 902 may work to deny credit, if its conditions for credit are not fulfilled. But it does not give federal priority over valid state claims. Moreover, both concessions are altogether inconsistent with the basic decisions in the Illinois cases and the grounds on which they rested. The matter requires brief restatement. It is one which goes fundamentally to the effect of Rev.Stat. § 3466, as distinguished from, though not unrelated to, § 902 of the Social Security Act. These of course are entirely distinct statutes, with different functions. 24 Section 3466 gives priority explicitly for 'debts due to the United States' and the priority given is in terms absolute, not conditional. Once attaching, it is final and conclusive. A ln g line of decisions has held that taxes due the Government are 'debts' within the meaning of the section.24 In the Illinois cases we applied this ruling to Title 8 and Title 9 taxes as against the state's claim for 'contributions.' Prior decisions also have held that the priority attaches as of the time of the insolvency,25 a ruling also applied in the Illinois cases. 25 But if credit can be taken after § 3466 attaches, i.e., after insolvency, effective to set aside the federal priority up to 90 per cent of the Title 9 claim, the priority to that extent becomes conditional, not absolute. Its effectiveness then becomes contingent upon the happening of subsequent events, namely, the concurrence of the conditions of § 902 for paying the state and taking the credit together with the taxpayer's election to do this. In short, § 3466 never conclusively attached and § 902 works retroactively on occurrence of those contingencies to upset the priority. 26 A further effect might be to make the statute applicable beyond the scope of the term 'debts due to the United States.' For if the taxpayer's subsequent election can destroy the priority retroactively, not only the priority but the 'debt' itself becomes contingent. And it is at least doubtful on the statute's wording that obligations wholly contingent for ultimate maturity and obligation upon the happening of events after insolvency can be said to fall within the reach of 'debts due' as of the time of insolvency.26 27 However this may be, we know of no previous application of § 3466 creating such a conditional priority.27 Nor do we see how one could be made consistently with the section's terms or purposes. The only such consistent application would seem to be one giving the Government the prior and indefeasible right to take the fund available, up to the amount necessary to pay its claim as of the date the priority attaches, not as it may be affected by later contingencies other than payment.28 In enacting § 3466 Congress gave no indication whatever of intent to create defeasible priorities. 28 The defeasance conceded possible by the Government, therefore, together wih the further conceded ineffectiveness of § 3466 (though not of § 902) in circumstances like these to deny the right to credit, destroys the fundamental character of the priority created by § 3466 and thereby removes the foundation from the Government's basic position, which is that § 3466 applies as of the time of insolvency to create the priority it contemplates. Through these concessions the section is made, by virtue of the effect of § 902, to create only a defeasible federal priority as against claims for credit. This actually is but another way of making § 902 effective as an exception to Rev.Stat. § 3466, like § 602(a) and(b) of the Revenue Act of 1943, noted above in Part II. 29 This of course was Illinois' earlier position, rejected by this Court. If that position is not to be accepted, we do not see how § 3466 can be regarded as applying to Title 9 taxes or, indeed, how the effect of treating § 902 as an exception can be limited to Title 9 taxes. For if § 902 works as an exception to § 3466, then Illinois was right in the first place, and the exception would seem to apply to all federal taxes, not just the one.29 30 Accordingly, the Government's concessions cannot be accepted as consistent either with our prior decisions or with its own basic position in the Illinois cases and this one. That position, apart from the concessions, rests ultimately on § 3466 and its applicability to these claims. This necessarily denies that § 902 creates an exception to § 3466 or a qualification inconsistent with its terms. The qualifications now conceded are not consistent with those terms, for they do not contemplate the tenuous, destrc tible sort of 'priority' the concessions involve. 31 Moreover, the fact that in Illinois v. United States we did not discuss expressly the 10-90 per cent distribution of Title 9 taxes now suggested does not mean that our decision did not encompass that possibility. It extended generally to all cases where credit is sought after insolvency. It was federal priority attaching as of the time of insolvency that we adjudicated, no something less. As we have indicated, in making the adjudication we neither were nor could have been ignorant of § 902's allowance of the taxpayer's election. Our decision held that right cut off by the incidence of § 3466 at the time of insolvency. Any other would have been wholly inconsistent with the ruling that § 3466 applies as against the state's claim for 'contributions' or the taxpayer's right to make them after the incidence of his insolvency. IV. 32 We have taken pains to state the effect of our previous decisions, because of the confusion concerning them and the fact that two states have earnestly presented the questions. Ordinarily this would end the matter. But, again for those reasons, we turn briefly to the merits and to the question whether the Illinois decisions should now be reversed. 33 Apart from the arguments already discussed, two stand out as reasons for the change sought. Both reiterate contentions rejected in the Illinois cases. The primary one is that the objects of the legislation will be defeated unless the change is made, namely, the encouragement of the state systems and correspondingly of taxpayers to make 'contributions' to state funds, thereby insuring that the moneys so paid in will go out for unemployment benefits rather than into the Treasury as revenue. The second is a heightened emphasis on the subsequent amendments to § 902 as showing Congress' intent to waive, in progressively broadening scope though still only in specified situations, the original limitations of § 902 upon securing credit.30 34 From the second contention is drawn the conclusion that Congress, by its carefully, even meticulously drawn relaxations, meant credit to be given not only in the circumstances so carefully prescribed but also in other situations not within those prescriptions. This conclusion when added to the first argument amounts in sum to reiterating that the state exaction is 'tantamount to a claim of the United States', and that not to disregard the tax and credit structure in which Congress molded the Act would be to 'observe the form and ignore the substance of the legislation.' 35 We shall not repeat the answers made in Illinois v. United States, except to say that 'while the state and federal governments were to cooperate, the underlying philosophy of the Federal Act was to keep the state and federal systems separately administered.' 328 U.S. at page 11, 66 S.Ct. at page 843. To the considerations there stated, however, we now add the following ones, not expressly mentioned in the earlier opinion, prefaced however, with the observation that the grounding of each plea for reversal affords basis for conclusion against that action as well as in its favor. 36 Thus the many relaxations which Congress has made respecting the conditions permitted for taking credit, by force of their very number and careful limitation, show that Congress was not offering a broadside exemption to be applied in situations, such as this case, other than those specifically defined.31 Rather the intention disclosed is to limit the credit to the precise situations specified for allowing it. That view accords with Congress' deliberate choice of the tax and conditional credit devices for framing the Act's structure. These are well-known techniques, adopted apparently in this instance for constt utional as well as administrative rasons.32 But those very motivations warn us to be wary of disregarding the form which Congress has chosen advisedly, in order to substitute a substance we can only be doubtful it may have intended.33 37 But it is said that if payment to the state is not allowed and the right to receive credit is cut off, the money will not be paid out in unemployment benefits but will go into the Treasury as general revenue; the states will be compelled to make payments to the insolvent's employees; and thus the primary purposes of the Act will be defeated. There are several answers. 38 One is that Congress has guaranteed the solvency of the state funds and, if need be, the revenues thus paid into the Treasury will be available for that purpose.34 Moreover, but especially in view of this guaranty, it may be more likely that the funds, if paid into the Treasury rather than to the state, will be saved for application to the Act's purposes. For there is no assurance, if the state's prior right to them is once established, that they will go for the payment of unemployment benefits. 39 It must be remembered that we are dealing with an insolvent's assets. And the states have statutes by which such assets are distributed according to local priorities whenever § 3466 is not operative. Only a few of them place unemployment benefits at the top.35 Depending therefore upon the number and the amounts of claims standing ahead of the unemployment benefit claims in the particular state would be the certainty or probability of payment of the latter. In short, reversing our decisions and conceding the validity of the state's position, either as to Title 9 taxes alone or as to all federal taxes, would give no definite and certain assurance that the funds thus acquired by the states would go to satisfy the Act's purposes.36 In many cases payment to the state would be the means of diverting them to wholly extraneous objects. Especially would this be true when smaller employers within the Ac' § terms are involved, as they seem to be much more often than others.37 In the absence of any explicit or clearly implied direction we do not believe that Congress intended to require that the state's claim for unemployment contributions take precedence over all other debts of the insolvent or to authorize us to make this a condition of allowing payment to the state to be made from his estate. There was no evident purpose thus broadly to upset state schemes of priority. 40 These examples are enough to show that the premises ofthe states' contentions are capable of supporting other conclusions than they draw from them. Other examples might be stated. But in each instance the inferences drawn by the states are counterbalanced with opposing ones quite or nearly as tenable. In some they are of greater weight. 41 It follows that Massachusetts and Illinois have not shown the clear inconsistency between the Act's explicit terms and our previous decisions, on the one hand, and achieving the Act's purposes, on the other, which is necessary to make out a case for reversal and thus for negating the force of Rev.Stat. § 3466 as creating federal priorities for Title 9 or other federal tax claims. The Illinois decisions were advisedly made, after full deliberation. There was no dissent on the basic question of priority, even though the issue seemed close. No substantially new argument or consideration of policy has been put forward. The case for reversal is no more clear or convincing than Illinois' position on the merits in the earlier litigation. 42 Nor are we persuaded that our former decisions were erroneous. For the strict policy of § 3466 had permitted few exceptions38 and, as we repeated in Illinois v. United States, quoting United States v. Emory, 314 U.S. 423, 433, 62 S.Ct. 317, 322, 86 L.Ed. 315, 'only the plainest inconsistency would warrant our finding an implied exception to the operation of so clear a command as that of § 3466.' 328 U.S. 8, 12, 66 S.Ct. 841, 843. See also United States v. Remund, 330 U.S. 539, 544, 67 S.Ct. 891, 893. There is no such inconsistency here. 43 Until the federal claims for taxes, whether under Title 8, Title 9 or other taxing provision are paid in full, the states are not entitled either to collect or to retain any part of the insolvent's debtor's assets. We do not anticipate that any of the state unemployment insurance programs will fail or be seriously impaired by reason of this decision, or their consequent failure to secure the small sums characteristically at stake in this extended litigation and, apparently, in other cases most likely to produce similar controversy. Nor would the Federal Treasury have been rendered bankrupt by a contrary result. 44 The judgment of the Circuit Court of Appeals is affirmed. 45 Affirmed. 46 Mr. Justice JACKSON, with whom Mr. Justice FRANKFURTER, Mr. Justice DOUGLAS and Mr. Justice BURTON join, dissenting. 47 This decision announces an unnecessarily ruthless interpretation of a statute that at its best is an arbitrary one. The statute by which the Federal Government gives its own claims against an insolvent priority over claims in favor of a state government must be applied by courts, not because federal claims are more meritorious or equitable, but only because that Government has more power. But the priority statute is an assertion of federal supremacy as against any contrary state policy. It is not a limitation on the Federal Government itself, not an assertion that the priority policy shall prevail over all other federal policies. Its generalities should not lightly be construed to frustrate a specific policy embodied in a later federal statute. 48 The Federal Government has sued to enforce a personal liability against one who, as assignee, paid to the State of Massachusetts funds which the Federal Government claims by virtue of its statutory priority. Defendant was the assignee of a small concern under a common-law assignment for benefit of creditors. The assests did not realize enough to pay both federal and state tax claims. The United States filed a claim, among other things, for 100% of the taxes laid by Title 9 of the Social Security Act, which however, provides for a 90% credit against the federal tax if that amount has been paid into an approved state unemployment compensation fund. Believing that he was entitled thereby to pay the State and to claim the credit against the federal tax, this assignee paid $803.72 on the claim of Massachusetts for taxes under the Massachusetts Unemployment Compensation Act. This is the sum now demanded by the Federal Government. 49 The reasoning on which the assignee is held liable and the State is required to turn this amount over to the Federal Government is this: True § 902 gives a 90% credit. But, literally, it is only for actual payment to the State. On insolvency, the federal priority statute, so it is held, intervenes and freezes the funds in the assignee's hands so that he cannot pay the State until he has first paid the Federal Government. Hence, unless he has enough money to pay both claims in full, the priority statute prevents him from taking the credit which the Social Security Act grants him, the Federal Government collects a windfall ten times what would normally be its due, and the State government gets nothing on its tax claim. This Court now so construes the priority statute as not merely to prefer net claims of the Federal Government, but also as a prohibition against courts marshaling the assets of an insolvent in an equitable manner. 50 The District Judge declined to support this harsh reasoning. He is one whose views of the meaning of the Social Security Act are entitled to great weight, because of his experience with it. See Steward Mach. Co. v. Davis, 301 U.S. 4 8, at page 553, 57 S.Ct. 883, at page 884, 81 L.Ed. 1279, 109 A.L.R. 1293. He considered that as to 90% of the federal tax, the taxpayer in effect was given an option to pay it to the approved state fund or to the Federal Government. He said (65 F.Supp. 764): 'The force of that analysis seemed to me the more persuasive when the true nature of Title IX of the Social Security Act as portrayed in Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293, was stressed. As to 90 per cent of the taxes under that title the objective of Congress was not to collect federal revenues but to stimulate the creation of and payment to state unemployment compensation funds. It would defeat obvious Congressional intent to lay down a rule which required that this 90 per cent should go to satisfy a Title IX tax claim instead of going to the direct benefit of claimants under state unemployment compensation plans.' 51 The consequences of this Court's refusal to follow his reasoning are so inconsistent with the purposes of the Social Security Act that they could not have been intended by a reasonable Congress. What the Court is doing practically is this: 52 1. The Court is giving the Federal Treasury a payment from an insolvent taxpayer ten times as large as Congress exacted from a solvent taxpayer under like circumstances. The 90% was never contemplated as federal revenue, but credit for that amount was intended to be availed of, to induce states to create unemployment compensation funds and to maintain them in solvent condition. 53 2. The Court is depriving the State of a revenue Congress not only tried to assure it, but one which it used the tax and credit device to impel the state to collect. See Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293. 54 3. This unjust enrichment of the Federal Government and the depletion of state unemployment funds is accomplished by holding that the priority statute prohibits simultaneous distribution to each, State and Federal Government, of the net amount actually due, taking into account such simultaneous payments, and by requiring instead that the total federal tax be paid in full and first in point of time, which in this case depletes the estate so that the assignee cannot thereafter make the state payment to obtain the federal credit. It seems to me that the federal priority statute cannot have been intended to do more than secure to the Federal Government what becomes fairly due it on a marshaling of assets as courts of equity usually do. 55 4. This interpretation prejudices general creditors by placing ahead of them $190 of tax claims for every $100 actually owing. For example, the maximum tax for both the State and Federal Governments is that laid by the Federal Act—let us say it amounts to $1,000. It can be discharged by payment of $1,000, $900 paid to the approved state fund and $100 to the Federal Government. But under this ruling the insolvent must pay the $1,000 in full to the Federal Government. That, of course, leaves the state tax undischarged, which calls for payment of another $900 before anything can be left for the general creditors. Thus, where an equitable marshaling of assets to pay just claims would put $1,000 of taxes ahead of general creditors, the Court's ruling puts $1,900 ahead of general creditors. The Court even goes so far as to reject concessions by the Government designed to mitigate, in this respect at least, the harshness of this rule. 56 The interpretation of the Priority Act to thus gouge the states and private creditors is contrary to the purpose and spirit of the Act itself. Over a century ago Mr. Justice Story defined the 'motives of public policy' which underlie the priority statutes of the Federal Government to be 'in order to secure an adequate revenue to sustain the public burthens and discharge the public debts. * * *' United States v. State Bank of North Carolina, 1832, 6 Pet. 29, 35, 8 L.Ed. 308. It is obvious that a to the 90% of the Social Security tax here involved, it was not contemplated as federal revenue to meet federal burdens but was laid to induce and to enable the State to assume specific obligations to the unemployed. The priority statute is now invoked to deny, in this class of cases, the aid promised in meeting these obligations. 57 When a later statute has enacted a comprehensive federal policy in another field and created a federal interest in the adverse claimant's solvency or function, this Court has rarely, and never until recently, hesitated to interpret the old and general priority statute as yielding to the newer and specific statutory scheme. Cook County National Bank v. United States, 107 U.S. 445, 2 S.Ct. 561, 27 L.Ed. 537; United States v. Guaranty Trust Co. of New York, 280 U.S. 478, 50 S.Ct. 212, 74 L.Ed. 556; cf. Callahan v. United States, 285 U.S. 515, 52 S.Ct. 454, 76 L.Ed. 914. See also dissent in United States v. Emory, 314 U.S. 423 at page 433, 62 S.Ct. 317, at page 322, 86 L.Ed. 315. The problem here is not whether a mere state claim can defeat one of the Federal Government, but whether one federal statute will be so construed as to defeat the manifest policy of another. 58 The Court's opinion, however, goes to some lengths to show that the Court as a whole and without dissent on this point has become committed to the interpretation it adopts, and by unusual deference to the doctrine of stare decisis declares itself bound hand and foot to full federal priority. I am unable to detect the commitment which the Court so clearly sees. But if I have agreed to any prior decision which forecloses what now seems to be a sensible construction of this Act, I must frankly admit that I was unaware of it. However, no rights have vested no prejudicial action has been taken in reliance upon such a ruling. It does not appear to have been called to the attention of Congress and in effect approved by failure to act. Under these circumstances, except for any personal humiliation involved in admitting that I do not always understand the opinions of this Court, I see no reason why I should be consciously wrong today because I was unconsciously wrong yesterday. 59 I would reverse the judgment and allow federal priority only subject to the 90% credit for sums disbursed to the State on account of its unemployment compensation tax. 1 Here, as in that case, the debtor made a common-law assignment for the benefit of creditors. The assignee here realized $1,135.11 from sale of the assets. The claim of the United States for Title 9 taxes amounted to $963.08; for Title 8 taxes, $690.05; and for capital stock taxes, $21. The commonwealth's claim was for $803.72 in unemployment taxes. Within the time allowed, but for intervention of the insolvency, the assignee paid the state's claim in full and then paid the remaining assets of $331.39 to the collector. He applied this sum on account of the Title 8 taxes, thus leaving unpaid the federal claims for capital stock and Title 9 taxes as well as $358.66 plus interest on the Title 8 claim. 2 The commonwealth in effect has undertaken to indemnify the assignee, by paying over to the United States the $803.72, if the payment to the state should turn out to have been erroneously made. The United States has agreed that if it prevails the judgment shall be limited to $803.72. 3 The original § 902, 49 Stat. 639, provided that the taxpayer might credit against Title 9 taxes 90 per cent of his contributions under an approved state program. Subsequent amendments did not alter the conception of a basic 90 per cent credit. See, e.g., notes 13, 15. The present 'credit against tax' section is incorporated in the Internal Revenue Code, 26 U.S.C. § 1601, 26 U.S.C.A. Int.Rev.Code, § 1601. 4 The District Court thought that in Illinois v. United States, the Title 9 issue had become moot either before or as of the time the case reached this Court, and that therefore we 'had no occasion to consider the problem whether as to 90 per cent of the amount due for Title IX taxes the United States (by § 902) had not given the taxpayer the option to make payment to Illinois instead of to the United States.' United States v. Spencer, D.C. 65 F.Supp. 763, 765. The court thus regarded the Title 9 question as left ope and 'nicely analyzed * * * to be one not of priority but of alternative obligation.' Id., 65 F.Supp. at page 764. 5 Since the insolvent's assets are not large enough to pay either the Title 8 or the Title 9 claim and leave enough to pay the state claim in full. See note 1. In the brief Massachusetts states the federal question as being whether the assignee may 'make payment of the State unemployment tax to the exclusion of the Federal Government claim for Title IX taxes or any other taxes due the Federal Government from the taxpayer?' (Emphasis added.) 6 Illinois has appeared with leave, both by brief and in the oral argument. It neither expressly disclaims nor expressly supports Massachusetts' broad position for reversal. 7 On the facts, see note 1, after paying the capital stock claim, the Title 8 claim and 10 per cent of the Title 9 claim, this would leave $327.75 to apply on the state's claim; and hence require Massachusetts to pay over to the United States $475.97 plus interest from the $803.72 she has received, in order to complete the payment in full of the Title 8 claim. Actually this represents the District Court's specific allocation, not exactly that of either Massachusetts or Illinois. Each would apply a somewhat different method of allocation. See note 20. 8 See Part III. The federal priority under § 3466 attaches from the time the insolvent debtor transfers or loses control over his property. Illinois v. Campbell, 329 U.S. 362, 370, 67 S.Ct. 340, 345; United States v. Waddill, Holland & Flinn Inc., 323 U.S. 353, 355—358, 65 S.Ct. 304, 305—307, 89 L.Ed. 294; United States v. Oklahoma, 261 U.S. 253, 260, 43 S.Ct. 295, 297, 67 L.Ed. 638. 9 The state supreme court's judgment had sustained the federal priority for Title 8 taxes, ordering them paid first and the small remaining balance of about $150 to be paid to the state. This left the Title 9 tx es unpaid. The court denied priority for that claim because it fell within the explicit exception of § 602(b) of the Revenue Act of 1943, 26 U.S.C.A. Int.Rev.Code, § 1601 note. See text infra at notes 13, 14. The Government's failure to apply for certiorari as to the $150 eliminated the Title 9 issue from the case in this Court. 10 Illinois almost uniformly put the issues as involving Title 8 and Title 9 taxes indiscriminately. Thus, in stating 'The Questions Presented,' the petition for certiorari spoke of priority for 'Social Security excise taxes and Capital Stock taxes,' necessarily encompassing Title 8 and Title 9 levies. This was repeatedly true of the state's brief. Further, the petition at one point said: 'In holding that the claim of the petitioner was subordinate to the claims of the United States for capital stock tax and for taxes arising under Titles VIII and IX of the Social Security Act, the Supreme Court of Illinois looked to form, not substance, and disregarded the character and significance of petitioner's claim.' The Government's briefs were equally positive in seeking disposition of the Title 9 claim. 11 The federal claims asserted were as follows: Capital stock taxes, $58.73; Title 8 taxes, $1,065.52; Title 9 taxes, $1,284.36; all plus interest from the date due. The Illinois claim for state unemployment compensation contributions was $721.29. And the fund available to satisfy all these claims was $1,010.81. Since the assets were insufficient to pay in full either the Title 8 or the Title 9 claim, Illinois had to override both to establish her claim. Illinois recognized this both by her application for review and by the broad argument that the state claim was tantamount to a federal tax and the credit provisions of § 902 exempted it completely from the priority of Rev.Stat. § 3466 for all federal taxes, not simply one. 12 The opinion in Illinois v. United States explicitly stated: 'The claim of the United States is for federal unemployment compensation taxes under Title 9 and federal insurance contributions taxes under Title 8 of the Social Security Act, 49 Stat. 620.' 328 U.S. 8, 9, 66 S.Ct. 841, 842. The opinion throughout treated Title 9 taxes on a parity with those under Title 8. We accepted fully the state's view that the credit or 'optional payment' provision of § 902 was designed to stimulate the creation of sound state systems. 328 U.S. 8, 10, 66 S.Ct. 841. See Illinois v. Campbell, 329 U.S. 362, 367, n. 5, 67 S.Ct. 340, 343. But we rejected the argument that the state claim was tantamount to a federal one and said: 'But we cannot agree that Congress thereby intended in effect to amend Section 3466, by making its priority provisions inapplicable to state unemployment tax claims.' 328 U.S. 8, 11, 66 S.Ct. 841, 843. The ruling applied to both types of tax without distinction. 13 This section was one of the relaxing amendments, see Part IV, to Title 9, § 902, of the Social Security Act. For Title 9 taxes due for the years 1939, 1940, 1941 and 1942 it allowed credit up to 90 per cent, without regard to previous failure to pay as required, if the assests of the debtor had been, during the period specified, 'in the custody or control of a receiver, trustee, or other fiduciary appointed by, or under the control of, a court of competent jurisdiction.' Section 602(a) of the 1943 Act, 58 Stat. 77, also created a similar relaxation of § 902, for Title 9 taxes due for the years 1936, 1937 and 1938, with credit limited however to 81 per cent, when the state payments for those years were made after December 6, 1940. This section formed the basis for a claim to credit in Illinois v. Unted States rejected by the Illinois court. See note 15. 14 See also Part IV. The court, however, in giving directions for the decree to be entered by the trial court ordered the federal Title 8 claim paid first in full 'and any balance remaining' to the state. 391 Ill. at page 46, 62 N.E.2d at page 544; see also id. 391 Ill. at page 42, 62 N.E.2d at page 543. Thus apparently it inadvertently lost sight of the fact, earlier expressly noted, id. 391 Ill. at pages 34, 39, 62 N.E.2d at pages 539, 541, that § 602(b) allowed the receiver to take credit only up to 90 per cent of the Title 9 taxes. This oversight seemingly was responsible for the court's failure to award priority to the United States for 10 per cent of its Title 9 claim, from the small balance remaining after paying the Title 8 taxes. Cf. note 9. Had this amount, some $128, also been awarded to the United States, roughly only $22 would have been left for the state. The opinion gave no consideration to this question, and by the Government's failure to apply for certiorari regarding it we were prevented from considering it. 15 An additional reason was that the taxes against which credit was claimed were not taxes for the years to which § 602(b) expressly limited the credit it allowed. Instead § 602(a) of the 1943 Act, see note 13, allowed conditional credit for the tax years involved in Illinois v. United States and the state sought to secure it. But the Illinois court held § 602(a) also inapplicable on the facts and denied the 81 per cent credit because the assets were in the hands of a common-law assignee, not in the custody or control of a court-appointed receiver or other official as the section required for the credit to be available. 391 Ill. at page 37, 62 N.E.2d at page 541. 16 391 Ill. at pages 39, 40, 62 N.E.2d at pages 541, 542; of. 328 U.S. at page 11, 66 S.Ct. at page 843. The Illinois court held 'the ful amount' of the payroll (Title 9) taxes to be 'taxes due the Federal government.' In the first instance, it said, this was true of '100 per cent of the taxes levied,' which 'continues to be taxes due the Federal government either until it is all paid to the Federal government, or 90 per cent is paid to the State and the balance to the Federal government.' The provisions for credit, the opinion continued, 'do not change the character of the taxes imposed. They are still taxes due the Federal government and constitute a debt due to the United States within the purview of section 3466 of the Revised Statutes.' Id., 391 Ill. at pages 40, 41, 62 N.E.2d at pages 542, 543. 17 391 Ill. at pages 42, 46, 62 N.E.2d at pages 543, 544. 18 Ibid. The order for judgment in Illinois v. United States merely reversed the trial court's judgment and remanded the cause 'with directions to enter a decree finding that the United States is entitled to priority of payment to the extent of the funds on deposit, and ordering distribution accordingly.' 391 Ill. at page 46, 62 N.E.2d at pages 544, 545. See note 14 for the directions in the Campbell case. 19 See notes 10, 11. The cases were obviously test cases designed to settle the question of priority generally, i.e., not merely for one but for all federal taxes nd thus provide a certain basis for administration of the Social Security Act in both its insurance and its unemployment compensation features. 20 Cf. the District Court's view, note 4 supra; and note 7. Illinois and Massachusetts in fact urge different methods of allocation, each differing from the one applied by the District Court. From the funds available for Title 9 distribution, Massachusetts would pay the state claim first and correspondingly reduce the federal claim. Illinois would make a pro rata distribution of 10 per cent of the available funds to the Federal Government and 90 per cent to the state, while the District Court would pay the federal 10 per cent first and apply the balance remaining on the state claim. 21 Since the fund was not large enough in either case to pay all the federal claims in full. 22 Hypothetical examples are stated in the District Court's opinion, 65 F.Supp. 763, and in the briefs filed here. 23 Possibly the concession was intended as an argumentative alternative to other and broader positions. In any event, we are not bound to accept it as either sound or conclusive of the litigation. It is not, even in terms, a confession of error. These observations apply equally to the Government's further damaging statement set forth in the sentence following the one to which this footnote is appended. 24 The federal priority has been uniformly sustained for tax claims. United States v. Waddill, Holland & Flinn, 323 U.S. 353, 65 S.Ct. 304, 89 L.Ed. 294 (unemployment compensation taxes and a debt arising out of a Federal Housing Administration transaction); United States v. Texas, 314 U.S. 480, 62 S.Ct. 350, 86 L.Ed. 356 (gasoline taxes); People of the State of New York v. Maclay, 288 U.S. 290, 53 S.Ct. 323, 77 L.Ed. 754 (income taxes and a claim for expenses incurred in the replacement of a buoy damaged by the insolvent); Spokane County v. United States, 279 U.S. 80, 49 S.Ct. 321, 73 L.Ed. 621 (income taxes and penalties); Price v. United States, 269 U.S. 492, 46 S.Ct. 180, 70 L.Ed. 373 (income taxes and customs duties); Stripe v. United States, 269 U.S. 503, 46 S.Ct. 182, 70 L.Ed. 379 (income, excess profits, and capital stock taxes). Judgments recovered by the United States also are debts entitled to priority. United States v. Knott, 298 U.S. 544, 56 S.Ct. 902, 80 L.Ed. 1321, 104 A.L.R. 741 (against surety on estreated bail bonds); Hunter v. United States, 5 Pet. 173, 8 L.Ed. 86 (against surety). Other debts for which the Government has been held to have priority under § 3466 are: United States Dept. of Agriculture, Emergency Crop and Feed Loans v. Remund, 330 U.S. 539, 67 S.Ct. 891 (emergency loans made by Farm Credit Administration); United States v. Emory, 314 U.S. 423, 62 S.Ct. 317, 86 L.Ed. 315 (sum due on note held under the National Housing Act); Bramwell v. United States Fidelity & Guaranty Co., 269 U.S. 483, 46 S.Ct. 176, 70 L.Ed. 368 (Indian funds deposited in bank); United States v. National Surety Co., 254 U.S. 73, 41 S.Ct. 29, 65 L.Ed. 143 (losses where contractor defaulted); Bayne v. United States, 93 U.S. 642, 23 L.Ed. 997 (misappropriated Army paymaster funds); Lewis v. United States, 92 U.S. 618, 23 L.Ed. 513 (funds held by Navy disbursing agents); United States v. State Bank of North Carolina, 6 Pet. 29, 8 L.Ed. 308 (bonds for customs duties); United States v. Fisher, 2 Cranch 358, 2 L.Ed. 304 (claim against indorser of protested bill of exchange). 25 See note 8 supra. 26 It has been held that the term 'debts due to the United States' should be construed with some liberality. See, e.g., Price v. United States, 269 U.S. 492, 500, 46 S.Ct. 180, 181, 70 L.Ed. 373; United States v. Emory, 314 U.S. 423, 426, 62 S.Ct. 317, 319, 86 L.Ed. 315. And there is apparently no decision expressly ruling the matters of contingency of the obligation or of the prioriy upon subsequent events not certain. Cf. United States v. Marxen, 307 U.S. 200, 59 S.Ct. 811, 83 L.Ed. 1222. But the fact that the problem has not squarely arisen in the long history of § 3466 and that all of the decisions sustaining the priority were for debts clearly due and owing, adds force to the clear inferences implicit in the statute's wording, viz., that Congress not only created a conclusive priority attaching as of the time of insolvency but in doing so drew the line for its operation close to, if not at, the commonly accepted meaning of 'debt' as distinguished from other forms of obligation. 27 See notes 24, 26. 28 Again the distinction between 'payment' and 'satisfaction' becomes pertinent. To construe the term 'satisfied' in § 3466 as being fulfilled by taking subsequent credit, as the states urge, would be to qualify the word 'debts' so as to make it include conditional obligations. 29 Congress of course, could provide for federal priority as to all taxes except Title 9 claims. But, apart from the explicit exceptions created by Revenue Act 1943, § 602(a) and (b) with reference to funds of insolvents in the hands of court-appointed officials. See Part II, notes 13, 15, Congress has not done so either by any wording or intent of Rev.Stat. § 3466, nor in our view by § 902 of the Social Security Act. We do not think that it intended to make the state's claim subject to all other federal taxes, but prior to all but 10 per cent. of the Title 9 taxes. See text infra Part IV. No instance has been found where § 3466 has been applied to create such a selective priority as among federal claims qualifying as 'debts' within the meaning of § 3466. 30 Of the several amendments, none is applicable to this case. The only ones relating expressly to insolvents' estates are those noted in Part II, see notes 13, 15 and text, 31, applying to payments by court-appointed receivers, etc. 31 Thus, as has been noted, the provision for payment and credit given by the Revenue Act of 1943, §§ 602(a)(3) and (b), 58 Stat. 77, is limited to situations where an insolvent's assets were under the control of a court or its appointed official. Congress quite obviously had the insolvent taxpayer in mind. But even so it excluded nonjudicial custodians of his assets by its failure to extend the relaxation to them. The omission cannot be taken to have been unintentional. The necessary effect in the one case was to create a legislative exception to § 3466, in the other to deny it by the withholding of the like privilege. So also with the other easing amendments. 32 Cf. Steward Mach. Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279. 33 It is precisely in matters where Congress has used the tax and credit technique that disregarding the form chosen offers the gravest dangers of perverting a statute's purposes. We think that possibility is equally as great here from ignoring Congress' expressed intent, both in limiting the right of credit to defined situations and in its failure expressly to qualify the broad policy of § 3466, as would be the other one of reaching its purpose by giving effect to its explicit limitations. 34 Sections 904 and 1201 of the Social Security Act, 58 Stat. 789, 50 U.S.C.App. Supp. V, §§ 1666, 1667, 50 U.S.C.A.Appendix §§ 1666, 1667, as amended, Pub.L. No. 379, 80th Cong., 1st Sess., § 4, 5, 42 U.S.C.A. §§ 1104, 1321. Section 904 established a federal employment account in the United States Treasury, and appropriated the excess of Title 9 taxes over unemployment administrative expenses to such account. Section 1201 authorized loans from such account to the states for unemployment insurance payments when a state's unemployment insurance fund becomes dangerously low, repayment of such advances not being required unless the state fund regains stable condition. See S.Rep. No. 477, 80th Cong., 1st Sess. 9—10. 35 See, eG., Mass.Ann.Laws, c. 151A, § 17 (1942); Cal.Gen.Laws, Act 8780d, § 46 (1944); Iowa Code, § 96.14(3) (1946); Okl.Stat., tit. 40, § 224(c) (1941). 36 Unless in this case we should undertake to say, as we have not been asked or authorized to do, that by implied force of § 902, state priorities are relegated to a position inferior to the taxpayer's right to pay the state and take federal credit. Nothing in the statute suggests that Congress intended to give the taxpayer or this Court the power thus to disorder the states' schemes of priorities. 37 If the litigated cases, of which the ones that have come here seem to be typical, and common observation may be taken as fairly accurate bases for judgment. It is true that in some cases of insolvency the business continues without being wound up. But this perhaps is much more often the case when operation is continued under judicial control than otherwise. And when that is the situation, insofar as the 1943 amendment applies the payment may be made and credit obtained. Insofar as it does not apply the amendment is a clear mandate against allowing that to be done. 38 The original departures indeed did not contemplate that exceptions were being made. They conceived that the funds or property affected, being covered by mortgage, belonged in fact to third persons, not to the insolvent debtor. Thelusson v. Smith, 2 Wheat. 396, 426, 4 L.Ed. 271; Conard v. Atlantic Ins. Co. of New York, 1 Pet. 386, 7 L.Ed. 189; Brent v. Bank of Washington, 10 Pet. 596, 611, 9 L.Ed. 547; see Savings & Loan Soc. v. Multnomah County, 169 U.S. 421, 428, 18 S.Ct. 392, 395, 42 L.Ed. 803; cf. United States v. Fisher, 2 Cranch 358, 2 L.Ed. 304; United States v. Hooe, 3 Cranch 73, 2 L.Ed. 370. The Court has been loath to expand these exceptions, cf. Illinois v. Campbell, 329 U.S. 362, 370, 67 S.T. 340, 345, to include other types of lien. The claims of Massachuset § and Illinois do not fall within the scope of those exceptions or of others as to which the Court has felt that subsequent legislation authorized them. Cf. Cook County Nat. Bank v. United States, 107 U.S. 445, 2 S.Ct. 561, 27 L.Ed. 537; United States v. Guaranty Trust Co. of New York, 280 U.S. 478, 50 S.Ct. 212, 74 L.Ed. 556.
1112
333 U.S. 795 68 S.Ct. 855 92 L.Ed.1 091 UNITED STATESv.SCOPHONY CORPORATION OF AMERICA et al. No. 41. Argued Jan. 12, 13, 1948. Decided April 26, 1948. Appeal from the District Court of the United States for the Southern District of New York. Mr. Sigmund Timberg, of New York City, for appellant. Mr. Edwin Foster Blair, of New York City, for appellees. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 The appellee Scophony, Limited, is a British corporation which has its offices and principal place of business in London, England. The question is whether that company 'transacted business' and was 'found' within the Southern District of New York under § 12 of the Clayton Act,1 so that it could be sued and served there in a civil proceeding charging violation of §§ 1 and 2 of the Sherman Act. 26 Stat. 209, 50 Stat. 693, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2. The violations stated were that Scophony and the other defendants2 had monopolized, attempted to monopolize, and conspired to restrain and monopolize interstate and foreign commerce in products, patents and inventions useful in television and allied industries. The cause is here on direct appeal3 from an order of the District Court granting Scophony's motion to quash the service of process and dismiss the complaint as to it. 69 F.Supp. 666. 2 Scophony manufactures and sells television apparatus and is the owner and licensor of inventions and patents covering television reception and transmission.4 With the outbreak of the European War in 1939, the British Broadcasting Corporation stopped television broadcasting. Consequently it became impossible for Scophony to continue in the commercial development, manufacture and sale of television equipment in England. It therefore sent personnel to the United States, opened an office in New York City, and began demonstrations of its product and other activities preliminary to establishing a manufacturing and selling business in this country. 3 Late in 1941 Scophony found itself in financial distress, in part because of restrictions imposed by the British Government on the export of currency. It became imperative that new capital from American sources be found for the enterprise. Accordingly Arthur Levey, a director of Scophony and on of its founders, undertook negotiations in New York with American motion picture and televisions interests, including Paramount and General Precision. They culminated in the execution of three interlacing contracts, the so-called master agreement of July, 1942, and two supplemental agreements of August 11, 1942. Copies of the latter had been attached to the master agreement, which provided for their later execution, and they when executed in effect carried out its terms. The alleged violations of the Sherman Act center around these agreements. 4 The master agreement was executed by Scophony, William George Elcock, as mortgagee of all of Scophony's assets, General Precision, and Productions, the latter a wholly owned subsidiary of Paramount. It provided for the formation of a new Delaware corporation, American Scophony, with an authorized capital stock of 1,000 Class 'A' shares and a like number of Class 'B' shares. Scophony and individuals interested in it5 were to be given the Class 'A' shares. Under the agreement, ownership of those shares conferred the right to elect three of American Scophony's five directors and its president, vice president and treasurer. The Class 'B' shares were allotted to General Precision and Productions. By virtue of such ownership those two corporations were entitled to name the remaining two directors and the secretary and assistant secretary of American Scophony. Levy was named in the agreement as the president and a director of the new corporation. 5 The master agreement set forth the general desire of the parties to promote the utilization of the Scophony inventions 'particularly in the United States of America and generally in the Western Hemisphere.' It then stated that American Scophony had been organized 'as a means therefor.' Scophony agreed to transfer all its television equipment then in the United States to American Scophony and to enter into the first supplemental agreement. Scophony, with the other parties, also undertook to cause American Scophony to enter into both supplemental agreements. For the 'B' stock in American Scophony and other rights acquired, General Precision and Productions agreed to enter into the second supplemental agreement and to pay specified sums in cash to Scophony or for its benefit in liquidation of listed obligations. 6 Pursuant to the master agreement's terms, the first supplemental agreement was executed by Scophony, Elcock, as mortgagee of its assets, and American Scophony; the other, by American Scophony, General Precision, and Productions. For present purposes it is necessary to set forth only the general effect of the agreements taken together. Scophony transferred to American Scophony not only all of its equipment in the United States, but also all patents and other interests in the Scophony inventions within the Western Hemisphere. General Precision and Productions were granted exclusive licenses under American Scophony's patents. They agreed to pay royalties on the products produced under the licenses and American Scophony undertook to transmit fifty per cent of such royalties to Scophony. American Scophony gave Scophony an exclusive sublicense for the Eastern Hemisphere on a royalty basis under all patents licensed to American Scophony by General Precision and Productions. Provision was also made for the interchange of technical data and information respecting the Scophony inventions. Finally, it was agreed that Scophony would not market any product involving the Scophony inventions in the Western Hemisphere and that General Precision and Productions would not export any such product to the Eastern Hemisphere.6 7 This rather complex plan soon fell of its own weight. Starting in 1943, an impasse developed in the affairs of American Scophony. It stemmed from the failure and unwillingness of General Precision and Productions to exploit the Scophony inventions themselves and their refusal to modify the agreements to permit the licensing of other American firms under the inventions. Several manufacturers expressed an interest in obtaining licenses. But in each instance the directors representing the American interests holding the Class 'B' shares were unwilling to approve the necessary modifications in the existing arrangements. In July, 1945, the directors representing the 'B' interests resigned. This made it impossible for American Scophony to transact business, since charter and by-law provisions adopted pursuant to the master and supplemental agreements required the presence of at least one Class 'B' director for a quorum. Adding to the difficulties were American Scophony's shortage of funds and the apparent reluctance of the American interests to cooperate in efforts to place American Scophony on firmer financial footing. American Scophony's affairs were further complicated by the institution of the present antitrust proceeding on December 18, 1945. 8 Levey kept Scophony advised of developments in the dispute between the 'A' and 'B' factions and otherwise made progress reports to Scophony on its interests in the United States. As the impass heightened, other individuals were authorized by Scophony to act in its behalf in the United States.7 Service of process as to Scophony was made first on Levey in New York City on December 20, 1945.8 9 On April 5, 1946, a summons and a copy of the complaint directed to Scophony were also served on Elcock in New York City. He was a dominant figure in Scophony. He arrived in this country in March, 1946, with the mission of investigating and ending the impasse and disposing of Scophony's interest in American Scophony. Elock not only was mortgagee of Scophony's assets by virtue of having made a large loan to the company. He was also its financial comptroller and a member of its board. At the time of service on him, he held a comprehensive power of attorney, irrevocable until March, 1947, giving him complete power to act with regard to Scophony's interests in the United States, including those in American Scophony.9 10 The District Court, in granting the motion to quash service and dismiss the complaint as to Scophony, held that it was not 'found' in the Southern District of New York within the meaning of § 12. The court rejected the contention that Scophony was within thej urisdiction by reason of the activities of its agents. It concluded that none of those activities related to Scophony's ordinary business of manufacturing, selling and licensing television apparatus, but all were confined to protecting Scophony's interest in American Scophony. It also found that the conduct of American Scophony did not serve to bring Scophony within the jurisdiction. 69 F.Supp. 666. I. 11 Section 12 of the Clayton Act has two functions, first, to fix the venue for antitrust suits against corporations; second, to determine where process in such suits may be served. Venue may be had 'not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business.' And all process may be served 'in the district of which it is an inhabitant, or wherever it may be found.' (Emphasis added.) 12 A plain and literal reading of the section's words gives it deceptively simple appearance. The source of trouble lies in the use of verbs descriptive of the behavior of human beings to describe that of entities characterized by Chief Justice Marshall as 'artificial * * *, invisible, intangible, and existing only in contemplation of law.' Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 636, 4 L.Ed. 629.10 13 The process of translating group or institutional relations in terms of individual ones, and so keeping them distinct from the nongroup relations of the people whose group rights are thus integrated, is perennial, not only because the law's norm is so much the individual man, but also because the continuing evolution of institutions more and more compels fitting them into individualistically conceived legal patterns. Perhaps in no other field have the vagaries of this process been exemplified more or more often than in the determination of matters of jurisdiction, venue and liability to service of process in our federal system.11 It has gone on from Bank of the United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38, and Baptist Association v. Hart's Executors, 4 Wheat. 1, 4 L.Ed. 499, to International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057, and now this case.12 14 The translation, or rather the necessity for it, permeates every significant word of § 12, not wholly excluding 'or transacts business.' If the statutory slate were clean, one might readilyc onclude that the words 'inhabitant' and 'found' would have the same meaning for locating both venue and the proper place for serving process. But even so, each of those terms and indeed the term 'transacts business' would have to be given specific content actually descriptive of corporate events taking place within specified areas. Because all corporate action must be vicarious, that content could be determined only by an act of judgment which selects and attributes to the corporation, from the mass of activity done or purporting to be done on its behalf, those acts of individuals which are relevant for the particular statutory purposes and policies in hand. 15 The statutory slate, however, is neither entirely new nor clean. Both legislative and judicial hands have written upon it. The writing is meandering, unclear in part, and partly erased. But it cannot be disregarded. What is legible must furnish guidance to decision. We deal here with a problem of statutory construction, not one of constitutional import.13 Nor do we have any question of the exercise of Congress' power to its farthest limit. The issue is simply how far Congress meant to go, and specifically whether it intended to create venue and liability to service of process through the occurrence within a district of the kinds of acts done here on Scophony's behalf. 16 Section 12 of the Clayton Act is an enlargement of § 7 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 15 note. Eastman Kodak Co. v. Southern Photo Materials Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684. The earlier statute provided for suit in the district iin which the defendant for suit in the district in which the defendant 'resides or is found.' 26 Stat. 210. fixing the places for service of process. 17 We do not stop to review the decisions construing § 7 and similar statutes, cf. Suttle v. Reich Bros. Const. Co., 333 U.S. 163, 68 S.Ct. 587; see International Shoe Co. v. Washington, supra, 326 U.S. at pages 317—319, 66 S.Ct. at pages 158—160, except to refer to People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537. There the foreign corporation was sued in a district in which it did not 'reside.' Because the Court found that the company had withdrawn from the state in which the district was located and had revoked the authority of its principal agents there, it held that he defendant was not 'found' in the district, although certain corporate activities continued. 18 The conventional rationalization applied equated 'found' in sequence to 'presence,' to 'doing business by its agents there,' to 'of a character warranting inference of subjection to the local jurisdiction.'14 The facts that the company continued to advertise its goods in the state and district, to make interstate sales to jobbers there, to send in drummers who solicited retail orders to be turned over to the jobbers, and finally to own stock in local subsidiaries, were held not to constitute the sort of 'doing business' warranting the inference of subjection to the local jurisdiction for the statute's purposes. International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, was narrowly distinguished. 246 U.S. at page 87, 38 S.Ct. at page 235. 19 The suit in the People's Tobacco case was begun in 1912, but the decision was not rendered until 1918. Meanwhile, in 1914, Congress had enacted the Clayton Act, including § 12. The following year the Eastman case, supra, was begun in the Northern District of Georgia. Process issued and was served under § 12 on the defendant, a New York corporation, at its principal place of business in Rochester. In 1927 this Court sustained both the venue and the service, as against objections that § 12 had not broadened § 7 of the Sherman Act, but merely made explicit what had been decided under it.15 20 The argument was certainly plausible, but for the fact that it made the addition of 'or transacts business' to 'inhabitant' and 'found' in § 12 redundant and meaningless. The Court refused to accept the argument, because doing so would have defeated the plain remedial purpose of § 12.16 That section was enacted, it held, to enlarge the jurisdiction given by § 7 of the Sherman Act over corporations by adding those words, 'so as to establish the venue of such a suit not only, as theretofore, in a district in which the corporation resides or is 'found,' but also in any district in which it 'transacts business'—although neither residing nor 'found' therein—in which case the process may be issued to and served in a district in which the corporation either resides or is 'found." 273 U.S. at page 372, 47 S.Ct. at page 403.17 21 This construction gave the words 'transacts business' a much broader meaning for establishing venue than the concept of 'carrying on business' denoted by 'found' under the preexisting statute and decisions. The scope of the addition was indicated by the statement 'that a corporation is engaged in transacting business in a district * * * if in fact, in the ordinary and usual sense, it 'transacts business' therein of any substantial character.' Id. 273 U.S. at page 373, 47 S.Ct. at page 403. (Emphasis added.) 22 In other words, for venue purposes, the Court sloughed off the highly technical distinctions theretofore glossed upon 'found' for filling that term with particularized meaning, or emptying it, under the trn slation of 'carrying on business.' In their stead it substituted the practical and broader business conception of engaging in any substantial business operations. Cf. Frene v. Louisville Cement Co., 77 U.S. App.D.C. 129, 134 F.2d 511, 146 A.L.R. 926; International Shoe Co. v. Washington, supra. Refinements such as previously were made under the 'mere solicitation' and 'solicitation plus' criteria, cf. Frene v. Louisville Cement Co., supra, and like those drawn, e.g., between the People's Tobacco and International Harvester cases, supra, were no longer determinative. The practical, everyday business or commercial concept of doing or carrying on business 'of any substantial character' became the test of venue. 23 Applying it, the Court stated that 'manifestly' the Eastman Company was not 'present' in the Georgia district under the earlier tests of § 7 of the Sherman Act, either for the purpose of venue or as being amenable to service of process. 273 U.S. at page 371, 47 S.Ct. at page 402. It thus aligned the case under those tests with the People's Tobacco decision rather than the International Harvester one. But, under the broader room given by § 12, venue was held to have been established.18 24 Thus, by substituting practical, business conceptions for the previous hairsplitting legal technicalities encrusted upon the 'found'-'present'-' carrying-on-business' sequence, the Court yielded to and made effective Congress' remedial purpose. Thereby it relieved persons injured through corporate violations of the antitrust laws from the 'often insuperable obstacle' of resorting to distant forums for redress of wrongs done in the places of their business or residence. A foreign corporation no longer could come to a district, perpetrate there the injuries outlawed, and then by retreating or even without retreating19 to its headquarters defeat or delay the retribution due. 25 With venue established under the new and broader approach, the Eastman case presented no problem regarding the service of process, except possibly for the ruling that process might run to another district than the one in which suit was brought. 273 U.S. at page 374, 47 S.Ct. at page 403. For by whatever test, whether of the old § 7 or the new § 12, the service was good As we have noted, the process had been directed to and served in the district where the Eastman Company was an 'inhabitant.'20 There was therefore no necessity for ruling upon the meaning of 'found' as relating to any other district. Any such ruling necessarily could be no more than dictum, since no such issue was presented by th facts. 26 Nevertheless, for service of process § 12 had specified 'the district of which it is an inhabitant, or wherever it may be found' without adding 'or transacts business,' as was done in the venue clause. Accordingly the Court took account of this difference and went on to indicate that for purposes of liability to service the section merely carried forward the preexisting law, so that in some situations service in a district would not be valid, even though venue were clearly established under § 12.21 27 But regardless of the pronouncement's effect, the decision, by resolving the venue problem, substantially removed the serious obstacles and practical immunities to suit which had grown up under § 7 of the Sherman Act, in by far the larger number of antitrust cases, i.e., for those not involving companies incorporated outside the United States. In them the fact that service may be dubious in the district of suit and can be assured only by causing process to run to another district, as in the Eastman case, presents no such obstacle to bringing and maintaining the suit as existed prior to § 12. The necessity, if it is that, for directing process to another district, creates at most some slight inconvenience and additional expense. II. 28 In this case, however, we deal with a company incorporated outside the United States. But there can be no question of the existence of 'jurisdiction,' in the sense of venue under § 12, over Scophony in the Southern District of New York. To say that on the facts presented Scophony transacted no business 'of any substantial character' there during the period covered by institution of the suit and the times of serving process would be to disregard the practical, nontechnical, business standard supplied by 'or transacts business' in the venue provision. It would be also to ignore the fact that Scophony then and there was carrying on largely, if not exclusively, the only business in which it could engage at the time. 29 Scophony's operations in New York were a continuous course of business before and throughout the period in question here. They consisted in strenuous efforts not simply to save an American 'investment,' as is urged, but to salvage and resuscitate Scophony's whole enterprise from the disasters brought upon it by the war. As with such efforts generally, changes in method and immediate objective took place as each one tried in turn failed to work out. But those changes brought none in ultimate objective, namely, to find a mode of saving and profitably exploiting the Scophony inventions; and none in the intensity or continuity with which that object was pursued in New York. 30 First was the phase of attempting to set up in this country as manufacturer and seller of television equipment. When that failed, the company turned to licensing and exploiting its patents by other means. This was done through the complicated arrangements for what practically if not also technically was a joint adventure with other companies. That project was carried out not merely through corporate forms and arrangements but by contracts binding the participating companies to the common enterprise, as well as the special medium of executing it, American Scophony. In this each corporate pat icipant had its special functions, controls and restrictions created in part by share ownership in American Scophony, but also in important respects by contract both beyond the stock controls and dictating their character.22 Finally, as the affairs of the keystone of the structure, American Scophony, came to and continued in stalemate, the immediate objective shifted once more, to getting out of the trap. Again the shift was in direct and constant pursuit of Scophony's primary and continuing object, to find a way to save and to exploit its patents. 31 This is a story of business in trouble, even desperate. We may have sympathy for the company's plight. But it does not follow that such continuing, intensive activities to save the business and put it on a normal course, even though shifting as they did in the successive winds that blew, did not constitute 'transacting business' of 'any substantial character.' Nor can we say that any of the major shifts in tacking toward the ultimate end stopped or interrupted the course of the company's business activity. At no time was the drive toward achieving its basic objects suspended. 32 Appellee would avoid this view and its consequences by taking an entirely different conception of what took place. It emphasizes that Scophony's corporate objects, as stated in its charter, were to manufacture and sell television equipment. Hence it concludes that when all New York activity directly pointing to that end ceased, and was followed by the phase of seeking to exploit the patents through the arrangements centering around American Scophony, the British company ceased to be engaged in promoting its corporate objects and thus in carrying on or doing business in New York for the relevant statutory purposes. From then on, it is claimed, Scophony became concerned solely with creating and protecting an 'investment,' namely, in American Scophony's shares. Nor did Scophony resume the doing of business when that effort also failed and the final stage of seeking to break the impasse arrived, because manufacturing and sale of equipment were not revived. 33 To this view of the sequence of events appellee then seeks to apply this Court's decisions interpreting 'found' under § 7 and similar requirements in application to manufacturing and selling companies,23 and also the like Eastman dictum concerning § 12. In doing this it seeks especially to invalidate the service by casting up from those decisions a check list of specific and often minor incidents of that sort of business done or not done as relevant to whether business is being carried on, and then matching against the list Scophony's New York activities as of the times of service.24 34 Obviously this view of the facts and of the determinative legal approach is at wide variance from the ones we have taken in dealing with the question of venue. But we do not find it necessary, in order to reject it for purposes of sustaining the service, to consider whether the process clause of § 12 should be given scope beyond that indicated by the Eastman dictum. For in any event we think that appellee and the District Court have misconceived the effects of the facts and of the decisions on which they rely, for determining the validity of the service in this case. 35 Certainly appellee's conclusionary premise cannot be accepted, that its sole authorized or actual business was manufacturing and selling equipment; or therefore the further one that no other activity on its behalf could constitute doing or engaging in business. Indeed it was authorized to take out, hold and exploit television patents, and doing this was certainly as much part of its business as manufacturing and selling the equipment they covered. There is nothing to show that Scophony was restricted by its charter or otherwise to exploiting its patents exclusively by direct manufacture and sale. When therefore, after that method had failed, the company chose another, it was not ceasing to do business. That consequence did not follow merely because it discontinued the activities incident to continuing the discarded method. 36 The alternative one chosen was not a matter simply of licensing patents to others, for active exploitation by them. Nor was it only a casual act or acts of contracting. The whole framework of this phase of the New York activities was dictated by the master and supplemental agreements. These were not mere licensing arrangements, nor did they make Scophony nothing more than a shareholder for investment purposes, with only such a shareholder's voting rights and control in American Scophony. The contracts created controls in Scophony, and in the American interests as well, which taken in conjunction with the stock controls called for continuing exercise of supervision over and intervention in American Scophony's affairs.25 We need not decide whether, in view of the agreements' continuing and pervasive effects, they could be considered as sufficing in themselves to make Scophony 'found' within the New York district.26 Whether so or not, they set the pattern for a regular and continuing program of patent exploitation requiring, as we have said, Scophony's constant supervision and intervention. 37 That necessity was shown, among other ways, by the contractual provisions for interchange of data and information, and further by the fact that there was sustained interchange of correspondence between Levey and Scophony dv oted to Scophony's affairs and interests in this country. Levey kept Scophony informed fully of all that went on here, and in turn received and carried out its instructions respecting American Scophony's affairs and its own. 38 In all this he was not acting merely as an officer of American Scophony. Rather he was also Scophony's director and representative, authorized to act in its behalf and interest. Indeed it was as Scophony's representative that he was named as president of American Scophony. His position was a dual one. He was not a mere shareholder's or investor's agent seeking information about that corporation's affairs for purposes of dealing with the stock. His functions and activities were much broader and related to Scophony's interests as much as to American Scophony's. Scophony's New York activities therefore were not confined to negotiation and execution of the agreements. Neither were they concerned only with mere stock ownership or 'investment' as is urged, nor were they simply occasional acts of contracting, like those in the decisions appellee cites. 39 Moreover, other individuals carried on for Scophony in continuing efforts27 to resolve the impasse. Apart from what was done by others, Elcock came to New York with unrestricted and irrevocable power to act on Scophony's behalf. Indeed it might almost be said in view of his triple position as mortgagee, corporate officer and attorney-in-fact, that for all relevant purposes at this phase of Scophony's activity he was the company. The stalemate put Scophony's affairs in this country at a standstill along with those of American Scophony. And Scophony's efforts to extricate itself were both strenuous and continuous. 40 Those efforts were not cessation of engaging in business. They were directed entirely to warding off that fate. Their object was not to liquidate, it was to resuscitate the business of Scophony and, as in all previous stages, put it on a normal course again. In doing all this, Scophony was engaging in business constantly and continuously, not retiring from it or interrupting it. Cf. Connecticut Mutual Life Insurance Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569; Pennsylvania Lumbermen's Insurance Co. v. Meyer, 197 U.S. 407, 25 S.Ct. 483, 49 L.Ed. 810; St. Louis Southwestern R. Co. v. Alexander, 227 U.S. 218, 33 S.Ct. 245, 57 L.Ed. 486, Ann.Cas.1915B, 77. The interruptions were only in particular phases of its authorized adventure, not in the continuity, intensity or totality of the adventure itself. 41 In sum, we have no such situation as was presented in the manufacturing and selling cases on which appellee relies. They concerned entirely different facts and enterprises. In none was there a shifting from a course of business in pursuit of one corporate object or objects, viz., manufacturing and selling, to another continuing mode of achieving a basic corporate objective, namely, the exploiting of patents by complex working arrangements partaking practically of the character of a common enterprise with others and requiring constant supervision and intervention beyond normal exercise of shareholders' rights by the participating companies' representatives qua such. 42 We know of no decision which has held or indicated that on such facts the process clause of § 12 is not adequate to confer power to make valid service. Such a continuing and far-reaching enterprise is not to be governed in this respect by rules evolved with reference to the very different businesses and activities of manufacturing and selling. Nor, what comes to the same thing, is the determination to be made for such an enterprise by atomizing it into minute parts or events, in disregard of the actual unity and continuity of the whole course of conduct, by the process sometimes applied in borderline cases involving manufacturing and selling activities. 43 For present purposes those decisions may be left untouched for the facts and situations in which they have arisen and to wi ch they have been applied. But there could be no valid object in expanding their pulverizing approach to situations as different and distinct as this one, comprehended within neither their rulings nor their effects. More especially would such an extension be inappropriate, when it is recalled that § 12 governs venue and service in antitrust suits against corporations. For, in cases against companies incorporated outside the United States, that extension would bring back all the obstacles to enforcement of antitrust policies and remedies which existed for domestic corporations before § 12 was enacted to give relief from those obstacles. Even though venue were clearly established, as here, the extension often would make valid service impossible, since process could not be issued to run for such corporations to the foreign countries of which they are 'inhabitants.' We are unwilling to construe § 12 in a manner to bring back the evils it abolished, for situations not foreclosed by prior decisions, and thus to defeat its policy together with that of the antitrust laws, so as to make another amendment necessary. 44 We think that Scophony not only was 'transacting business' of a substantial character in the New York district at the times of service, so as to establish venue there, but also on the sum of the facts regarding its activities was 'found' there within the meaning of the service-of-process clause of § 12. Of course such a ruling presents no conceivable element of offense to 'traditional notions of fair play and substantial justice.' See International Shoe Co. v. Washington, supra, 326 U.S. at page 316, 66 S.Ct. at page 158; cf. Hutchinson v. Chase & Gilbert, 2 Cir., 45 F.2d 139, 141. 45 It remains only to say that we do not stop to consider whether, as is argued, Levey's authority to act for Scophony had expired or been revoked at the time service was made by delivery of process to him. For when service was made by delivery to Elcock, he had unrevoked and irrevocable authority to act in Scophony's behalf in the New York district, and that service was valid to confer personal jurisdiction over Scophony. 46 Accordingly, the judgment is reversed and the cause is remanded to the District Court for further proceedings in conformity with this opinion. 47 Reversed and remanded. 48 Mr. Justice JACKSON concurs in the result. 49 Mr. Justice FRANKFURTER, concurring. 50 I deem it appropriate to state why I concur merely in the Court's result. 51 The only question in this case is whether Scophony limited, a British corporation, which has its offices and principal place of business in London, may be made a party defendant in a suit by the United States for violation of the Sherman Law pending in the Southern District of New York. The corporation may be brought into court in that District if its activities there satisfy the requirements of § 12 of the Clayton Act. According to this provision, Scophony Limited is properly a party defendant in this suit only if, by virtue of its activities, it is 'found or transacts business' in the Southern District of New York, and it may be served in that District if it is 'found' there. 52 Whether a corporation 'transacts business' in a particular district is a question of fact in its ordinary untechnical meaning. The answer turns on an appraisal of the unique circumstances of a particular situation. And a corporation can be 'found' anywhere, whenever the needs of law make it appropriate to attribute location to a corporation, only if activities on its behalf that are more than episodic are carried on by its agents in a particular place. This again presents a question of fact turning on the unique circumstances of a particular situation, to be ascertained as such questions of fact are every day decided by judges. 53 What was done in the Southern District of New York on behalf of Scophony Limited, as detailed in the Court's opinion, establishes that the corporation was there transacting business and was found there in the ol y sense in which a corporation ever 'transacts business' or is 'found.' Accordingly, Scophony Limited was amenable to suit and service in the District within the requirements of § 12 of the Clayton Act. 54 To reach this result, however, I do not find it necessary to open up difficult and subtle problems regarding the law's attitude toward corporations. I abstain from joining the Court's opinion not because I am in disagreement with what is said but because I am not prepared to agree. And I am not prepared to agree because I do not wish to forecast, which agreement would entail, the bearing of the Court's discussion upon situations not now before us but as to which such theoretical discussion is bound to be influential. Law, no doubt, is concerned with 'practical and substantial rights, not to maintain theories.' Davis v. Mills, 194 U.S. 451, 457, 24 S.Ct. 692, 695, 48 L.Ed. 1067. But theories often determine rights. Since I do not know where the opinion in this case will take me in the future, I prefer to reach its destination by the much shorter route of recognizing that a corporation as such never transacts business and is never found anywhere, but does 'transact business' and is 'found' somewhere by attribution to the corporation of what human beings do for it. No doubt legal reasoning must be on its guard not to oversimplify. Dangers also lurk in over-complicating. 55 From earliest times the law has enforced rights and exacted liabilities by utilizing a corporate concept—by recognizing, that is, juristic persons other than human beings. The theories by which this mode of legal operation has developed, has been justified, qualified, and defined are the subject matter of a very sizable library. The historic roots of a particular society, economic pressures, philosophic notions, all have had their share in the law's response to the ways of men in carrying on their affairs through what is now the familiar device of the corporation. Law has also responded to religious needs in recognizing juristic persons other than human beings. Thus, in the Hindu law an idol has standing in court to enforce its rights. See e.g., Pramatha Nath Mullick v. Pradyumna Kumar Mullick, 52 L.R.I.A. 245 (1925). Attribution of legal rights and duties to a juristic person other than man is necessarily a metaphorical process. And none the worse for it. No doubt, 'metaphors in law are to be narrowly watched,' Cardozo, J., in Berkey v. Third Avenue R. Co., 244 N.Y. 84, 94, 155 N.E. 58, 61, 50 A.L.R. 599. But all instruments of thought should be narrowly watched lest they be abused and fail in their service to reason. 1 'Sec. 12. That any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.' 38 Stat. 736, 15 U.S.C. § 22, 15 U.S.C.A. § 22. 2 The suit was instituted against Scophony, Limited (designated in this opinion as 'Scophony'), Scophony Corporation of America (designated 'American Scophony'), General Precision Equipment Corporation (designated 'General Precision'), Television Productions, Inc. (designated 'Productions'), Paramount Pictures, Inc. (designated 'Paramount'), and three individual defendants, Arthur Levey and the presidents of General Precision and Productions. The corporations, except Scophony, are incorporated in the United States. 3 Pursuant to § 2 of the Expediting Act of February 11, 1903, 32 Stat. 823, 15 U.S.C. § 29, 15 U.S.C.A. § 29, and § 238 of the Judicial Code, 43 Stat. 938, 28 U.S.C. § 345, 28 U.S.C.A. § 345. 4 The inventions and patents in the main relate to two systems of television transmission and reception, one known as the 'supersonic' system and the other as the 'skiatron' system. We shall at times refer to the present and future patents, processes, designs, technical data, etc., relating to these two systems as the Scophony inventions. A third system, the cathode-fluorescent system, was developed early in this century and is the principal method of television transmission and reception used in the United States today. 5 An agreement of February 4, 1943, amended the original agreement so as to give two-thirds of the 'A' shares to Scophony, the remainder to individuals. 6 The complaint alleged that the effects of the agreements and understandings were to create a territorial division of the manufacture and sale of television products, assigning the Eastern Hemispe re to Scophony and the Western Hemisphere to General Precision and Productions; to suppress and restrain competition in the manufacture and sale of television equipment, both in the domestic and in the export markets; and to give General Precision and Productions monopoly power over the Scophony inventions which enabled them to suppress their exploitation and deprive others of their use. 7 These included at various times two American attorneys, a member of the British Parliament, and an English officer. 8 Levey immediately informed Scophony in England of this action and advised it to designate appropriate counsel. On December 21, 1945, he sent a copy of the complaint to Scophony by airmail. 9 The power of attorney set forth Scophony's desire to appoint Elcock to act 'and bind the Company in all or any matters affecting the Company's interests in the United States * * *.' It then authorized Elcock to institute and prosecute all proceedings necessary to conserve Scophony's interests; to defend or compromise any suits brought against Scophony; to settle accounts; to engage or dismiss subagents; to borrow money; to dispose of any and all of Scophony's property and interests in the United States; and 'generally to represent the Company in the United States of America in all matters in any way affecting or pertaining to the Company * * *.' 10 More than once Marshall had difficulty in transferring to corporations or other institutions legal conceptions and relations shaped in nomenclature and in fact from normative evolution in relation to persons of flesh and blood. See, e.g., Bank of the United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38, where he was unable to adapt the concept of corporate 'inhabitancy,' applied in decisions he cited, for fitting the corporation into the constitutional scheme of diversity jurisdiction. His individualistic solution brought difficulties which lasted for decades. See Henderson, The Position of Foreign Corporations in American Constitutional Law 50—76; Harris, A Corporation As a Citizen, 1 Va.L.Rev. 507. Cf. Baptist Association v. Hart's Executors, 4 Wheat. 1, 4 L.Ed. 499. 11 See, e.g., Cahill, Jurisdiction over Foreign Corporations and Individuals Who Carry on Business within the Territory, 30 Harv.L.Rev. 676; Scott, Jurisdiction over Nonresidents Doing Business within a State, 32 Harv.L.Rev. 871; Bullington, Jurisdiction over Foreign Corporations, 6 N.C.L.Rev. 147; Note, What Constitutes Doing Business by a Foreign Corporation for Purposes of Jurisdiction, 29 Col.L.Rev. 187. 12 The very federalism of our structure magnifies the problem, by multiplying state and other governmental boundaries across which corporate activity runs with the greatest freedom. The problem arises on constitutional as well as statutory and common-law levels. Cf. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057; Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903. 13 Appellee makes no suggestion of a constitutional issue. The Government, however, suggests that, in view of our recent decision in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057, which was concerned with the jurisdiction of a state over a foreign corporation for purposes of suit and service of process, and in view of aspects of similarly between that problem and the one now presented, we extend to this case and to § 12 the criteria there formulated and applied. There is no necessity for doing so. The facts of the two cases are considerably different and, as we have said, we are not concerned here with finding the utmost reach of Congress' power. 14 The Court said: 'The general rule deducb le from all our decisions is that the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state or district where service is attempted. Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; St. Louis Southwestern Ry. Co. v. Alexander, 227 U.S. 218, 226, 33 S.Ct. 245 (247), 57 L.Ed. 486, Ann.Cas.1915B, 77.' 246 U.S. 79, 87, 38 S.Ct. 233, 235. 15 Counsel for the defendant equated the words 'inhabitant' and 'found' of § 12 to 'resides or is found' of § 7 of the Sherman Act. They then went on to argue that the addition of 'or transacts business' in the venue clause of § 12 did not broaden the section, but merely made explicit what the Court had already decided under the earlier statute. 273 U.S. at page 361, 47 S.Ct. at page 401. This, because 'or transacts business' was said to be nothing more than 'carrying on business,' which was the content the Court had given to 'is found' in § 7, by the People's Tobacco case and others. 16 Rather, the Court said, the section supplements 'the remedial provision of the Anti-Trust Act for the redress of injuries resulting from illegal restraints upon interstate trade, by relieving the injured person from the necessity of resorting for the redress of wrongs committed by a nonresident corporation, to a district, however distant, in which it resides or may be 'found'—often an insuperable obstacle—and enabling him to institute the suit in a district, frequently that of his own residence, in which the corporation in fact transacts business, and bring it before the court by the service of process in a district in which it resides or may be 'found." 273 U.S. 359, 373, 47 S.Ct. 400, 403. (Emphasis added.) 17 See also note 16. 18 The concrete facts held to sustain the venue were that the Eastman Company was engaged 'not only in selling and shipping its goods to dealers within the Georgia district, but also in soliciting orders therein through its salesmen and promoting the demand for its goods through its demonstrators for the purpose of increasing its sales * * *.' 273 U.S. at page 374, 47 S.Ct. at page 404. The Court also expressly stated that, in contrast to prior limitations, the company was 'none the less engaged in transacting business * * * because of the fact that such business may be entirely interstate in character and be transacted by agents who do not reside within the district,' referring in this connection to International Harvester Co. v. Kentucky, 234 U.S. 579, 587, 34 S.Ct. 944, 946, 58 L.Ed. 1479, and Davis v. Farmers' Co-operative Equity Co., 262 U.S. 312, 316, 43 S.Ct. 556, 557, 67 L.Ed. 996. 273 U.S. 359, 373, 47 S.Ct. 400, 403. 19 I.e., by artful arrangement of agents' authority, or of their comings and goings, or of the geography of minute incidents in contracting. Cf. People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537. Such artifice saw its day end for creating substantive liability through a course of dealing contrary to the antitrust statutes, but without thereby also creating venue to enforce it, with the advent of § 12. 20 As has been stated, the company was incorporated in New York and had its principal office and place of business in Rochester. 21 Although difference of that sort may appear to be generally incongruous, since ordinarily it would seem that susceptibility to suit in a district should be accompanied by amenability to process there, such things of course are for Congress' determination as matters of policy relating to the scope and correlation, or lack of it, of venue and service provisions. There is certainly no constitutional requirement that the two be coextensive. And to support the dictum, if it were now necessary to rule on the matter, considerations beyond the verbal difference to which the Eastman opinion pointed might be stated. 22 E.g., the hemispheric division of territories between the British and American interests; the exclusive licensing agreements which prevented Scophony from granting licenses to interested American companies; and the arrangements for the interchange of technical information were contractual, not charter limitations on corporate powers. The particular corporate medium used, American Scophony, and the refinements in its charter and by-laws giving General Precision and Productions an effective veto power over its operations were themselves aspects of the contractual undertakings embodied in the master agreement and the two supplemental agreements. The master agreement also designated the persons to become officers and directors of American Scophony, as representatives of both the British and the American interests. 23 E.g., Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 45 S.Ct. 250, 69 L.Ed. 634; Consolidated Textile Corp. v. Gregory, 289 U.S. 85, 53 S.Ct. 529, 77 L.Ed. 1047; People's Tobacco Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537. 24 The catalogue emphasizes things not being done as of the dates of service, e.g., maintaining an office, warehouse or place of business; owning realty or other physical property; keeping a staf of employees; having agents 'other than counsel in this case and * * * Elcock'; keeping a telephone or a listing; making sales; conducting research; soliciting orders. Correspondingly appellee atomizes the things then being done into separate, disconnected events, viz., stock ownership (in American Scophony); contracting with American Scophony and the other corporations for transfer and licensing of patents; activities to protect Scophony's American 'interests' by resolving the impasse. 25 See note 22 supra. Indeed the contracts shaped the nature of the corporate distribution of powers and voting rights, so as to make them conform to the overall character and objects of the larger common enterprise. The charter and bylaw provisions of American Scophony therefore not only were governed by the contractual arrangements but carried them into execution. 26 Especially in view of the fact that § 12 fixes venue and the places for serving process in antitrust suits, there would seem to be sound basis for differentiating the execution of agreements so all-pervasive and far-reaching in their effects upon the statutory policies from run-of-mine casual or intermittent sales of commodities by a manufacturing or selling company, for the section's purposes. 27 See note 7.
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333 U.S. 821 68 S.Ct. 854 92 L.Ed. 1108 ANDERSONv.ATCHISON, T. & S.F. RY. CO. No. 620. Certiorari Granted and Judgment Reversed April 26, 1948. Mr. Clifton Hildebrand, of Oakland, Cal., for petitioner. Frank B. Belcher, of Los Angeles, Cal., for respondent. PER CURIAM. 1 Petitioner, as administratrix, filed a complaint in a California state court under the Federal Employers' Liability Act, 45 U.S.C. § 51, 45 U.S.C.A. § 51, to recv er damages for the alleged wrongful death of one L. C. Bristow. The trial court held that the allegations of the complaint, even if true, were totally insufficient to support a judgment for plaintiff, and entered judgment for the defendant. The State Supreme Court, two judges dissenting, affirmed on the same ground. 187 P.2d 729.1 2 The complaint's allegations and the inferences fairly drawn from them in summary are as follows: November 24, 1942, the deceased was a conductor on respondent's passenger train westbound from Amarillo, Texas, to Belen, New Mexico. At about 5:30 a.m., while the train was moving approximately opposite defendant's station at Gallaher, New Mexico, decedent fell from the train's rear vestibule where it was necessary for him to be in order properly to perform the duty in which he was then engaged, 'checking a certain train order signal at said station' of Gallaher. Decedent's fall resulted in injuries which made it impossible for him to secure help by his own efforts. At the next station where the train stopped, St. Vrain, respondent's employees 'made note of the absence of decedent,' but passed by it and three other station stops, Melrose, Taiban, and Fort Summer, without taking any steps of any kind to ascertain the whereabouts of decedent or what had happened to him. Finally, however, at Yeso, New Mexico, the regular train conductor directed respondent's employees there to wire other employees along the route the train had traversed to ascertain decedent's whereabouts. The Yeso employees 'carelessly and negligently' failed to transmit any message 'for an unnecessarily long period of time,' and when the message was finally received by other of respondent's employees at Clovis, New Mexico, they 'carelessly and negligently failed to institute and pursue a search within a reasonable period of time.' When search was ultimately made decedent was found lying alongside the track adjacent to the point where he had fallen while performing his duties on the rear vestibule opposite the station at Gallaher. Three days later decedent died, due to exposure to the very cold weather from the time he fell until he was finally rescued. 3 It thus appears that we have a complaint which charges that a conductor disappears from a moving train in bitter cold weather at a time when his duty requires him to be on the rear vestibule, his absence is discovered, and efforts of any kind to ascertain and save him from his probable peril are not promptly made by other train employees, the only persons likely to know of his disappearance and the probable dangers incident to it. We are unable to agree that had petitioner been permitted to introduce all evidence relevant under her allegations, the facts would have revealed a situation as to which a jury under appropriate instructions could not have found that decedent's exposure and consequent death were due 'in whole or in part' to failure of respondent's agents to do what 'a reasonable and prudent man would ordinarily have done under the circumstances of the situation.' Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 67, 63 S.Ct. 444, 451, 87 L.Ed. 610, 143 A.L.R. 967. See also Jamison v. Encarnacion, 281 U.S. 635, 640, 641, 50 S.Ct. 440, 442, 74 L.Ed. 1082; Bailey v. Central Vermont R. Co., 319 U.S. 350, 353, 63 S.Ct. 1062, 1064, 87 L.Ed. 1444; Blair v. Baltimore & O.R. Co., 323 U.S. 600, 604, 65 S.Ct. 545, 547, 89 L.Ed. 490; Lillie v. Thompson, 332 U.S. 459, 461, 462, 68 S.Ct. 140, 141, 142. 4 Certiorari is granted, the judgment is reversed, and the cause is remanded to the State Supreme Court for proceedings not inconsistent with this opinion. 5 Reversed. 1 The sufficiency of the complaint to state a cause of action was raised under California procedure by an objection of respondent to hearing evidence. Such a procedure, the State Supreme Court held, is in the nature of a general demurrer under which allegations of the complaint are deemed true.
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333 U.S. 683 68 S.Ct. 793 92 L.Ed. 1010 FEDERAL TRADE COMMISSIONv.CEMENT INSTITUTE et al. and eleven other cases. Nos. 23-34. Argued Oct. 20, 21, 1947. Decided April 26, 1948. Rehearing Denied June 7, 1948. [Syllabus from pages 683-685 intentionally omitted] Charles H. Weston and Walter B. Wooden, both of Washington, D.C., for petitioner. 1 William J. Donovan, of New York City, for respondents Cement Institute and others. 2 Edward A. Zimmerman, of Chicago, Ill., for respondent Marquette Cement Mfg. Co. 3 Charles Wright, Jr., of Detroit, Mich., for respondent Huron Portland Cement Co. 4 Herbert S. Little, of Seattle, Wash., for respondents Superior Portland Cement, Inc. 5 S. Harold Shefelman, of Seattle, Wash., for respondent Northwestern Portland Cement Co. 6 Herbert W. Clark of San Francisco, Cal., for respondents Calaveras Cement Co. and another. 7 Pierce Works, of Los Angeles, Cal., for respondent Riverside Cement Co. 8 Nathan L. Miller, of New York City, for respondent Universal Atlas cement co. 9 Alex W. Davis, of Los Angeles, Cal., for respondent California Portland Cement Co. 10 No appearance for Monolith Portland Cement Co. and others. 11 Mr. Justice BLACK delivered the opinion of the Court. 12 We granted certiorari to review the decree of the Circuit Court of Appeals which, with one judge dissenting, vacated and set aside a cease and desist order issued by the Federal Trade Commission against the respondents. 7 Cir., 157 F.2d 533. Those respondents are: The Cement Institute, an unincorporated trade association composed of 74 corporations1 which manufacture, sell and distribute cement; the 74 corporate members of the Institute;2 and 21 individuals who are associated with the Institute. It took three years for a trial examiner to hear the evidence which consists of about 49,000 pages of oral testimony and 50,000 pages of exhibits. Even the findings and conclusions of the Commission cover 176 pages. The briefs with accompanying p pendixes submitted by the parties contain more than 4,000 pages. The legal questions raised by the Commission and by the different respondents are many and varied. Some contentions are urged by all respondents and can be jointly considered. Others require separate treatment. In order to keep our opinion within reasonable limits, we must restrict our record references to the minimum consistent with an adequate consideration of the legal questions we discuss. 13 The proceedings were begun by a Commission complaint of two counts. The first charged that certain alleged conduct set out at length constituted an unfair method of competition in violation of § 5 of the Federal Trade Commission Act. 38 Stat. 719, 15 U.S.C. § 45, 15 U.S.C.A. § 45. The core of the charge was that the respondents had restrained and hindered competition in the sale and distribution of cement by means of a combination among themselves made effective through mutual understanding or agreement to employ a multiple basing point system of pricing. It was alleged that this system resulted in the quotation of identical terms of sale and identical prices for cement by the respondents at any given point in the United States. This system had worked so successfully, it was further charged, that for many years prior to the filing of the complaint, all cement buyers throughout the nation, with rare exceptions, had been unable to purchase cement for delivery in any given locality from any one of the respondents at a lower price or on more favorable terms than from any of the other respondents. 14 The second count of the complaint, resting chiefly on the same allegations of fact set out in Count I, charged that the multiple basing point system of sales resulted in systematic price discriminations between the customers of each respondent. These discriminations were made, it was alleged, with the purpose of destroying competition in price between the various respondents in violation of § 2 of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526. That section, with certain conditions which need not here be set out, makes it 'unlawful for any person engaged in commerce, * * * either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality. * * *' 15 U.S.C. § 13, 15 U.S.C.A. § 13. 15 Resting upon its findings, the Commission ordered that respondents cease and desist from 'carrying out any planned common course of action, understanding, agreement, combination, or conspiracy' to do a number of things, 37 F.T.C. 97, 258—262, all of which things, the Commission argues, had to be restrained in order effectively to restore individual freedom of action among the separate units in the cement industry. Certain contentions with reference to the order will later require a more detailed discussion of its terms. For the present it is sufficient to say that, if the order stands, its terms are broad enough to bar respondents from acting in concert to sell cement on a basing point delivered price plan which so eliminates competition that respondents' prices are always identical at any given point in the United States. 16 We shall not now detail the numerous contentions urged against the order's validity. A statement of these contentions can best await the separate consideration we give them. 17 Jurisdiction.—At the very beginning we are met with a challenge to the Commission's jurisdiction to entertain the complaint and to act on it. This contention is pressed by respondent Marquette Cement Manufacturing Co. and is relied upon by other respondents. Count I of the complaint is drawn under the provision in § 5 of the Federal Trade Commission Act which declares that 'Unfair methods of competii on * * * are hereby declared unlawful.' Marquette contends that the facts alleged in Count I do not constitute an 'unfair method of competition' within the meaning of *s 5. Its argument runs this way: Count I in reality charges a combination to restrain trade. Such a combination constitutes an offense under § 1 of the Sherman Act which outlaws 'Every * * * combination * * * in restraint of trade.' 26 Stat. 209, 15 U.S.C. § 1, 15 U.S.C.A. § 1. Section 4 of the Sherman Act provides that the attorney general shall institute suits under the Act on behalf of the United States, and that the federal district courts shall have exclusive jurisdiction of such suits. Hence, continue respondents, the Commission, whose jurisdiction is limited to 'unfair methods of competition,' is without power to institute proceedings or to issue an order with regard to the combination in restraint of trade charged in Count I. Marquette then argues that since the fact allegations of Count I are the chief reliance for the charge in Count II, this latter count also must be interpreted as charging a violation of the Sherman Act. Assuming, without deciding, that the conduct charged in each count constitutes a violation of the Sherman Act, we hold that the Commission does have jurisdiction to conclude that such conduct may also be an unfair method of competition and hence constitute a violation of § 5 of the Federal Trade Commission Act. 18 As early as 1920 this Court considered it an 'unfair method of competition' to engage in practices 'against public policy because of their dangerous tendency unduly to hinder competition or create monopoly.' Federal Trade Commission v. Gratz, 253 U.S. 421, 427, 40 S.Ct. 572, 575, 64 L.Ed. 993. In 1921, the Court in Federal Trade Commission v. Beech Nut Packing Co., 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307, 19 A.L.R. 882, sustained a cease and desist order against a resale price maintenance plan because such a plan 'necessarily constitutes a scheme which restrains the natural flow of commerce and the freedom of competition in the channels of interstate trade which it has been the purpose of all the Anti-Trust Acts to maintain.' Id., 257 U.S. at page 454, 42 S.Ct. at page 154, 66 L.Ed. 307, 19 A.L.R. 882. The Court, in holding that the scheme before it constituted an unfair method of competition, noted that the conduct in question was practically identical with that previously declared unlawful in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502, and United States v. Schrader's Son, Inc., 252 U.S. 85, 40 S.Ct. 251, 64 L.Ed. 471, the latter a suit brought under § 1 of the Sherman Act. Again in 1926 this Court sustained a Commission unfair-method-of-competition order against defendants who had engaged in a price-fixing combination, a plain violation of § 1 of the Sherman Act. Federal Trade Commission v. Pacific States Paper Trade Ass'n, 273 U.S. 52, 47 S.Ct. 255, 71 L.Ed. 534. In 1941 we reiterated that certain conduct of a combination found to conflict with the policy of the Sherman Act could be suppressed by the Commission as an unfair method of competition. Fashion Originators' Guild v. Federal Trade Commission, 312 U.S. 457, 465, 61 S.Ct. 703, 707, 85 L.Ed. 949. The Commission's order was sustained in the Fashion Originators' case not only because the prohibited conduct violated the Clayton Act but also because the Commission's findings brought the 'combination in its entirety well within the inhibition of the policies declared by the Sherman Act itself.' In other cases this Court has pointed out many reasons which support interpretation of the language 'unfair methods of competition' in § 5 of the Federal Trade Commission Act as including violations of the Sherman Act.3 Thus it appears that soon after its creation the Commission began to interpret the prohibitions of § 5 as including those restraints of trade which also were outlawed by the Sherman Act,4 and that this Court has consistently approved that interpretatin of the Act. 19 Despite this long and consistent administrative and judicial construction of § 5, we are urged to hold that these prior interpretations were wrong and that the term 'unfair methods of competition' should not be construed as embracing any conduct within the ambit of the Sherman Act. In support of this contention, Marquette chiefly relies upon its reading of the legislative history of the Commission Act. We have given careful consideration to this contention because of the earnestness with which it is pressed. Marquette points to particular statements of some of the Act's sponsors which, taken out of their context, might lend faint support to its contention that Congress did not intend the Commission to concern itself with conduct then punishable under the Sherman Act. But on the whole the Act's legislative history shows a strong congressional purpose not only to continue enforcement of the Sherman Act by the Department of Justice and the Federal District Courts but also to supplement that enforcement through the administrative process of the new Trade Commission. Far from being regarded as a rival of the Justice Department and the District Courts in dissolving combinations in restraint of trade, the new Commission was envisioned as an aid to them and was specifically authorized to assist them in the drafting of appropriate decrees in antitrust litigation.5 All of the committee reports and the statements of those in charge of the Trade Commission Act reveal an abiding purpose to vest both the Commission and the courts with adequate powers to hit at every trade practice, then existing or thereafter contrived, which restrained competition or might lead to such restraint if not stopped in its incipient stages. These congressional purposes are revealed in the legislative history cited below, most of which is referred to in respondents' briefs.6 We can conceive of no greater obstacle this Court could create to the fulfillment of these congressional purposes than to inject into every Trade Commission proceeding brought under § 5 and into every Sherman Act suit brought by the Justice Department a possible jurisdictional question. 20 We adhere to our former rulings. The Commission has jurisdiction to declare that conduct tending to restrain trade is an unfair method of competition even though the selfsame conduct may also violate the Sherman Act. 21 There is a related jurisdictional argument pressed by Marquette which may be disposed of at this time. While review of the Commission's order was pending in the Circuit Court of Appeals, the Attorney General filed a civil action in the Federal District Court for Denver, Colorado, to restrain the Cement Institute, Marquette and 88 other cement companies, including all of the present respondents, from violating § 1 of the Sherman Act. Much of the evidence before the Commission in this proceeding might also be relevant in that case, which, we are informed, has not thus far been brought to trial. Marquette urges that the Commission proceeding should now be dismissed because it is contrary to the public interest to force respondents to defend both a Commission proceeding and a Sherman Act suit based largely on the same alleged misconduct. 22 We find nothing to justify a holding that the filing of a Sherman Act suit by the Attorney General requires the termination of these Federal Trade Commission proceedings. In the first place, although all conduct violative of the Sherman Act may likewise come within the unfair trade practice prohibitions of the Trade Commission Act, the converse is not necessarily true. It has long been recognized that there are many unfair methods of competition that do not assume the proportions of Sherman Act violations. Federal Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, 54 S.Ct. 423, 78 L.Ed. 814; Federal Trade Commission v. Gratz, 253 U.S. 421, 427, 40 S.Ct. 572, 574, 64 L.Ed. 993. Hence a conclusion that respondents' conduct constituted an unfair method of competition does not necessarily mean that their same activities would also be found to violate § 1 of the Sherman Act. In the second place, the fact that the same conduct may constitute a violation of both acts in nowise requires us to dismiss this Commission proceeding. Just as the Sherman Act itself permits the Attorney General to bring simultaneous civil and criminal suits against a defendant based on the same misconduct, so the Sherman Act and the Trade Commission Act provide the Government with cumulative remedies against activity detrimental to competition. Both the legislative history of the Trade Commission Act and its specific language indicate a congressional purpose, not to confine each of these proceedings within narrow, mutually exclusive limits, but rather to permit the simultaneous use of both types of proceedings. Marquette's objections to the Commission's jurisdiction are overruled. 23 Ojections to Commission's Jurisdiction by Certain Respondents on Ground That They Were Not Engaged in Interstate Commerce.—One other challenge to the Commission's jurisdiction is specially raised by Northwestern Portland and Superior Portland. The Commission found that 'Northwestern Portland makes no sales or shipments outside the State of Washington,' and that 'Superior Portland, with few exceptions, makes sales and shipments outside the State of Washington only to Alaska.' These two respondents contend that since they did not engage in interstate commerce, and since § 5 of the Trade Commission Act applies only to unfair methods of competition in interstate commerce, the Commission was without jurisdiction to enter an order against them under Count I of the complaint. For this contention they chiefly rely on Federal Trade Commission v. Bunte Bros., 312 U.S. 349, 61 S.Ct. 580, 85 L.Ed. 881. They also argue that for the same reason the Commission lacked jurisdiction to enforce against them the price discrimination charge in Count II of the complaint. 24 We cannot sustain this contention. The charge against thee respondents was not that they, apart from the other respondents, had engaged in unfair methods of competition and price discriminations simply by making intrastate sales. Instead, the charge was, as supported by the Commission's findings, that these respondents in combination with others agreed to maintain a delivered price system in order to eliminate price competition in the sale of cement in interstate commerce. The combination, as found, includes the Institute and cement companies located in many different states. The Commission has further found that 'In general, said corporate respondents have maintained, and now maintain, a constant course of trade and commerce in cement among and between the several States of the United States.' The fact that one or two of the numerous participants in the combination happen to be selling only within the borders of a single state is not controlling in determining the scope of the Commission's jurisdiction. The important factor is that the concerted action of all of the parties to the combination is essential in order to make wholly effective the restraint of commerce among the states.7 The Commission would be rendered helpless to stop unfair methods of competition in the form of interstate combinations and conspiracies if its jurisdiction could be defeated on a mere showing that each conspirator had carefully confined his illegal activities within the borders of a single state. We hold that the Commission did have jurisdiction to make an order against Superior Portland and Northwestern Portland. 25 The Multiple Basing Point Delivered Price System.—Since the multiple basing point delivered price system of fixing prices and terms of cement sales is the nub of this controversy, it will be helpful at this preliminary stage to point out in general what it is and how it works. A brief reference to the distinctive characteristics of 'factory' or 'mill prices' and 'delivered prices' is of importance to an understanding of the basing point delivered price system here involved. 26 Goods may be sold and delivered to customers at the seller's mill or warehouse door or may be sold free on board (f.o.b.) trucks or railroad cars immediately adjacent to the seller's mill or warehouse. In either event the actual cost of the goods to the purchaser is, broadly speaking, the seller's 'mill price' plus the purchaser's cost of transportation. However, if the seller fixes a price at which he undertakes to deliver goods to the purchaser where they are to be used, the cost to the purchaser is the 'delivered price.' A seller who makes the 'mill price' identical for all purchasers of like amount and quality simply delivers his goods at the same place (his mill) and for the same price (price at the mill). He thus receives for all f.o.b. mill sales an identical net amount of money for like goods from all customers. But a 'delivered price' system creates complications which may result in a seller's receiving different net returns from the sale of like goods. The cost of transporting 500 miles is almost always more than the cost of transporting 100 miles. Consequently if customers 100 and 500 miles away pay the same 'delivered price,' the seller's net return is less from the more distant customer. This difference in the producer's net return from sales to customers in different localities under a 'delivered price' system is an important element in the charge under Count I of the complaint and is the crux of Count II. 27 The best known early example of a basing point price system was called 'Pittsburgh plus.' It related to the price of steel. The Pittsburgh price was the base price, Pittsburgh being therefore called a price basing point. In order for the system to work, sales a d to be made only at delivered prices. Under this system the delivered price of steel from anywhere in the United States to a point of delivery anywhere in the United States was in general the Pittsburgh price plus the railroad freight rate from Pittsburgh to the point of delivery.8 Take Chicago, Illinois, as an illustration of the operation and consequences of the system. A Chicago steel producer was not free to sell his steel at cost plus a reasonable profit. He must sell it at the Pittsburgh price plus the railroad freight rate from Pittsburgh to the point of delivery. Chicago steel customers were by this pricing plan thus arbitrarily required to pay for Chicago produced steel the Pittsburgh base price plus what it would have cost to ship the steel by rail from Pittsburgh to Chicago had it been shipped. The theoretical cost of this fictitious shipment became known as 'phantom freight.' But had it been economically possible under this plan for a Chicago producer to ship his steel to Pittsburgh, his 'delivered price' would have been merely the Pittsburgh price, although he actually would have been required to pay the freight from Chicago to Pittsburgh. Thus the 'delivered price' under these latter circumstances required a Chicago (non-basing point) producer to 'absorb' freight costs. That is, such a seller's net returns became smaller and smaller as his deliveries approached closer and closer to the basing point. 28 Several results obviously flow from use of a single basing point system such as 'Pittsburgh plus' originally was. One is that the 'delivered prices' of all producers in every locality where deliveries are made are always the same regardless of the producers' different freight costs. Another is that sales made by a non-base mill for delivery at different localities result in net receipts to the seller which vary in amounts equivalent to the 'phantom freight' included in, or the 'freight absorption' taken from the 'delivered price.' 29 As commonly employed by respondents, the basing point system is not single but multiple. That is, instead of one basing point, like that in 'Pittsburgh plus,' a number of basing point localities are used. In the multiple basing point system, just as in the single basing point system, freight absorption or phantom freight is an element of the delivered price on all sales not governed by a basing point actually located at the seller's mill.9 And all sellers quote identical delivered prices in any given locality regardless of their different costs of production and their different freight expenses. Thus the multiple and single systems function in the same general manner and produce the same consequences—identity of prices and diversity of net returns.10 Such differences as there are in matters here pertinent are therefore differences of degree only. 30 Alleged Bias of the Commission.—One year after the taking of testimony had been concluded and while these proceedings were still pending before the Commission, the respondent Marquette asked the Commission to disqualify itself from passing upon the issues involved. Marquette charged that the Commission had previously prejudged the issues, was 'prejudiced and biased against the Portland cement industry generally,' and that the industry and Marquette in particular could not receive a fair hearing from the Commission. After hearing oral argument the Commission refused to disqualify itself. This contention, repeated here, was also urged and rejected in the Circuit Court of Appeals one year before that court reviewed the merits of the Commission's order. Marquette Cement Mfg. Co. v. Federal Trade Commission, 7 Cir., 147 F.2d 589. 31 Marquette introduced numerous exhibits intended to support its charges. In the main these exhibits were copies of the Commission's reports made to Congress or to the President, as required by § 6 of the Trade Commission Act. 15 U.S.C. § 46, 15 U.S.C.A. § 46. These reports, as well as the testimony given by members of the Commission before congressional committees, make it clear that long before the filing of this complaint the members of the Commission at that time, or at least some of them, were of the opinion that the operation of the multiple basing point system as they had studied it was the equivalent of a price fixing restraint of trade in violation of the Sherman Act. We therefore decide this contention, as did the Circuit Court of Appeals, on the assumption that such an opinion had been formed by the entire membership of the Commission as a result of its prior official investigations. But we also agree with that court's holding that this belief did not disqualify the Commission. 32 In the first place, the fact that the Commission had entertained such views as the result of its prior ex parte investigations did not necessarily mean that the minds of its members were irrevocably closed on the subject of the respondents' basing point practices. Here, in contrast to the Commission's investigations, members of the cement industry were legally authorized participants in the hearings. They produced evidence volumes of it. They were free to point out to the Commission by testimony, by cross-examination of witnesses, and by arguments, conditions of the trade practices under attack which they thought kept these practices within the range of legally permissible business activities. 33 Moreover, Marquette's position, if sustained, would to a large extent defeat the congressional purposes which prompted passage of the Trade Commission Act. Had the entire membership of the Commission disqualified in the proceedings against these e spondents, this complaint could not have been acted upon by the Commission or by any other government agency. Congress has provided for no such contingency. It has not directed that the Commission disqualify itself under any circumstances, has not provided for substitute commissioners should any of its members disqualify, and has not authorized any other government agency to hold hearings, make findings, and issue cease and desist orders in proceedings against unfair trade practices.11 Yet if Marquette is right, the Commission, by making studies and filing reports in obedience to congressional command, completely immunized the practices investigated, even though they are 'unfair,' from any cease and desist order by the Commission or any other governmental agency. 34 There is no warrant in the Act for reaching a conclusion which would thus frustrate its purposes. If the Commission's opinions expressed in congressionally required reports would bar its members from acting in unfair trade proceedings, it would appear that opinions expressed in the first basing point unfair trade proceeding would similarly disqualify them from ever passing on another. See Morgan v. United States, 313 U.S. 409, 421, 61 S.Ct. 999, 1004, 85 L.Ed. 1429. Thus experience acquired from their work as commissioners would be a handicap instead of an advantage. Such was not the intendment of Congress. For Congress acted on a committee report stating: 'It is manifestly desirable that the terms of the commissioners shall be long enough to give them an opportunity to acquire the expertness in dealing with these special questions concerning industry that comes from experience.' Report of Committee on Interstate Commerce, No. 597, June 13, 1914, 63d Cong., 2d Sess. 10—11. 35 Marquette also seems to argue that it was a denial of due process for the Commission to act in these proceedings after having expressed the view that industry-wide use of the basing point system was illegal. A number of cases are cited as giving support to this contention. Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749, 50 A.L.R. 1243, is among them. But it provides no support for the contention. In that case Tumey had been convicted of a criminal offense, fined, and committed to jail by a judge who had a direct, personal, substantial, pecuniary interest in reaching his conclusion to convict. A criminal conviction by such a tribunal was held to violate procedural due process. But the Court there pointed out that most matters relating to judicial disqualification did not rise to a constitutional level. Id., at page 523 of 273 U.S., at page 441 of 47 S.Ct. 71 L.Ed. 749, 50 A.L.R. 1243. 36 Neither the Tumey decision nor any other decision of this Court would require us to hold that it would be a violation of procedural due process for a judge to sit in a case after he had expressed an opinion as to whether certain types of conduct were prohibited by law. In fact, judges frequently try the same case more than once and decide identical issues each time, although these issues involved questions both of law and fact. Certainly, the Federal Trade Commission cannot possibly be under stronger constitutional compulsions in this respect than a court.12 37 The Commission properly refused to disqualify itself. We thus need notr eview the additional holding of the Circuit Court of Appeals that Marquette's objection on the ground of the alleged bias of the Commission was filed too late in the proceedings before that agency to warrant consideration. 38 Alleged Errors in re Introduction of Evidence.—The complaint before the Commission, filed July 2, 1937, alleged that respondents had maintained an illegal combination for 'more than eight yearts last past.' In the Circuit Court of Appeals and in this Court the Government treated its case on the basis that the combination began in August, 1929, when the respondent Cement Institute was organized. The Government introduced much evidence over respondents' objections, however, which showed the activities of the cement industry for many years prior to 1929, some of it as far back as 1902. It also introduced evidence as to respondents' activities from 1933 to May 27, 1935, much of which related to the preparation and administration of the NRA Code for the cement industry pursuant to the National Industrial Recovery Act, 48 Stat. 195, held invalid by this Court May 27, 1935, in Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947. All of the testimony to which objection was made related to the initiation, development, and carrying on of the basing point practices. 39 Respondents contend that the pre-1929 evidence, especially that prior to 1919, is patently inadmissible with reference to a 1929 combination, many of whose alleged members were non-existent in 1919. They also urge that evidence of activities during the NRA period was improperly admitted because § 5 of Title I of the NRA provided that any action taken in compliance with the code provisions of an industry should be 'exempt from the provisions of the antitrust laws of the United States.' And some of the NRA period testimony relating to basing point practices did involve references to code provisions. The Government contends that evidence of both the pre-1929 and the NRA period activities of members of the cement industry tends to show a continuous course of concerted efforts on the part of the industry, or at least most of it, to utilize the basing point system as a means to fix uniform terms and prices at which cement would be sold, and that the Commission had properly so regarded this evidence. The Circuit Court of Appeals agreed with respondents that the Commission had erroneously considered both the NRA period evidence and the pre-1929 evidence in making its findings of the existence of a combination among respondents. 40 We conclude that both types of evidence were admissible for the purpose of showing the existence of a continuing combination among respondents to utilize the basing poing pricing system.13 41 The Commission did not make its findings of post-1929 combination, in whole or in part, on the premise that any of respondents' pre-1929 or NRA code activities were illegal. The consideration given these activities by the Commission was well within the established judicial rule of evidence that testimony of prior or subsequent transactions, which for some reason are barred from forming the basis for a suit, may nevertheless be introduced if it tends reasonably to show the purpose and character of the particular transactions under scrutiny. Standard Oil Co. v. United States, 221 U.S. 1, 46, 47, 31 S.Ct. 502, 510, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734; United States v. Reading Co., 253 U.S. 26, 43, 44, 40 S.Ct. 425, 427, 428, 64 L.Ed. 760. Here the trade practices of an entire industry were under consideration. Respondents, on the one hand, insisted that the multiple basin point delivered price system represented a natural evolution of business practices adopted by the different cement companies, not in concert, but separately in response to customers' needs and demands. That the separately adopted business practices produced uniform terms and conditions of sale in all localities was, so the respondents contended, nothing but an inevitable result of long-continued competition. On the other hand, the Government contended that, despite shifts in ownership of individual cement companies, what had taken place from 1902 to the date the complaint was filed showed continued concerted action on the part of all cement producers to develop and improve the basing point system so that it would automatically eliminate competition. In the Government's view the Institute when formed in 1929 simply took up the old practices for the old purpose and aided its member companies to carry it straight on through and beyond the NRA period. See Fort Howard Paper Co. v. Federal Trade Commission, 7 Cir., 156 F.2d 899, 906. 42 Furthermore, administrative agencies like the Federal Trade Commission have never been restricted by the rigid rules of evidence. Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S.Ct. 563, 568, 569, 48 L.Ed. 860. And of course rules which bar certain types of evidence in criminal or quasi-criminal cases are not controlling in proceedings like this, where the effect of the Commission's order is not to punish or to fasten liability on respondents for past conduct but to ban specific practices for the future in accordance with the general mandate of Congress. 43 The foregoing likewise largely answers respondents' contention that there was error in the admission of a letter written by one Treanor in 1934 to the chairman of the NRA code authority for the cement industry. Treanor, who died prior to the filing of the complaint, was at the time president of one of the respondent companies and also an active trustee of the Institute. In the letter he stated among other things that the cement industry was one 'above all others that cannot stand free competition, that must systematically restrain competition or be ruined.' This statement was made as part of his criticism of the cement industry's publicity campaign in defense of the basing point system. The relevance of this statement indicating this Institute official's informed judgment is obvious. That is might be only his conclusion does not render the statement inadmissible in this administrative proceeding. 44 All contentions in regard to the introduction of testimony have been considered. None of them justify refusal to enforce this order. 45 The Old Cement Case.—This Court's opinion in Cement Mfrs.' Protective Ass'n v. United States, 268 U.S. 588, 45 S.Ct. 586, 592, 69 L.Ed. 1194, known as the Old Cement case, is relied on by the respondents in almost every contention they present. We think it has little relevance, if any at all, to the issues in this case. 46 In that case the United States brought an action in the District Court to enjoin an alleged combination to violate s 1 of the Sherman Act. The respondents were the Cement Manufacturers Protective Association, four of its officers, and nineteen cement manufacturers. The District Court held hearings, made findings of fact, and issued an injunction against those respondents. This Court, with three justices dissenting, reversed upon a review of the evidence. It did so because the Government did not charge and the record did not show 'any agreement or understanding between the defendants placing limitations on either prices or production,' or any agreement to utilize the basing point system as a means of fixing prices. The Court said 'But here the government does not rely upon agreement or understanding, and this record wholly fails to establish, either directly or by inference, any concerted action other than that involved in the gathering and dissemination of pertinent information with respect to the sale and distribution of cement to whc h we have referred, and it fails to show any effect on price and production except such as would naturally flow from the dissemination of that information in the trade and its natural influence on individual action.' Id., at page 606, of 268 U.S., at page 592 of 45 S.Ct., 69 L.Ed. 1104. In the Old Cement case and in Maple Flooring Mfrs.' Ass'n v. United States, 268 U.S. 563, 45 S.Ct. 578, 69 L.Ed. 1093, decided the same day, the Court's attention was focused on the rights of a trade association, despite the Sherman Act, openly to gather and disseminate statistics and information as to production costs, output, past prices, merchandise on hand, specific job contracts, freight rates, etc., so long as the Association did these things without attempts to foster agreements or concerted action with reference to prices, production, or terms of sale. Such associations were declared guiltless of violating the Sherman Act, because 'in fact, no prohibited concert of action was found.' Corn Products Refining Co. v. Federal Trade Commission, 324 U.S. 726, 735, 65 S.Ct. 961, 966, 89 L.Ed. 1320. 47 The Court's holding in the Old Cement case would not have been inconsistent with a judgment sustaining the Commission's order here, even had the two cases been before this Court the same day. The issues in the present Commission proceedings are quite different from those in the Old Cement case, although many of the trade practices shown here were also shown there. In the first place, unlike the Old Cement case the Commission does here specifically charge a combination to utilize the basing point system as a means to bring about uniform prices and terms of sale. And here the Commission has focused attention on this issue, having introduced evidence on the issue which covers thousands of pages. Furthermore, unlike the trial court in the Old Cement case, the Commission has specifically found the existence of a combination among respondents to employ the basing point system for the purpose of selling at identical prices. 48 In the second place, individual conduct, or concerted conduct, which falls short of being a Sherman Act violation may as a matter of law constitute an 'unfair method of competition' prohibited by the Trade Commission Act. A major purpose of that Act, as we have frequently said, was to enable the Commission to restrain practices as 'unfair' which, although not yet having grown into Sherman Act dimensions would, most likely do so if left unrestrained. The Commission and the courts were to determine what conduct, even though it might then be short of a Sherman Act violation, was an 'unfair method of competition.' This general language was deliberately left to the 'Commission and the courts' for definition because it was thought that 'There is no limit to human inventiveness in this field'; that consequently, a definition that fitted practices known to lead towards an unlawful restraint of trade today would not fit tomorrow's new inventions in the field; and that for Congress to try to keep its precise definitions abreast of this course of conduct would be an 'endless task.' See Federal Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, 310—312, 54 S.Ct. 423, 426, 78 L.Ed. 814, and congressional committee reports there quoted. 49 These marked differences between what a court must decide in a Sherman Act proceeding and the duty of the Commission in determining whether conduct is to be classified as an unfair method of competition are enough in and of themselves to make the Old Cement decision wholly inapplicable to our problem in reviewing the findings in this case. That basic problem is whether the Commission made findings of concerted action, whether those findings are supported by evidence, and if so whether the findings are adequate as a matter of law to sustain the Commission's conclusion that the multiple basing point system as practiced constitutes an 'unfair method of competition,' because it either restrains free competition or is an incipient menace to it. 50 Findings and Ei dence.—It is strongly urged that the Commission failed to find, as charged in both counts of the complaint, that the respondents had by combination, agreements, or understandings among themselves utilized the multiple basing point delivered price system as a restraint to accomplish uniform prices and terms of sale. A subsidiary contention is that assuming the Commission did so find, there is no substantial evidence to support such a finding. We think that adequate findings of combination were made and that the findings have support in the evidence. 51 The Commission's findings of fact set out at great length and with painstaking detail numerous concerted activities carried on in order to make the multiple basing point system work in such way that competition in quality, price and terms of sale of cement would be nonexistent, and that uniform prices, job contracts, discounts, and terms of sale would be continuously maintained. The Commission found that many of these activities were carried on by the Cement Institute, the industry's unincorporated trade association, and that in other instances the activities were under the immediate control of groups of respondents. Among the collective methods used to accomplish these purposes, according to the findings, were boycotts; discharge of uncooperative employees; organized opposition to the erection of new cement plants; selling cement in a recalcitrant price cutter's sales territory at a price so low that the recalcitrant was forced to adhere to the established basing point prices; discouraging the shipment of cement by truck or barge; and preparing and distributing freight rate books which provided respondents with similar figures to use as actual or 'phantom' freight factors, thus guaranteeing that their delivered prices (base prices plus freight factors) would be identical on all sales whether made to individual purchasers under open bids or to governmental agencies under sealed bids. These are but a few of the many activities of respondents which the Commission found to have been done in combination to reduce or destroy price competition in cement. After having made these detailed findings of concerted action, the Commission followed them by a general finding that 'the capacity, tendency, and effect of the combination maintained by the respondents herein in the manner aforesaid is to * * * promote and maintain their multiple basing point delivered-price system and obstruct and defeat any form of competition which threatens or tends to threaten the continued use and maintenance of said system and the uniformity of prices created and maintained by its use.'14 The Commission then concluded that 'The aforesaid combination and acts and practices of respondents pursuant thereto and in connection therewith, as hereinabove found, under the conditions and circumstances set forth, constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act.' And the Commission's cease and desist order prohibited respondents 'from entering into, continuing, cooperating in, or carrying out any planned common course of action, understanding, agreement, combination, or conspiracy between and among any two or more of said respondents * * *' to do certain things there enumerated. 52 Thus we have a complaint which charged collective action by respondents designed to maintain a sales technique that restrained competition, detailed findings of collective activities by groups of respondents to achieve that end, then a general finding that respondents maintained the combination, and finally an order prohibiting the continuance of the combination. It seems impossible to conceive that anyone reading these findings in their entirety could doubt that the Commission found that respondents, collectively maintained a multiple basing point delivered price system for the purpose of suppressing competition in cement sales. The findings are sufficient. The contention that they were not is without substance. 53 Disposition of this question brings us to the related contention that there was no substantial evidence to support the findings. We might well dispose of the contention as this Court dismissed a like one with reference to evidence and findings in a civil suit brought under the Sherman Act in Sugar Institute v. United States, 297 U.S. 553, 601, 56 S.Ct. 629, 643, 80 L.Ed. 859: 'After a hearing of extraordinary length, in which no pertinent fact was permitted to escape consideration, the trial court subjected the evidence to a thorough and acute analysis which has left but slight room for debate over matters of fact. Our examination of the record discloses no reason for overruling the court's findings in any matter essential to our decision.' In this case, which involves the evidence and findings of the Federal Trade Commission, we likewise see no reason for upsetting the essential findings of the Commission. Neither do we find it necessary to refer to all the voluminous testimony in this record which tends to support the Commission's findings. 54 Although there is much more evidence to which reference could be made, we think that the following facts shown by evidence in the record, some of which are in dispute, are sufficient to warrant the Commission's finding of concerted action. 55 When the Commission rendered its decision there were about 80 cement manufacturing companies in the United States operating about 150 mills. Ten companies controlled more than half of the mills and there were substantial corporate affiliations among many of the others. This concentration of productive capacity made concerted action far less difficult than it would otherwise have been. The belief is prevalent in the industry that because of the standardized nature of cement, among other reasons, price competition is wholly unsuited to it. That belief is historic. It has resulted in concerted activities to devise means and measures to do away with competition in the industy . Out of those activities came the multiple basing point delivered price system. Evidence shows it to be a handy instrument to bring about elimination of any kind of price competition. The use of the multiple basing point delivered price system by the cement producers has been coincident with a situation whereby for many years, with rare exceptions, cement has been offered for sale in every given locality at identical prices and terms by all producers. Thousands of secret sealed bids have been received by public agencies which corresponded in prices of cement down to a fractional part of a penny.15 56 Occasionally foreign cement has been imported, and cement dealers have sold it below the delivered price of the domestic product. Dealers who persisted in selling foreign cement were boycotted by the domestic producers. Officers of the Institute took the lead in securing pledges by producers not to permit sales f.o.b. mill to purchasers who furnished their own trucks, a practice regarded as seriously disruptive of the entire delivered price structure of the industry. 57 During the depression in the 1930's, slow business prompted some producers to deviate from the prices fixed by the delivered price system. Meetings were held by other producers; an effective plan was devised to punish the recalcitrants and bring them into line. The plan was simple but successful. Other producers made the recalcitrant's plant an involuntary base point. The base price was driven down with relatively insignificant losses to the producers who imposed the punitive basing point, but with heavy losses to the recalcitrant who had to make all its sales on this basis. In one instance, where a producer had made a low public bid, a punitive base point price was put on its plant and cement was reduced 10¢ per barrel; further reductions quickly followed until the base price at which this recalcitrant had to sell its cement dropped to 75¢ per barrel, scarcely one-half of its former base price of $1.45. Within six weeks after the base price hit 75 capitulation occurred and the recalcitrant joined a Portland cement association. Cement in that locality then bounced back to $1.15, later to $1.35, and finally to $1.75. 58 The foregoing are but illustrations of the practices shown to have been utilized to maintain the basing point price system. Respondents offered testimony that cement is a standardized product, that 'cement is cement,' that no differences existed in quality or usefulness, and that purchasers demanded delivered price quotations because of the high cost of transportation from mill to dealer. There was evidence, however, that the Institute and its members had, in the interest of eliminating competition, suppressed information as to the variations in quality that sometimes exist in different cements.16 Respondents introduced the testimony of economists to the effect that competition alone could lead to the evolution of a multiple basing point system of uniform delivered prices and terms of sale for an industry with a standardized product and with relatively high freight costs. These economists testified that for the above reasons no inferences of collusion, agreement, or understanding could be drawn from the admitted fc t that cement prices of all United States producers had for many years almost invariably been the same in every given locality in the country. There was also considerable testimony by other economic experts that the multiple basing point system of delivered prices as employed by respondents contravened accepted economic principles and could only have been maintained through collusion. 59 The Commission did not adopt the views of the economists produced by the respondents. It decided that even though competition might tend to drive the price of standardized products to a uniform level, such a tendency alone could not account for the almost perfect identity in prices, discounts, and cement containers which had prevailed for so long a time in the cement industry. The Commission held that the uniformity and absence of competition in the industry were the results of understandings or agreements entered into or carried out by concert of the Institute and the other respondents. It may possibly be true, as respondents' economists testified, that cement producers will, without agreement express or implied and without understanding explicit or tacit, always and at all times (for such has been substantially the case here) charge for their cement precisely, to the fractional part of a penny, the price their competitors charge. Certainly it runs counter to what many people have believed, namely, that without agreement, prices will vary—that the desire to sell will sometimes be so strong that a seller will be willing to lower his prices and take his chances. We therefore hold that the Commission was not compelled to accept the views of respondents' economist-witnesses that active competition was bound to produce uniform cement prices. The Commission was authorized to find understanding, express or implied, from evidence that the industry's Institute actively worked, in cooperation with various of its members, to maintain the multiple basing point delivered price system; that this pricing system is calculated to produce, and has produced, uniform prices and terms of sale throughout the country; and that all of the respondents have sold their cement substantially in accord with the pattern required by the multiple basing point system.17 60 Some of the respondn ts contend that particularly as to them crucial findings of participation by them in collective action to eliminate price competition and to bring about uniformity of cement prices are without testimonial support. On this ground they seek to have the proceedings dismissed as to them even though there may be adequate evidence to sustain the Commission's findings and order as to other respondents. The Commission rejected their contentions; the Circuit Court of Appeals did not consider them in its opinion. Those respondents whose individual contentions in this respect deserve special mention are central and southern California cement companies; Superior Portland Cement Company and Northwestern Portland Cement Company, both of the State of Washington; Huron Portland Cement Company, which does business in the Great Lakes region; and Marquette Cement Manufacturing Company with plants in Illinois and Missouri. 61 These companies support their separate contentions for particularized consideration by pointing out among other things that there was record evidence which showed differences between many of their sales methods and those practiced by other respondents. Each says that there was no direct evidence to connect it with all of the practices found to have been used by the Institute and other respondents to achieve delivered price uniformity. 62 The record does show such differences as those suggested. It is correct to say, therefore, that the sales practices of these particular respondents, and perhaps of other respondents as well, were not at all times precisely like the sales practices of all or any of the others. For example, the Commission found that in 1929 all of the central California mills became basing points. There was evidence that the Institute's rate books did not extend to the states in which some of the California companies did business. The Commission found that 'In Southern California the basing point system of pricing is modified by an elaborate system of zone prices applicable in certain areas,' that the California system does not require separate calculations to determine the delivered price at each destination, but that complete price lists were published by the companies showing delivered prices at substantially all delivery points. Northwestern and Superior assert that among other distinctive practices of theirs, they were willing to and did bid for government contracts on a mill price rather than a delivered price basis. Huron points out that it permitted the use of trucks to deliver cement, which practice, far from being consistent with the plan of others to maintain the basing point delivered price formulas, was frowned on by the Institute and others as endangering the success of the plan. Marquette emphasizes that it did not follow all the practices used to carry out the anticompetition plan, and urges that although the Commission rightly found that it had upon occasion undercut its competitors, it erroneously found that its admitted abandonment of price cutting was due to the combined pressure of other respondents, including the Institute. 63 What these particular respondents emphasize does serve to underscore certain findings which show that some respondents were more active and influential in the combination than were others,18 and that some companies probably unwillingly abandoned competitive practices and entered into the combination. But none of the distinctions mentioned, or any other differences relied on by these particular respondents, justifies a holding that there was no substantial evidence to support the Commission's findings that they cooperated with all the others to achieve the ultimate objective of all—the elimination of price competition in the sale of cement. These respondents' special contentions only illustrate that the Commission was called upon to resolve factual issues as to each of them in the light of whatever relevant differences in their practices were shown by the evidence. For aside from the testimony indicating the differencs in their individual sales practices, there was abundant evidence as to common practices of these respondents and the others on the basis of which the Commission was justified in finding cooperative conduct among all to achieve delivered price uniformity. 64 The evidence commonly applicable to these and the other respondents showed that all were members of the Institute and that the officers of some of these particular respondents were or had been officers of the Institute. We have already sustained findings that the Institute was organized to maintain the multiple basing point system as one of the 'customs and usages' of the industry and that it participated in numerous activities intended to eliminate price competition through the collective efforts of the respondents. Evidence before the Commission also showed that the delivered prices of these respondents, like those of all the other respondents, were, with rare exceptions, identical with the delivered prices of all their competitors. Furthermore, there was evidence that all of these respondents, including those who sold cement on a zone basis in sections of southern California, employed the mutiple basing point delivered price system on a portion of their sales. 65 Our conclusion is that there was evidence to support the Commission's findings that all of the respondents, including the California companies, Northwestern Portland and Superior Portland, Huron and Marquette, cooperated in carrying out the objectives of the basing point delivered price system. 66 Unfair Methods of Competition.—We sustain the Commission's holding that concerted maintenance of the basing point delivered price system is an unfair method of competition prohibited by the Federal Trade Commission Act. In so doing we give great weight to the Commission's conclusion, as this Court has done in other cases. Federal Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, 314, 54 S.Ct. 423, 427, 78 L.Ed. 814; Federal Trade Commission v. Pacific States Paper Trade Ass'n, 273 U.S. 52, 63, 47 S.Ct. 255, 258, 71 L.Ed. 534. In the Keppel case the Court called attention to the express intention of Congress to create an agency whose membership would at all times be experienced, so that its conclusions would be the result of an expertness coming from experience. We are persuaded that the Commission's long and close examination of the questions it here decided has provided it with precisely the experience that fits it for performance of its statutory duty. The kind of specialized knowledge Congress wanted its agency to have was an expertness that would fit it to stop at the threshold every unfair trade practice—that kind of practice, which if left alone, 'destroys competition and establishes monopoly.' Federal Trade Commission v. Raladam Co., 283 U.S. 643, 647, 650, 51 S.Ct. 587, 591, 75 L.Ed. 1324, 79 A.L.R. 1191. And see Federal Trade Commission v. Raladam Co., 316 U.S. 149, 152, 62 S.Ct. 966, 968, 86 L.Ed. 1336. 67 We cannot say that the Commission is wrong in concluding that the delivered-price system as here used provides an effective instrument which, if left free for use of the respondents, would result in complete destruction of competition and the establishment of monopoly in the cement industry. That the basing point price system may lend itself to industry-wide anti-competitive practices is illustrated in the following among other cases: United States v. United States Gypsum Co. et al., 333 U.S. 364, 68 S.Ct. 525, Sugar Institute v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859. We uphold the Commission's conclusio that the basing point delivered price system employed by respondents is an unfair trade practice which the Trade Commission may suppress.19 68 The Price Discrimination Charge in Count Two.—The Commission found that respondents' combination to use the multiple basing point delivered price system had effected systematic price discrimination in violation of § 2 of the Clayton Act as amended by the Robinson-Patman Act. 49 Stat. 1526, 15 U.S.C. § 13, 15 U.S.C.A. § 13. Section 2(a) of that Act declares it to 'be unlawful for any person engaged in commerce * * * either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality * * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *' Section 2(b) provides that proof of discrimination in price (selling the same kind of goods cheaper to one purchaser than to another), makes out a prima facie case of violation, but permits the seller to rebut 'the prima facie case thus made by showing that his lower price * * * was made in good faith to meet an equally low price of a competitor * * *.' 69 The Commission held that the varying mill nets received by respondents on sales between customers in different localities constituted a 'discrimination in price between different purchasers' within the prohibition of § 2(a), and that the effect of this discrimination was the substantial lessening of competition between respondents. The Circuit Court of Appeals reversed the Commission on this count. It agreed that respondents' prices were unlawful insofar as they involved the collection of phantom freight, but it held that prices involving only freight absorption came within the 'good faith' proviso of § 2(b). 70 The respondents contend that the differences in their net returns from sales in different localities which result from use of the multiple basing point delivered price system are not price discriminations within the meaning of § 2(a). If held that these net return differences are price discriminations prohibited by § 2(a), they contend that the discriminations were justified under § 2(b) because 'made in good faith to meet an equally low price of a competitor.' Practically all the arguments presented by respondents in support of their contentions were considered by this Court and rejected in 1945 in Corn Products Co. v. Federal Trade Commission, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320, and in the related case of Federal Trade Commission v. A. E. Staley Mfg. Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338. As stated in the Corn Products opinion at page 730, of 324 U.S., at page 963 of 65 S.Ct., 89 L.Ed. 1338, certiorari was granted in those two cases because the 'questions involved' were 'of importance in the administration of the Clayton Act in view of the widespread use of basing point price systems.' For this reason the questions there raised were given thorough consideration. Consequently, we see no reason for again reviewing the questions that were there decided. 71 In the Corn Products case the Court, in holding illegal a single basing point system, specifically reserved decision upon the legality under the Clayton Act of a multiple basing point price system, but only in view of the 'good faith' proviso of § 2(b), and referred at that point to the companion Staley opinion. 324 U.S. at page 735, 65 S.Ct. at page 966, 89 L.Ed. 1320. The latter case held thata seller could not justify the adoption of a competitor's basing point price system under § 2(b) as a good faith attempt to meet the latter's equally low price. Thus the combined effect of the two cases was to forbid the adoption for sales purposes of any basing point pricing system. It is true that the Commission's complaint in the Corn Products and Staley cases simply charged the individual respondents with discrimination in price through use of a basing point price system, and did not, as here, allege a conspiracy or combination to use that system. But the holdings in those two cases that § 2 forbids a basing point price system are equally controlling here, where the use of such a system is found to have been the result of a combination. Respondents deny, however, that the Corn Products and Staley cases passed on the questions they here urge. 72 Corn Products Co. was engaged in the manufacture and sale of glucose. It had two plants, one in Chicago, one in Kansas City. Both plants sold 'only at delivered prices, computed by adding to a base price at Chicago the published freight tariff from Chicago to the several points of delivery, even though deliveries are in fact made from their factory at Kansas City as well as from their Chicago factory.' 324 U.S. at page 729, 65 S.Ct. at page 963, 89 L.Ed. 1320. This price system we held resulted in Corn Products Co. receiving from different purchasers different net amounts corresponding to differences in the amounts of phantom freight collected or of actual freight charges absorbed. We further held that 'price discriminations are necessarily involved where the price basing point is distant from the point of production,' because in such situations prices 'usually include an item of unearned of phantom freight or require the absorption of freight with the consequent variations in the seller's net factory prices. Since such freight differentials bear no relation to the actual cost of delivery, they are systematic discriminations prohibited by § 2(a), whenever they have the defined effect upon competition.' Federal Trade Commission v. A. E. Staley Mfg. Co., supra, at pages 750, 751 of 324 U.S., at page 973 of 65 S.Ct., 89 L.Ed. 1338. This was a direct holding that a pricing system involving both phantom freight and freight absorption violates § 2(a) if under that system prices are computed for products actually shipped from one locality on the fiction that they were shipped from another. This Court made the holding despite arguments, which are now repeated here, that in passing the Robinson-Patman Act, Congress manifested its purpose to sanction such pricing systems; that this Court had approved the system in Maple Flooring Mfrs' Ass'n v. United States, 268 U.S. 563, 45 S.Ct. 578, 69 L.Ed. 1093, and in Cement Mfrs' Protective Ass'n v. United States, 268 U.S. 588, 45 S.Ct. 592, 69 L.Ed. 1104; and that there was no discrimination under this system between buyers at the same point of delivery. 73 Respondents attempt to distinguish their multiple basing point pricing system from those previously held unlawful by pointing out that in some situations their system involves neither phantom freight nor freight absorption, and that is correct; for example, sales by a base mill at its base price plus actual freight from the mill to the point of delivery involve neither phantom freight nor freight absorption. But the Corn Products pricing system which was condemned by this Court related to a base mill, that at Chicago, as well as to a non-base mill, at Kansas City. The Court did not permit this fact to relieve the pricing system from application of § 2, or to require any modification of the Commission's order. So here, we could not require the Commission to attempt to distinguish between sales made by a base mill involving actual freight costs and all other sales made by both base and non-base mills, when all mills adhere to a common pricing system. 74 Section 2(b) permits a single company to sell one customer at a lower price than it sells to another i the price is 'made in good faith to meet an equally low price of a competitor.' But this does not mean that § 2(b) permits a seller to use a sales system which constantly results in his getting more money for like goods from some customers than he does from others. We held to the contrary in the Staley case. There we said that the Act 'speaks only of the seller's 'lower' price and of that only to the extent that it is made 'in good faith to meet an equally low price of a competitor.' The Act thus places emphasis on individual competitive situations, rather than upon a general system of competition.' Federal Trade Commission v. A. E. Staley Mfg. Co., supra, at page 753 of 324 U.S., at page 975 of 65 S.Ct., 89 L.Ed. 1338. Each of the respondents, whether all its mills were basing points or not, sold some cement at prices determined by the basing point formula and governed by other base mills. Thus, all respondents to this extent adopted a discriminatory pricing system condemned by § 2. As this in itself was evidence of the employment of the multiple basing point system by the respondents as a practice rather than as a good faith effort to meet 'individual competitive situations,' we think the Federal Trade Commission correctly concluded that the use of this cement basing point system violated the Act. Nor can we discern under these circumstances any distinction between the 'good faith' proviso as applied to a situation involving only phantom freight and one involving only freight absorption. Neither comes within its terms. 75 We hold that the Commission properly concluded that respondents' pricing system results in price discriminations. Its findings that the discriminations substantially lessened competition between respondents and that they were not made in good faith to meet a competitor's price are supported by evidence. Accordingly, the Commission was justified in issuing a cease and desist order against a continuation of the unlawful discriminatory pricing system. 76 The Order.—There are several objections to the Commission's cease and desist order. We consider the objections, having in mind that the language of its prohibitions should be clear and precise in order that they may be understood by those against whom they are directed. See Illinois Commerce Commission v. Thomson, 318 U.S. 675, 685, 63 S.Ct. 834, 839, 87 L.Ed. 1075. But we also have in mind that the Commission has a wide discretion generally in the choice of remedies to cope with trade problems entrusted to it by the Commission Act. Jacob Siegel Co. v. Federal Trade Commission, 327 U.S. 608, 611—613, 66 S.Ct. 758, 759, 760, 90 L.Ed. 888. 77 There is a special reason, however, why courts should not lightly modify the Commission's orders made in efforts to safeguard a competitive economy. Congress when it passed the Trade Commission Act felt that courts needed the assistance of men trained to combat monopolistic practices in the framing of judicial decrees in antitrust litigation. Congress envisioned a commission trained in this type of work by experience in carrying out the functions imposed upon it.20 To this end it provided in § 7 of the Act, 15 U.S.C. § 47, 15 U.S.C.A. § 47, that courts might, if it should be concluded that the Government was entitled to a decree in an antitrust case, refer that case 'to the commission, as a master in chancery, to ascertain and report an appropriate form of decree therein.' The Court could then adopt or reject such a report. 78 In the present proceeding the Commission has exhibited the familiarity with the competitive problems before it which Congress originally anticipated the Commission would achieve from its experience. The order it has prepared is we think clear and comprehensive. At the same time the prohibitions in the order forbid no activities except those which if continued would directly aid in perpetuating the same old unlawful practices. Nor do we find merit to the charges of surplusage in the order's terms. 79 Most of the objections to the order appear to rest on the premise that its terms will bar an individual cement producer from selling cement at delivered prices such that its net return from one customer will be less than from another, even if the particular sale be made in good faith to meet the lower price of a competitor. The Commission disclaims that the order can possibly be so understood. Nor do we so understand it. As we read the order, all of its separate prohibiting paragraphs and subparagraphs, which need not here be set out, are modified and limited by a preamble. This preamble directs that all of the respondents 'do forthwith cease and desist from entering into, continuing, cooperating in, or carrying out any planned common course of action, understanding or agreement, combination or conspiracy, between and among any two or more of said respondents, or between any one or more of said respondents and others not parties hereto, to do or perform any of the following things. * * *' Then follow the prohibitory sentences. It is thus apparent that the order by its terms is directed solely at concerted, not individual activity on the part of the respondents. 80 Respondents have objected to the phrase 'planned common course of action' in the preamble. The objection is two-fold; first, that it adds nothing to the words that immediately follow it; and second, that if it does add anything, 'the Commission should be required to state what this novel phrase means in this order and what it adds to the four words.' It seems quite clear to us what the phrase means. It is merely an emphatic statement that the Commission is prohibiting concerted action—planned concerted action. The Commission chose a phrase perhaps more readily understood by businessmen than the accompanying legal words of like import. 81 Then there is objection to that phrase in the preamble which would prevent respondents, or any of them, from doing the prohibited things with 'others not parties hereto.' We see no merit in this objection. The Commission has found that the cement producers have from time to time secured the aid of others outside the industry who are not parties to this proceeding in carrying out their program for preserving the basing point pricing system as an instrument to suppress competition. Moreover, there will very likely be changes in the present ownership of cement mills, and the construction of new mills in the future may be reasonably anticipated. In view of these facts, the Commission was authorized to make its order broad enough effectively to restrain respondents from combining with others as well as among themselves. 82 One other specific objection to the order will be noted. Paragraph 1 prohibits respondents from 'quoting or selling cement pursuant to or in accordance with any other plan or system which results in identical price u otations or prices for cement at points of quotation or sale or to particular purchasers by respondents using such plan or system, or which prevents purchasers from finding any advantage in price in dealing with one or more of the respondents against any of the other respondents.' This paragraph like all the others in the order is limited by the preamble which refers to concerted conduct in accordance with agreement or planned common course of action. The paragraph is merely designed to forbid respondents from acting in harmony to bring about national uniformity in whatever fashion they may seek by collective action to achieve that result. We think that no one would find ambiguity in this language who concluded in good faith to abandon the old practices. There is little difference in effect between paragraph 1 to which objection is here raised and paragraph 5 which was sustained as proper in Federal Trade Comm'n v. Beech-Nut Packing Co., 1922, 257 U.S. 441, 456, 42 S.Ct. 150, 66 L.Ed. 307, 19 A.L.R. 882, one of the first Trade Commission cases to come before this Court. Paragraph 5 in the Beech-Nut case read: '* * * by utilizing any other equivalent co-operative means of accomplishing the maintenance of prices fixed by the company.' 83 Many other arguments have been presented by respondents. All have been examined, but we find them without merit. 84 The Commission's order should not have been set aside by the Circuit Court of Appeals. Its judgment is reversed and the cause is remanded to that court with directions to enforce the order. It is so ordered. 85 Reversed and remanded. 86 Mr. Justice DOUGLAS and Mr. Justice JACKSON took no part in the consideration or decision of these cases. 87 Mr. Justice BURTON, dissenting. 88 While this dissent is written with special reference to case No. 23 against The Cement Institute, et al., its conclusions apply to cases Nos. 23—34, all of which were considered together. 89 It is important to note that this Court has disagreed with the conclusions of the court below as to the material facts constituting the premise on which that court and this have based their respective conclusions. Accordingly, this Court has neither reversed nor directly passed upon the principal conclusion of law reached by the court below. The court below concluded that there was not sufficient evidence to support a finding by the Federal Trade Commission of the existence of that combination among the respondents to restrain the competition in price that was charged in both counts of the complaint.1 The court below even doubted that the Commission had clearly stated that it found such a combination existed. However, rather than send the case back to the Commission for clarification of the Commission's findings of fact, the Court of Appeals assumed that those findings did state that such a combination existed. The court then concluded that, even if the Commission had so found, there was not sufficient evidence to support the finding.2 Accordingly, the court below applied the law of the case to a set of facts that did not include such a combination. On that basis, it held that the Commission's order to cease and desist should be set aside. I agree with the court below in both of these conclusions.3 On the other hand, this Court today has held not only that the Commission found the existence of the combination as charged, but that such finding is sufficiently supported by evidence in the record. This Court accordingly has applied the law of the case to a set of facts which includes a combination among the respondents to restrain competition in price as alleged in the complaint. The resulting effect is that, while the court below has held that without such a combination there was not the alleged violation either of § 5 of the Federal Trade Commission Act4 or of § 2 of the amended Clayton Act,5 yet on the other hand, this Court has held that, including such a combination, there was a violation of each of those Sections to h e extent charged in the several cases. This Court, therefore, has not here determined the relation, if any, of either of the foregoing statutes to the absorption of freight charges by individuals when not participating in a combination of the kind charged by the Commission.6 90 The Commission based its conclusion upon its finding of the existence of the combination charged in its complaint.7 The court below was in a position to, and did, judicially examine the record at length, hear extended argument upon it and pass upon the many inferences to be drawn from the evidence it contained. In the light of that court's recent experience with many cases in this particular field of the law, and of what it has described as its 'long and careful study of the situation,' it concluded that the evidence was not sufficient to support a finding of the combination charged. Its opinion reviewed the evidence and pointed out many weaknesses in the inferences upon which the Commission had based its finding of the existence of the alleged unlawful combination.8 91 The absence of sufficient evidence to support the conclusions of the Commission was especially impressive in the cases concerning the central California group, the southern California group, the Washington-Oregon group9 and the Huron Portland Cement Company. The decision of the Commission and of this Court even in those cases was made dependent upon the conclusion of the existence of a combination, however attenuated the basis for that conclusion might be.10 The cease and desist orders in all of these cases are therefore to be regarded as based upon the unique and extended record presented in this case, including what this Court refers to as 'abundant evidence as to common practices of these respondents and the others on the basis of which the Commission was justified in finding cooperative conduct among all to achieve delivered price uniformity.' 92 On the view of the evidence taken by the court below and by me, that evidence does not support the Commission's finding of the combination as charged. Unlike the Commission and the majority of this Court, the lower court and I, therefore, have faced the further issue presented by the Commission's charges unsupported by a finding of the alleged combination. This has led us to consider an issue quite different from that decided by this Court today. That issue lies within the long-established and widespread practice by individuals of bona fide competition by freight absorption with which practice Congress has declined to interfere, although asked to do so.11 This is the field where a producer, for his own purposes and without collusion, often ships his product to a customer who, in terms of freight charges, is located nearer to one or more of the producer's competitors than to the producer himself. In selling to such a customer, this producer is at an obvious freight disadvantage. To meet the lower delivered-price of his competitor, the producer, therefore, reduces his delivered-price in that area by a sum sufficient to absorb his freight disadvantage. He might do this for many reasons. For example, this customer might be such a large customer that the volume of his orders would yield such a return to the producer that the producer, by distributing his fixedc harges over the resultingly increased volume of business, could absorb the freight differential without loss of profit to his business as a whole and without raising any charges to his other customers. The securing of this particular business might even enable the producer to reduce his own basic factory price to all his customers. It might make the difference between a profitable and a losing business, resulting in the producer's solvency or bankruptcy. If the advantage to be derived from this customer's business were not sufficient, in itself, thus completely to absorb the freight differential, the producer might absorb all or part of such differential by a reduction in his net earnings without affecting his other customers. Whether or not he would be justified in absorbing any or all of this freight differential by increasing his charges to other customers, in his own freight-advantage area, raises a separate question as to the validity of such an increase. The Commission and the majority of this Court did not reach the question of individual and independent absorptions of freight charges by one or more producers to meet lower prices of competitors in such competitors' respective areas of freight advantage. 93 I conclude, therefore, that the judgment f the Court of Appeals setting aside the order of the Federal Trade Commission should have been affirmed, but I emphasize what I regard as equally important—that this Court, in sustaining the order of the Commission, has done so on such a different premise that it has not passed upon the validity of freight absorptions made in sales by one or more producers in the course of bona fide competition, where such producers have not acted as part of a combination to hinder, lessen, restrain or suppress competition in the sale or distribution of the products so sold. 1 The Commission dismissed the proceedings without prejudice against respondent Castalia Portland Cement Co., which went into bankruptcy. 2 Respondent Valley Forge Cement Co. is associated with the Institute only by reason of its affiliation with a member company. 3 Federal Trade Commission v. R. F. Keppel & Bro., 291 U.S. 304, 310, 54 S.Ct. 423, 425, 78 L.Ed. 814; Federal Trade Commission v. Raladam Co., 283 U.S. 643, 649, 650, 51 S.Ct. 587, 590, 591, 75 L.Ed. 1324, 79 A.L.R. 1191; see also United States Alkali Export Ass'n v. United States, 325 U.S. 196, 65 S.Ct. 1120, 89 L.Ed. 1554 and see Eugene Dietzgen Co. v. Federal Trade Commission, 7 Cir., 142 F.2d 321, 326, 327, and cases there cited, among the numerous Circuit Courts of Appeals cases on the same subject. 4 'The Commission had issued up to October 1939, a total of 267 orders to cease and desist in cases involving cooperation, conspiracy, or combination.' Beer, Federal Trade Law and Practice, 94 (1942). Other writers have also commented on the recognition by the Commission and courts that unfair methods of competition include violations of the Sherman Act. Handler, Unfair Competition and the Federal Trade Commission, 8 G.W.L.Rev., 399, 416, 417, 419. Montague, The Commission's Jurisdiction Over Practices in Restraint of Trade: A Large-scale Method of Mass Enforcement of the Antitrust Laws, 8 G.W.L.Rev. 365; Miller, Unfair Competition, Chapter XI (1941); Henderson, The Federal Trade Commission, a Study in Administrative Law and Procedure, 22—28 (1924); Beer, Federal Trade Law and Practice, 93 et seq. (1942). 5 Section 7 of the Act empowered the Commission, upon the request of the district courts, to serve as a master in chancery in framing appropriate decrees in antitrust suits brought by the attorney general. Section 6(c) authorized the Commission to investigate compliance with antitrust decrees upon application of the Attorney General and to report its findings and recommendations to him. 38 Stat. 722, 15 U.S.C. §§ 47, 46(c), 15 U.S.C.A. §§ 47, 46(c). 6 51 Cong.Rec. 11083, 11104, 11528—11533, 12146, 12622—12623, 12733—12734, 12787, 13311—131 2, 14251, 14460, 14926, 14929; H.R.Rep.No.533, 63d Cong., 2d Sess., 1, 6 (1914); H.R.Rep.No.1142, 63d Cong., 2d Sess., 18—19 (1914); Sen.Rep.No.597, 63d Cong., 2d Sess. 12—13 (1914). 7 See Ramsay Co. v. Bill Posters Ass'n, 260 U.S. 501, 511, 43 S.Ct. 167, 168, 67 L.Ed. 368; Stevens Co. v. Foster & Kleiser Co., 311 U.S. 255, 260, 261, 61 S.Ct. 210, 212, 213, 85 L.Ed. 173; United States v. Frankfort Distilleries, 324 U.S. 293, 297, 298, 65 S.Ct. 661, 663, 664, 89 L.Ed. 951. 8 This was not true as to steel produced and shipped from Birmingham, Alabama. Under the system Birmingham steel had to be sold at the Pittsburgh price plus an arbitrary addition of $5 per ton. There were also other minor variations from the system as here described. See United States Steel Corp. et al., 8 F.T.C. 1. 9 A base mill selling cement for delivery at a point outside the area in which its base price governs, and inside the area where another base mill's lower delivered price governs, adopts the latter's lower delivered price. The first base mill thus absorbs freight and becomes as to such sales a non-base mill. 10 The Commission in its findings explained how the multiple basing point system affects a seller's net return on sales in different localities and how the delivered price is determined at any particular point. 'Substantially all sales of cement by the corporate respondents are made on the basis of a delivered price; that is, at a price determined by the location at which actual delivery of the cement is made to the purchaser. In determining the delivered price which will be charged for cement at any given location, respondents use a mut iple basing-point system. The formula used to make this system operative is that the delivered price at any location shall be the lowest combination of base price plus all-rail freight. Thus, if Mill A has a base price of $1.50 per barrel, its delivered price at each location where it sells cement will be $1.50 per barrel plus the all-rail freight from its mill to the point of delivery, except that when a sale is made for delivery at a location at which the combination of the base price plus all-rail freight from another mill is a lower figure, Mill A uses this lower combination so that its delivered price at such location will be the same as the delivered price of the other mill. At all locations where the base price of Mill A plus freight is the lowest combination, Mill A recovers $1.50 net at the mill, and at locations where the combination of base price plus freight of another mill is lower, Mill A shrinks its mill net sufficiently to equal that price. Under these conditions it is obvious that the highest mill net which can be recovered by Mill A is $1.50 per barrel, and on sales where it has been necessary to shrink its mill net in order to match the delivered price of another mill, its net recovery at the mill is less than $1.50.' 37 F.T.C. at 147—148. 11 Marquette in support of its motion to disqualify the Commission urged that the Department of Justice and the Commission had concurrent power or jurisdiction to enforce the prohibitions of the Sherman Act. 147 F.2d at page 593. 12 'Section Five of the Federal Trade Commission Act does not provide private persons with an administrative remedy for private wrongs.' The Commission is not a court. It can render no judgment, civil or criminal. Federal Trade Commission v. Klesner, 280 U.S. 19, 25, 50 S.Ct. 1, 3, 74 L.Ed. 138, 68 A.L.R. 838; and see Humphrey's Executor v. United States, 295 U.S. 602, 628, 55 S.Ct. 869, 874, 79 L.Ed. 1611; Louisville & N.R. Co. v. Garrett, 231 U.S. 298, 307, 34 S.Ct. 48, 51, 58 L.Ed. 229. 13 We need not here determine what protection was afforded respondents by the exemption from the antitrust laws conferred by the Act later held unconstitutional. Nor need we decide whether this provision also exempted respondents from the unfair methods of competition provisions of the Trade Commission Act. The Government does not press either contention here. 14 Paragraph 26 of the Findings is as follows: 'The Commission concludes from the evidence of record and therefore finds that the capacity, tendency, and effect of the combination maintained by the respondents herein in the manner aforesaid and the acts and practices performed thereunder and in connection therewith by said respondents, as set out herein, has been and is to hinder, lessen, restrain, and suppress competition in the sale and distribution of cement in, among, and between the several States of the United States; to deprive purchasers of cement, both private and governmental of the benefits of competition in price; to systematically maintain artificial and monopolistic methods and prices in the sale and distributo n of cement, including common rate factors used and useful in the pricing of cement; to prevent purchasers from utilizing motor trucks or water carriers for the transportation of cement and from obtaining benefits which might accrue from the use of such transportation agencies; to require that purchases of cement be made on a delivered price basis, and to prevent and defeat efforts of purchasers to avoid this requirement; frequently to deprive agencies of the Federal Government of the benefits of all or a part of the lower landgrant rates available to such purchasers; to require certain agencies of the Federal Government to purchase their requirements of cement through dealers at higher prices than are available in direct purchases from manufacturers; to establish and maintain an agreed classification of customers who may purchase cement from manufacturers thereof; to maintain uniform terms and conditions of sale; to hinder and obstruct the sale of imported cement through restraints upon those who deal in such cement; and otherwise to promote and maintain their multiple basing-point delivered-price system and obstruct and defeat any form of competition which threatens or tends to threaten the continued use and maintenance of said system and the uniformity of prices created and maintained by its use.' 37 F.T.C. 257—258. 15 The following is one among many of the Commission's findings as to the identity of sealed bids: An abstract of the bids for 6,000 barrels of cement to the United States Engineer Office at Tucumcari, New Mexico, opened April 23, 1936, shows the following: Name of Price Name of Price Bidder per Bbl. Bidder per Bbl. Monarch. $3.286854. Oklahoma. $3.286854 Ash Grove. 3.286854. Consolidated. 3.286854 Lehigh... 3.286854. Trinity 3.286854 Southwestern. 3.286854. Lone Star. 3.286854 U. S. Portland Cement Co. 3.286854. Universal. 3.286854 Colorado. 3.286854 All bids subject to 10¢ per barrel discount for payment in 15 days. (Com.Ex. 175-A.) See 157 F.2d at page 576. 16 See Sugar Institute v. United States, 297 U.S. 553, 600, 56 S.Ct. 629, 643, 80 L.Ed. 859: 'The fact that because sugar is a standardized commodity, there is a strong tendency to uniformity of price, makes it the more important that such opportunities as may exist for fair competition should not be impaired.' 17 It is enough to warrant a finding of a 'combination' within the meaning of the Sherman Act, if there is evidence that persons, with knowledge that concerted action was contemplated and invited, give adherence to and then participate in a scheme. Interstate Circuit v. United States, 306 U.S. 208, 226, 227, 59 S.Ct. 467, 474, 83 L.Ed. 610; United States v. Masonite Corp., 316 U.S. 265, 275, 62 S.Ct. 1070, 1076, 86 L.Ed. 1461; United States v. Bausch & Lomb Co., 321 U.S. 707, 722, 723, 64 S.Ct. 805, 813, 88 L.Ed. 1024; United States v. U.S. Gypsum Co., 333 U.S. 364, 393, 394; 68 S.Ct. 525. See United States Maltsters Ass'n v. Federal Trade Commission, 7 Cir., 152 F.2d 161, 164: 'We are of the view that the Commission's findings that a price fixing agreement existed must be accepted. Any other conclusion would do violence to common sense and the realities of the situation. The fact that petitioners utilized a system which enabled them to deliver malt at every point of destination at exactly the same price is a persuasive circumstance in itself. Especially is this so when it is considered that petitioners' plants are located in four different states and that the barley from which the malt is manufactured is procured from eight or nine different states.' See also Milk & Ice Cream Can Institute v. Federal Trade Commission, 7 Cir., 152 F.2d 478, 481; Fort Howard Paper Co. v. Federal Trade Commission, 7 Cir., 156 F.2d 899, 907. 18 For example, there was evidence which showed that Huron's officials participated in meetings held in connection with another respondent's practices deemed inimical to the policy of non-competition. As a result of that meeting the offending company agreed that it would 'play the game 100%'; that it would not countenance 'chiseling'; that it would not knowingly invade territory of its competitors, or 'tear down the price structure.' 19 While we hold that the Commission's findings of combination were supported by evidence, that does not mean that existence of a 'combination' is an indispensable ingredient of an 'unfair method of competition' under the Trade Commission Act. See Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 455, 42 S.Ct. 150, 155, 66 L.Ed. 307, 19 A.L.R. 882. 20 In speaking of the authority granted the Commission to aid the courts in drafting antitrust decrees, the Senate Committee on Interstate Commerce said: 'These powers, partly administrative and partly quasi judicial, are of great importance and will bring both to the Attorney General and to the court the aid of special expert experience and training in matters regarding which neither the Department of Justice nor the courts can be expected to be proficient. 'With the exception of the Knight case (United States v. E. C. Knight Co., 156 U.S. 1 15 S.Ct. 249, 39 L.Ed. 325), the Supreme Court has never failed to condemn and to break up any organization formed in violation of the Sherman law which has been brought to its attention; but the decrees of the court, while declaring the law satisfactorily as to the dissolution of the combinations, have apparently failed in many instances in their accomplishment simply because the courts and the Department of Justice have lacked the expert knowledge and experience necessary to be applied to the dissolution of the combinations and the reassembling of the divided elements in harmony with the spirit of the law.' Sen.Rep.No.597, 63d Cong., 2d Sess., 12 (1914). 1 '* * * For more than eight years last past, respondents have maintained and now have in effect a combination among themselves to hinder, lessen, restrict and restrain competition in price, among producing respondents in the course of their aforesaid commerce among the states. The said combination is made effective by mutual understanding or agreement to employ, and by the actual employment of, the methods and practices set forth in Paragraphs Five to Seven inclusive, of this Count.' Count I, Paragraph Four, of complaint. '* * * As Paragraphs One to Five, inclusive, of Count II of this complaint the Commission hereby incorporates Paragraphs One to Five, inclusive, of Count I to precisely the same extent as if each and all of them were set forth in full and repeated verbatim in this Count.' Count II, Paragraphs One to Five, inclusive, of complaint. 37 F.T.C. at pp. 102, 117. 2 The Court of Appeals considered it a 'highly controverted issue' as to whether the findings as made by the Commission, even if supported by sufficient evidence in the record, would 'sustain the charge of combination alleged in the complaint.' 157 F.2d 533, 543. That court then said that if—'this were an ordinary proceeding we would return it to the Commission for the purpose of revising its findings if it could and so desired in the light of what we have said. However, we are confronted with what might be termed an extraordinary situation. As already observed, it will soon be ten years since this proceeding was initiated. * * * We think the case should be on its way up and not down. For this reason we shall not return it to the Commission but shall proceed to decide the legal issues involved.' Id., 157 F.2d at page 553. 3 The law of the case represents a development of the law in relation to delivered-price systems. See especially, Federal Trade Commission v. A. E. Staley Mfg. Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338; Corn Products Refining Co. v. Federal Trade Commission, 324 U.S. 726, 65 S.Ct. 961, 89 L.Ed. 1320; Sugar Institute, Inc., v. United States, 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859; Fairmont Creamery Co. v. Minnesota, 274 U.S. 1, 47 S.Ct. 506, 71 L.Ed. 893, 52 A.L.R. 163; Cement Mfrs' Protective Ass'n v. United States, 268 U.S. 588, 45 S.Ct. 592, 69 L.Ed. 1104; Maple Flooring Manufacturers Ass'n v. United States, 268 U.S. 563, 45 S.Ct. 578, 69 L.Ed. 1093; United States v. American Linseed Oil Co., 262 U.S. 371, 43 S.Ct. 607, 67 L.Ed. 1035; Aetna Portland Cement Co. v. Federal Trade Commission, 7 Cir., 157 F.2d 533 (this case below); Fort Howard Paper Co. v. Federal Trade Commission, 7 Cir., 156 F.2d 899; United States Maltsters Ass'n v. Federal Trade Commission, 7 Cir., 152 F.2d 161. 4 'Sec. 5. (a) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful. 'The Commission is hereby empowered and directed to prevent persons, partnerships, or corporations, * * * from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. '(b) Whenever the Commission shall have reason to believe that any such person, partnership, or corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect and containing a notice of a hearing upon a day and at a place therein fixed * * *. If upon such hearing the Commission shall be of the opinion that the method of competition or the act or practice in question is prohibited by this Act, it shall make a e port in writing in which it shall state its findings as to the facts and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition or such act or practice. * * *' 52 Stat. 111, 112, 15 U.S.C. § 45, 15 U.S.C.A. § 45. 5 Sec. 2. (a) * * * It shall be unlawful for any person engaged in commerce in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, * * * where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing contained shall prevent diferentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered: * * * '(b) Upon proof being made, at any hearing on a complaint under this section, that there has been discrimination in price or services or facilities furnished, the burden of rebutting the prima-facie case thus made by showing justification shall be upon the person charged with a violation of this section, and unless justification shall be affirmatively shown, the Commission is authorized to issue an order terminating the discrimination: Provided, however, That nothing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price or the furnishing of services or facilities to any purchaser or purchasers was made in good faith to meet an equally low price of a competitor, or the services or facilities furnished by a competitor.' 49 Stat. 1526, 15 U.S.C. § 13, 15 U.S.C.A. § 13. 6 The final section of the opinion of the Court makes appropriate disclaimers as to the breadth of the Commission's order and of its own decision sustaining that order. Among these is the statement that 'the order by its terms is directed solely at concerted, not individual activity on the part of the respondents.' These disclaimers are further supported by such statements as the following in the brief filed for the Commission in this Court: 'It is plain that under this order there is a violation of its provisions only in the event that there is a 'planned common course of action, understanding, agreement, combination, or conspiracy' to which a respondent is a party to do something specified in the numbered paragraphs of the order. This is an essential qualification of the prohibitions of these paragraphs. The order therefore leaves each respondent free—provided he acts individually and with that variability in action respecting particular competitive situations which is characteristic of genuine competitive endeavor and a free market—to absorb freight in order to meet a competitor's low price or to sell at a delivered price. 'What the order does is to bar acting in concert in adopting, continuing, or implementing the multiple basing-point delivered-price system or any similar system which necessarily operates to suppress price competition. The order is aimed at uprooting the pricing system which has flourished by virtue of the agreement among respondents, charged and found, to stifle price competition by selling cement at identical prices. 'The error of the court below is epitomized in its statement that 'this court is now urged to hold that the (multiple basing-point delivered-priced) system is illegal per se, and to require that cement be sold on an f.o.b. plant basis' * * *. The system as such was not attacked; what was attacked was agreement to maintain and implement the system and to eliminate price competition. '* * * Had the Commission inferred agreement from the system alone, it might loosely be said h at the system itself was attacked as illegal per se. But this is not what the Commission did. Its searching inquiry disclosed in specific detail the collective action which had been taken to implement and continue the system. And from all these facts, as well as the existence of the system, itself, the Commission found combination among respondents to suppress price competition.' The statement by this Court, in its note 19, to the effect that the Court does not hold 'that existence of a 'combination' is an indispensable ingredient of an 'unfair method of competition' under the Trade Commission Act' is accompanied by a citation which shows that that statement is one of general application and that it is not intended as a denial that the combination found by the Commission in this case is not a highly material and possibly decisive factor in this particular case. 7 See Paragraph Twenty-six of the Commission's 'Findings as to Facts and Conclusion': '* * * The Commission concludes from the evidence of record and therefore finds that the capacity, tendency, and effect of the combination maintained by the respondents herein in the manner aforesaid and the acts and practices performed thereunder and in connection therewith by said respondents, as set out herein, has been and is to hinder, lessen, restrain, and suppress competition in the sale and distribution of cement in, among, and between the several States of the United States; to deprive purchasers of cement, both private and governmental, of the benefits of competition in price; to systematically maintain artificial and monopolistic methods and prices in the sale and distribution of cement, including common rate factors used and useful in the pricing of cement; * * *.' 37 F.T.C. § p. 257. The Commission followed this Paragraph Twenty-six immediately with the following conclusion of law: 'The aforesaid combination and acts and practices of respondents pursuant thereto and in connection therewith, as hereinabove found, under the conditions and circumstances set forth, constitute unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act; and the discriminations in price by respondents, as hereinabove set out, constitute violations of subsection (a) of Section 2 of an Act of Congress entitled 'An Act To supplement existing laws against unlawful restraints and monopolies, and for other purposes,' approved October 15, 1914 (the Clayton Act), as amended by Act approved June 19, 1936 (the Robinson- Patman Act).' Id., at p. 258. 8 A further review of the insufficiently supported inferences would be of little value here. By way of illustration, however, it may be noted that the Commission and this Court, in its note 15, have emphasized the fact that secret sealed bids for 6,000 barrels of cement were received by a public agency from ten or more of the respondent companies and that the bid of each company was precisely $3.286854 a barrel. Such a fractional identity of price would, on its face, create an inference of collusion. However, the Commission failed to explain, as has the court below, that the highly fractional figure merely reflected the freight charge. The bid, apart from the freight chag e, was $2.10 per barrel while 'the land grant freight rate to which the government was entitled from the nearest mill of the eleven bidders was $1.1865854 ($1.186854) per barrel.' Aetna Portland Cement Co. v. Federal Trade Commission, 7 Cir., 157 F.2d 533, 567. 9 The central California group refers to the following respondents: Calaveras Cement Company, Pacific Portland Cement Company, Santa Cruz Portland Cement Company, Yosemite Portland Cement Corporation, The southern California group to: California Portland Cement Company, Monolith Portland Cement Company, Riverside Cement Company, Southwestern Portland Cement Company (Victorville, California, plant). The Washington-Oregon group to: Beaver Portland Cement Company, Lehigh Portland Cement Company (Metaline Falls, Washington, plant), Northwestern Portland Cement Company. Oregon Portland Cement Company, Spokane Portland Cement Company, Superior Portland Cement, Inc. 10 In a general finding the Commission indicated that the evidence concerning certain of the respondent companies was less conclusive than that relating to some of the other respondents. 'Some of the respondents have been parties to substantially all of these activities; other respondents have participated in a lesser degree, or fully or partially for shorter periods of time; other respondents have been mere followers, adopting and supporting the practices of their more active associates; and a few respondents have from time to time, for various reasons, participated only reluctantly in some of the practices, and have occasionally opposed for a time particular instances of group action.' Commission's 'Findings as to Facts and Conclusion.' Paragraph Six (a). 37 F.T.C. at p. 144. 11 'Furthermore, the basing point price system has been in use by industry for almost a half century. There has been and is a marked diversity of opinion among economists, lawmakers and people generally as to whether it is good or bad. Numerous bills have been introduced in Congress seeking to outlaw its use. Countless time has been spent in hearings by Congressional committees, before whom it has been assailed and defended. The pages of the Congressional Record bear mute but indisputable proof of the fact that Congress has repeatedly refused to declare its use illegal. There is no occasion to relate this Congressional history. It is a matter of common and general knowledge. In the Corn Products case, the court in commenting upon some of this legislative history stated (324 U.S. at page 737, 65 S.Ct. at page 967, 89 L.Ed. 1320): 'We think this legislative history indicates only that Congress was unwilling to require f.o.b. factory pricing, and thus to make all uniform delivered price systems and all basing point systems illegal per se.' Notwithstanding this Congressional attitude as recognized by the Supreme Court, this court is now urged to hold that the system is illegal per se, and to require that cement be sold on an f.o.b. plant basis. 'In our judgment, the question as to whether the basing point price system should be declared illegal rests clearly within the legislative domain. We know of no criticism so often and so forcibly directed at courts, particularly Federal courts, as their propensity for usurping the functions of Congress. If this pricing system which Congress has over the years steadfastly refused to declare illegal, although vigorously urged to do so is now to be outlawed by the courts, it will mark the high tide in judicial usurpation.' Aetna Portland Cement Co. v. Federal Trade Commission, supra, at page 573. See §§ 1 and 2, Sherman Antitrust Act, approved July 2, 1890, 26 Stat. 209, 15 U.S.C. §§ 1 and 2, 15 U.S.C.A. §§ 1, 2; § 5, Federal Trade Commission Act, approved September 26, 1914, 38 Stat. 719; § 2, Clayton Act, approved October 15, 1914, 38 Stat. 730; § 2, Clayton Act, as amended by the Robinson-Patman Act, approved June 19, 1936, 49 Stat. 1526, 15 U.S.C. § 13, 15 U.S.C.A. § 13; § 5, Federal Trade Commission Act, as amended, March 21, 1938, 52 Stat. 111, 15 U.S.C. § 45, 15 U.S.C.A. § 45. See Bill 'To Prevent Unnecessary and Wasteful Cross-Hauling' introduced by Senator Wheeler in 1936 banning basing-point systems by statute, but not reported out of Committee. Hearings before Senate Committee on Interstate Commerce on S. 4055, 74th Cong., 2d Sess. (1936), and see p. 325. See also, H.R.Rep.No.2287, 74th Cong., 2d Sess. 14 (1936), and debates upon the Robinson-Patman Bill, 80 Cong.Rec. 8102, 8118, 8140, 8223—8224 (1936).
34
333 U.S. 771 68 S.Ct. 868 92 L.Ed. 1077 UNITED STATESv.SOUTH BUFFALO RY. CO. et al. No. 198. Argued Feb. 2, 1948. Decided April 26, 1948. Appeal from the District Court of the United States for the Western District of New York. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for appellant. Mr. Bruce Bromley, of New York City, for appellees. Mr. Justice JACKSON delivered the opinion of the Court. 1 The Government, by direct appeal from the District Court,1 invites us to reconsider and overrule the interpretation of the commodities clause of the Interstate Commerce Act2 promulgated in United States v. Elgin, J. & E.R. Co., 298 U.S. 492, 56 S.Ct. 841, 80 L.Ed. 1300. That holding, in substance, is that the prohibition3 against a railroad company transporting any commodity which it owns or in which it has an interest, except for its own use, does not prevent it from transporting commodities of a corporation whose stock is wholly owned by a holding company which also owns all of the stock of the railway, unless the control of the railway is so exercised as to make it the alter ego of the holding company. 2 The present challenge to that doctrine is predicated on the following facts: Bethlehem Steel Corporation (the holding company) owns substantially all of the stocks of South Buffalo Railway Company (South Buffalo) and of Bethlehem Steel Corporation (the Steel Company). At its Lackawanna plant, near Buffalo, N.Y., the Steel Company produces steel and from it fabricates various products. These commodities are transported by the South Buffalo from the plant to the rails of trunk-line carriers. In fact, South Buffalo provides the sole terminal connection between this industry and the trunk-line railroads. It operates about 6 miles of main-line track and 81 miles of spur track, 58 miles of its trackage being on leased right-of-way within the steel plant where it connects with other trackage owned by the Steel Company itself. 3 While about 70% of South Buffalo revenues have been derived from the Steel Company traffic, it also renders terminal switching for 27 unrelated industries, some of considerable size. It enables all of them to ship, by direct connection, over five trunk-line systems and through interchange over seven more. 4 South Buffalo performs no transportation service and owns no facilities outside of the State of New York, where it operates only within the Buffalo switching district. It is classified by the Interstate Commerce Commission as an 'S—1' carrier, which is defined as one engaged in 'performing switching services only.' It files tariffs covering switching service, both with the Interstate Commerce Commission and with the New York Public Service Commission. It does not appear to participate with any line-haul railroad in a through interstate route or to receive a division of any joint or through rate. 5 In 1936 this Court decided United States v. Elgin, J. & E.R. Co., 298 U.S. 492, 56 S.Ct. 841, 80 L.Ed. 1300, and held that the production and transportation set-up of the United States Steel Corporation, one of Bethlehem's competitors, did not violate the commodities clause. Thereupon, Bethlehem made a study of the relations between itself, South Buffalo and the Steel Company in the light of this decision. It revised its intercorporate relationship in the next few years to comply, as it was advised, with the conditions under which this Court had found the statute inapplicable to United States Steel. It does not seem necessary to recite the complex details of intercorporate dealings before the reorganization about 1940 as this action for injunction was not begun until 1943 and and crucial question is whether there was a contemporaneous violation or a threat of violation against which the writ of the Court should be directed. Voluntarily abandoned courses of conduct are not grounds for injunction, though they may sometimes be relevant evidence of intent or similar issues. 6 At all times crucial to the Government's case, Bethlehem controlled the stock of both the shipper and the carrier corporations. It unquestionably had power to favor its shipping subsidiary at the expense of its carrying subsidiary, or vice versa. The first question is whether we will now hold that were possession of the power, regardless of whether it is exercised or remains dormant, makes out a violation of the statute. This Court said in the Elgin Case that it does not. 7 It is the Government's contentin that the Elgin decision misconstrued the Act, misunderstood its legislative history and misapplied the Court's own prior decisions. It is not necessary in the view we take of the case to decide to what extent, if any, these contentions are correct. It is enough to say that if the Elgin case were before us as a case of first impression, its doctrine might not now be approved. But we do not write on a clean slate. What the Court has written before is but one of a series of events, which convinces us that its overruling or modification should be left to Congress. As the Court held on our last decision day, when the questions are of statutory construction, not of constitutional import, Congress can rectify our mistake, if such it was, or change its policy at any time, and in these circumstances reversal is not readily to be made. Massachusetts v. United States, 333 U.S. 611, 68 S.Ct. 747. Moreover, in this case unlike the cited one, Congress has considered the alleged mistake and decided not to change it. 8 The Interstate Commerce Commission, after repeatedly calling the attention of Congress to the Elgin Case during its pendency, in 1936 reported its defeat in the litigation. Referring to commodities clause cases it said, 'We recommend that Congress, in the light of facts already made available in our reports and in reports of investigations conducted by congressional committees, shall determine the appropriate limit of our jurisdiction in such cases and whether further legislation to extend that jurisdiction is necessary.'4 Congress took no action. 9 But its inaction has not been from inadvertence or failure to appreciate the effect of the Court's interpretation. A Bill was introduced in the Senate containing language relating to affiliates and subsidiaries calculated in effect to set aside the Elgin decision.5 Section 12 of the Act as introduced read as follows: 10 'It shall be unlawful for any carrier by railroad and, on and after January 1, 1941, it shall be unlawful for any carrier, other than a carrier by air, to transport, in commerce subject to this Act, any article or commodity, other than timber and the manufactured products thereof, manufactured, mined, or produced by or under the authority of such carrier or any subsidiary, affiliate, or controlling person of such carrier, or any such article or commodity in which such carrier, subsidiary, affiliate, or controlling person has any interest, direct or indirect, legal or equitable, except such articles or commodities as may be necessary or intended for use in the conduct of the carrier business of such carrier.' 11 The italicized portions indicate the proposed additions which would have extended the clause to cover (1) carriers other than railroads, and (2) subsidiaries, affiliates and controlling persons. 12 At the beginning of hearings thereon by the Senate Committee on Interstate Commerce its chairman said that, with respect to the commodities clause, the purpose of the Bill was 'To make effective the intent of Congress in prohibiting railroads, or other carriers after January 1, 1941, from transporting products not utilized in the conduct of their transportation business but in which they have an interest, direct or indirect.'6 A week later, in the course of the hearings when evidence began to be offered showing the effect the proposed clause might have on various industries, the chairman made this statement: 13 'Let me say this to you with reference to the commodities clause, so that there will not be a lot of time wasted on it. I am speaking for myself and not for the committee. I think the commodities clause will have to be changed; and if we are going to make such drastic changes in the commodity clause as this bill would suggest, I think i ought not to be incorporated in this particular piece of legislation, but should come up as a separate piece of legislation so that we can devote considerable time and thought to that particular subject. This would so change the economic structure of a lot of industries that I think it is something that would have to have particular consideration in a separate piece of legislation.'7 14 In a further discussion the Chairman added: 'I might say, also, that if the commodities clause should stay in as it is at the present time it would disrupt a great many industries, and I would seriously question whether or not I wanted to attempt anything of that kind at this time, particularly in this specific piece of legislation.'8 15 When the bill was reported to the Senate, the proposed change had been eliminated and the original language of the Act retained. The Committee, in reporting the bill, said, 'The rewritten commodities clause was considered far too drastic and the subcommittee early decided against any change therein.'9 16 The Government argues that the characterization of the rejected revised commodities clause as 'too drastic' was based on the proposed extension of its terms to all common carriers and not on the proposal to include a 'subsidiary, affiliate, or controlling person' of a carrier. We believe, however, that a fair reading of the legislative history leads to the conclusion that the 'drastic readjustment' feared by the Committee was that expected from the application sought here by the Government, at least as much as that feared from extension of the clause to cover carriers other than railroads. If the Committee objected only to extending the clause to other carriers, it would have been a simple matter to delete the short series of words which would have accomplished that change, and still leave undisturbed the more complicated provision concerning subsidiaries and affiliates, since the text of each provision is wholly disconnected from the other. 17 In view of the foregoing, it seems clear that when, in discussing whether or not this revised clause would have 'prevented the steel company, or somebody in that position, from operating their own railroad,' the Committee Chairman said 'I did not intend such a result,' he expressed the view which prevailed in the Committee and in the Congress. 18 The Government now asks us to apply the unchanged language as if Congress had adopted the proposal which it rejected as 'far too drastic.' The considerations which led to the suggestion that the problem presented by the Government's position would require separate legislation and particular consideration seems to us to require that the problem be left to legislation rather than to the judicial process. And the pertinent portions of the legislative history which are set out at length in the margin10 indicate clearly we think, that this Senate Committee responsible for S. 2009, which became the Transportation Act of 1940, 49 U.S.C.A. § 1 et seq., deliberately refused to recommend and the Congress refused to legislate into the law the change we are now asked to make by judicial decision. 19 We could, of course, refuse to follow the Elgin precedent, and apply a different and more drastic rule to Bethlehem than applies to its competitor. Congress, however, in making a rule for the future, can make one of impartial application to all like situations. Limitations that are traditional upon our powers do seem not to permit us to do so. 20 Whatever may be said of the Elgin decision, when the Committee of Congress faced the readjustments its overruling would force, and with special reference to the steel industry,11 it concluded the decision should be allowed, at least for the present, to stand. We cannot ignore the considerations they found to be so persuasive, and which are equally involved in the request that we do what Congress considered and abandoned. 21 The relief asked of us as a court of equity is so drastic in nature as to afford an example of an 'upset' in an industry owning a short line of railroad of the type referred to by the Chairman of the Interstate Commerce Committee of the Senate, who said 'it is questionable whether we would want to make such a radical departure from the present system.' The demand is for an injunction perpetually to enjoin and restrain South Buffalo from transporting commodities in which the Steel Company or the holding company owns an interest. There is no other rail route by which inbound raw materials or outbound products of this huge industry can reach trunk-line railroads. And the traffic that we are asked thus to prohibit yields 70% of the railroad's revenues, and if taken away would doubtless substantially increase the cost of service to the unaffiliated industries that would remain to be served. Of course, what is literally asked is probably not what is ultimately desired. To forbid the physical operation as now conducted would be needlessly damaging to both shipper and carrier. What is aimed at, we suppose, is to force such a change of financial structure as will divorce shipper interest from all transportation interest. It seems clear, however, in the light of the legislative history, that this is the kind of operation that Congress did not want to prohibit because the prohibition was thought too drastic. If an independent ownership could be found for South Buffalo, it might be desirable. But independent ownership of a dependent facility wedged in between shippers, one of whom controls 70% of its revenues, and the trunk-line railroads, is not shown to be likely. Under the Government's theory, no other shipper or group of shippers any more than Bethlehem could own the road. Nor is it clear that any evils exist or are threatened which would be eliminated if this operation were transferred to control of one of the trunk-line railroads or to a pool of them. This road, despite its shipper ownership, is bound by both federal and state law to serve all shippers without discriminations or unreasonable charges. The Commission has power to exact cm pliance with these duties. The argument, however, is that a situation exists which presents opportunity and temptation for abuse and for concealed evasions of duty. But to forestall possible abuses we are asked to apply a remedy which there is indication failed of congressional approval because its application to many situations would be too drastic and would do greater injury to shipper and transportation interests than could result from its withholding. In the light of the history of this clause since the Elgin decision and the equitable considerations involved in this case, we decline to overrule the interpretation Congress has not seen fit to set aside. 22 The argument is made that even accepting the Elgin decision the evidence here establishes that Bethlehem has so exercised its power over South Buffalo as to reduce the railroad to a mere department of Bethlehem. The trial court found against the Government and considered that on this subject this case contains much less proof to sustain an injunction than did the Elgin Case. Without reciting the voluminous evidence in detail, we agree. Bethlehem, as a stockholder, of course controlled South Buffalo. It did not, however, disregard in either the legal or economic sense, the separate entity of its subsidiary or treat it as its own alter ego. On the contrary, it rather ostentatiously maintained the formalities of separate existence, choosing as directors several Buffalo citizens who were not interested in Bethlehem. We are not naive enough to believe that Bethlehem chose men for the posts whose interests or records left any fair probability that they would act adversely to Bethlehem in representing its interest as chief stockholder of the railroad. Nor has any instance been cited in which the best interests of the railroad would require them to do so. So long as Congress considers it inadvisable to extend the prohibition of the commodities clause to subsidiaries and affiliates, we see nothing that Bethlehem has done to incur liability for its violation. Of course, it could not expect the Commission or the courts to respect a corporate entity which Bethlehem itself disregarded; but that it has not done. The subsidiary would not have to establish its separate identity by a course of hostility to its sole stockholder or its chief customer. Its identity has been preserved in form and in substance—the substance of separate corporate existence being itself largely a matter of form. Under the Elgin Case and until Congress shall otherwise decide, this is sufficient. 23 Judgment affirmed. 24 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK, Mr. Justice DOUGLAS, and Mr. Justice MURPHY join, dissenting. 25 This is another case where the Court saddles Congress with the load of correcting its own emasculation of a statute, by drawing from Congress' failure explicitly to overrule it, the unjustified inference that Congress approves the mistake. I think that United States v. Elgin, J. & E.R. Co., 298 U.S. 492, 56 S.Ct. 841, 80 L.Ed. 1300, was decided in the teeth of the commodities clause, 49 U.S.C. § 1(8), 49 U.S.C.A. § 1(8), that it should now be overruled, and that this conclusion is dictated by the legislative history which the Court misreads, in my opinion, as giving basis for the opposite one. 26 The commodities clause forbids 'any railroad company to transport * * * any article or commodity * * * in which it may have any interest, direct or indirect * * *.' The Elgin decision made the clause 'in which it may have any interest, direct or indirect' to read, in effect, 'in which it may have any interest, direct or indirect, unless the interest is indirectly held through 100 per cent stock ownership of another corporation and hence 100 per cent interest in that company's profits, or through some other corporate arrangement having like effects.' 27 The simple question for decision under the statute is whether the South Buffalo Railway has an interest, 'direct or indirect,' in the commodities which it hauls fr the affiliated Bethlehem Steel Company. Any attempt to answer by a factual inquiry into the degree of control which the Holding Company or the Steel Company has actually exercised over the railroad can only complicate a simple problem.1 Only by the most sophisticated, or unsophisticated, process of reasoning can it be concluded that any one of the many subsidiary members of this integrated steel producing empire2 has no interest in the operations of every other member. Particularly, the railroad has an interest in the production of the Steel Company, 'for all of the profits realized from the operations of the two must find their way ultimately into (the Holding Company) treasury—any discriminating practice which would harm the general shipper3 would profit the Holding Company.' United States v. Reading Co., 253 U.S. 26, 61, 40 S.Ct. 425, 433, 64 L.Ed. 760. Here a railroad and one of its customers are both wholly owned subsidiaries of the same holding company. It is clear to me, and the Court does not deny, that the railroad in fact is occupying the inconsistent positions of carrier and shipper which the commodities clause was designed to prevent. United States v. Reading Co., supra.4 28 The Court does not dispute that it would so hold if the clause had not been construed differently in the Elgin case. But even on the assumption that the statute was then misconstrued, the Court is unwilling to correct its own error because it concludes that Congress has subsequently indicated approval of the Elgin decision. This conclusion is based on a distorted view of the legislative history of the Transportation Act of 1940, particularly of § 12 of S. 2009, which would have amended the commodities clause if adopted. Since the proposed § 12 would have overruled the Elgin case, and since it was rejected in committee as 'far too drastic,'5 it is inferred that Congress has expressed approval of that case. 29 The conclusion does not follow because the premise is wrong. The argument overlooks the crucial inquiry, namely, the reason for which Congress considered the proposed § 12 'far too drastic.' If this reason had been an objection to applying the commodities clause to the wholly owned subsidiary relationships presn t in this and the Elgin cases, the argument might have some pertinence. But that was not the reason. On the contrary, the two Senators who were most active in sponsoring the bill and in the conduct of the hearings on it felt that no legislation would be necessary if no more were intended than a reversal of the Elgin case.6 That was only one of several broad purposes of the bill, others being much more sweeping. The new commodities clause, instead of applying only to railroads, would have applied to all types of carriers except air carriers. It is perfectly clear from a reading of the hearings that this proposed application to carriers of all types was what was considered 'far too drastic' a change to be included in the Transportation Act of 1940. 30 The crucial importance of this extension is abundantly shown from the vigorous objections on behalf of parties that would have been affected by extending the commodities clause to water carriers,7 to pipe lines,8 and to motor carriers.9 It was argued repeatedly that it was proper for shippers to control interestsi n these carriers for reasons not applicable to carriers by rail. These arguments cannot be read without concluding that the change, whether desirable or not, would have been drastic indeed and would have gone far beyond the intended coverage of the Transportation Act of 1940.10 Rather than jeopardize the entire legislative program comprehended by the Act,11 the committee naturally decided that sound strategy required separate consideration of this narrower, but still broad and highly controversial problem. 31 Statements of the committee chairman show that this was the real basis for the conclusion that the amendment would have been 'far too drastic.'12 Indeed they show, together with other statements before the committee that the Elgin decision was regarded as unfortunate and likely to be overruled when another case should arise.13 Even the opposition by the short-line railroads was not based on the argument that an overruling of the Elgin case would have been too drastic, but rather on the fact that the amended § 12, in conjunction with other proposed legislation, would have prohibited the transportation of commodities for anyone who owned, even as an investment, as much as ten per cent of the stock of the railroad.14 And other groups argued that the amendment was too drastic because it was not limited to common carriers.15 In sum, the proposed amendment was indeed drastic, but not because it would have accomplished what the committee members assumed this Court would and should do without legislative aid.16 It is therefore most unreasonable to conclude that the considerations which prompted the Senate Committee to reject a proposed extension of the commodities clause to all types of carrier compel this Court to deny a request to overrule an interpretation of the impact of the clause on railroads which the most active sponsors regarded as erroneous. 32 The host of reasons which may have induced the various members of the committee to forego the extremely controversial and drastic extensions forbids any inference that the committee action was the equivalent of approval of the Elgin case by the entire Congress. In fact, the difficulty of interpreting the views of even one legislator without taking account of all he has had to say, as exemplified by the discussion in note 6, should serve as a warning that the will of Congress seldom is to be determined from its wholly negative actions subsequent to the enactment of the statute construed. In this case the rejection of the proposed amendment is not more, indeed I think it is less, indicative of congressional acquiescence than complete inactivity would have been. Even if there may be cases where the 'silence of Congress' may have some weight, that ambiguous doctrine does not require or support the result which the Court reaches today. Girouard v. United States 328 U.S. 61, 66 S.Ct. 826, 60 L.Ed. 1084; cf. Cleveland v. United States, 329 U.S. 14, concurring opinion at page 21, 67 S.Ct. 13, concurring opinion at page 16. 33 Nor is that result justified by the 'equitable' considerations which the Court's opinion somewhat obliquely advances. It is suggested that a refusal to follow the Elgin precedent would be to apply a different and more drastic rule to Bethlehem than applies to its competitor, the United States Steel Corporation. But, aside from the specious character of an argument that permits X to violate the law on the ground that Y also violates it, there is no explanation offered for the assumption that the overruling of the Elgin case would have no effect on United States Steel. The policy of res judicata would not apply, cf. Commissioner v. Sunnen, 333 U.S. 591, 68 S.Ct. 715, and United States Steel, instead of being prejudiced by the course of decision, actually has been benefited by more than a decade of ownership of the Elgin road, contrary to the statute's plain terms and policy. 34 The Court also feels that the relief requested is too drastic because Bethlehem would be compelled to sell its short-line railroads, the Government has not shown that independent ownership of these railroads is likely, nor has it shown that evils exist which would be remedied by this relief. These are considerations which undoubtedly influenced the majority in the Elgin case, somewhat differently it would seem from the majority in this one, but which the dissenting justices felt had been foreclosed by the legislative determination of policy. Reliance on such arguments today seems inconsistent with the statement 'that if the Elgin case were before us as a case of first impression, its doctrine might not now be approved.' Moreover, it does not follow that this Court in the exercise of its equity jurisdiction could not adapt the relief afforded so as to give time and opportunity for making the adjustments necessary to secure conformity with the statute in an orderly and inoppressive manner. Indeed it would be the Court's duty to do this. 35 The arguments on this level are most effectively answered by the dissenting opinion of Mr. Justice Stone, who was joined by Mr. Justice Brandeis and Mr. Justice Cardozo, in the Elgin case: 'The language of the commodities clause, read in the light of its legislative history, can leave no doubt that its purpose was to withhold from every interstate rail carrier the inducement and facility for favoritism and abuse of its powers as a common carrier, which experience had shown are likely to occur when as ingle business interest occupies the inconsistent position of carrier and shipper. See United States v. Reading Co., 253 U.S. 26, 60, 61, 40 S.Ct. 425, (433), 64 L.Ed. 760. Before the enactment of the commodities clause, Congress, by sweeping prohibitions, had made unlawful every form of rebate to shippers and every form of discrimination in carrier rates, service, and facilities, injurious to shippers or the public. By the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, it had forbidden combinations in restraint of interstate commerce. But it did not stop there. The commodities clause was aimed, not at the practices of railroads already penalized, but at the suppression of the power and the favorable opportunity, inseparable from actual control of both shipper and carrier by the same interest, to engage in practices already forbidden and others inimical to the performance of carrier duties to the public. See Delaware, L. & W.R. Co. v. United States, 231 U.S. 363, 370, 34 S.Ct. 65, 66, 58 L.Ed. 269; United States v. Reading Co., supra.' 298 U.S. at page 504, 56 S.Ct. at page 844, 80 L.Ed. 1300.17 36 In my opinion this expresses the intent of the letter and the policy of the commodities clause, and we should now return to it on our own responsibility. Congress should not again be required to reenact what it has once provided for, only to have its mandate nullified in part by this Court's misconstruction. 1 49 U.S.C. § 45, 49 U.S.C.A. § 45; 28 U.S.C. § 345, 28 U.S.C.A. § 345. 2 49 U.S.C. § 1(8), 49 U.S.C.A. § 1(8). 3 The complete text of h e commodities clause provides: 'From and after May first, nineteen hundred and eight, it shall be unlawful for any railroad company to transport from any State, Territory, or the District of Columbia, to any other State, Territory, or the District of Columbia, or to any foreign country, any article or commodity, other than timber and the manufactured products thereof, manufactured, mined, or produced by it, or under its authority, or which it may own in whole or in part, or in which it may have any interest, direct or indirect, except such articles or commodities as may be necessary and intended for its use in the conduct of its business as a common carrier.' 4 50 Annual Report I.C.C. 30 (1936). 5 S. 2009, 76th Cong., 1st Sess., March 30 (legislative day March 28) 1939. 6 Hearings before Senate Committee on Interstate Commerce on S. 2009, 76th Cong., 1st Sess., 3 (April 3, 1939). 7 Id., at 427 (April 10, 1939). 8 Ibid. 9 Senate Report No. 433, 76th Cong., 1st Sess., 15 (May 16, legislative day May 8, 1939). 10 The extent of the consideration which the Senate Interstate Commerce Committee gave to the proposed revision of the commodities clause, is indicated by the following excerpts from Hearings on S. 2009, held from April 3 to April 14, 1939: In opening the hearing, Senator Wheeler, Chairman, stated that, with respect to the commodities clause, the purpose of the bill was 'to make effective the intent of Congress in prohibiting railroads, or other carriers after January 1, 1941, from transporting products not utilized in the conduct of their transportation business but in which they have an interest, direct or indirect.' During the testimony oft he General Counsel, Association of American Railroads, the following colloquies took place: 'Senator Reed. Judge, in section 12 there is some new language. I have marked it 'O.K.' here. That is to cover the decisions of the Supreme Court in the E.J. & E. case? 'Mr. Fletcher. I will get to that in just a moment. There is new language in there. 'Mr. Fletcher. I come now to section 12, the commodities clause, about which I would like to say a word. 'It was the thought of those who drew the bill, H.R. 4862, to undertake to put into statutory form the recommendation of the Committee of Six that they ought to extend the commodities clause, which now applies only to railroads, to water carriers and motor carriers as well. 'Now I think the water carrier people will object to that * * * I think some of the steel companies have water operations of that kind. I mention that as a change in the law suggested by the draftsmen who prepared the bill, reflecting the views of the Committee of Six. 'The Chairman. Judge, somebody called me on the phone the other day * * * and asked me as to whether or not in my opinion this prevented the steel company, or somebody in that position, from operating their own railroad, where they have a small railroad they are operating. I did not intend such a result.' Emphasis supplied.) 'Mr. Fletcher. This bill has no relation to that. One of my associates suggests, Senator, that possibly this language which I was just about to mention and which was called to my attention a few minutes ago by Senator Reed, might possibly have that effect. 'Senator Reed. I would disagree with the chairman, if I may be so bold. I think the commodities clause would have that effect in the bill that we are currently discussing.' (Emphasis supplied.) 'Mr. Fletcher. When I said so promptly and perhaps rashly that I did not think it did, I did not have in mind this particular amendment, which I will now mention. 'Senator Reed. I am perfectly willing that it should have that effect. 'The Chairman. Well, I doubt that it should. For instance, a lumber company may own some railroad. 'Senator Reed. You exempt that? 'Mr. Fletcher. You exempt the lumber company? 'The Chairman. Yes. 'Mr. Fletcher. It might not be altogether lumber. 'The Chairman. I was speaking, for instance, of some steel company or some other industrial company which might own a short railroad. (Emphasis supplied.) 'Senator Reed. The United States Steel Co. owns the Union Railroad Co. 'The Chairman. I do not know what the Union Railroad Co. is. 'Senator Reed. It is a short road. 'Mr. Fletcher. I think the E.J. & E. started all this shouting. 'Senator Reed. In section 12, on page 44, beginning at line 22, it reads: 'or produced by or under the authority of such carrier or any subsidiary, affiliate' * * * and this is the language * * * 'or controlling person of such carrier.' 'Mr. Fletcher. That is new, you see. 'Senator Reed. That is new. I am in accord with the chairman on that language. 'Mr. Fletcher. I do not know, Mr. Chairman, but I do think it is a trifle unfortunate to try to accomplish so drastic a thing in a bill of this kind, the thought of which was to reproduce existing law. 'The Chairman. I am very doubtful about it. I am afraid that it will cause such a drastic readjustment. (Emphasis supplied.) 'Mr. Fletcher. The E.J. & E. Co. (case) * * * 'The Chairman (interposing). I am not familiar with the E.J. & E. case. 'Mr. Fletcher (continuing) * * * brought about this suggestion here. There the United States Steel Corporation does not own the E.J. & E. directly, but through the medium of the Illinois Steel Corporation, a subsidiary of the United States Steel Co. * * * and I may get that a little confused * * * 'Senator Reed (interposing). You have. 'Mr. Fletcher. My recollection is that the United States Steel Corporation owns a company—you might call it a holding company—which holding company owns both the E.J. & E. and the steel corporation. 'It was contended by the o vernment that when the E.J. & E. transported freight for the Illinois Steel Corporation they were violating the commodities clause, because either directly or indirectly the railroad owned this traffic that was being transported but the Supreme Court of the United States held not, but where you had one company or person who owned both the railroad and the commercial enterprises that produced the tonnage, the transportation by the railroad of that tonnage was not equivalent to the transportation by the railroad of tonnage which it owned. 'Senator Reed. Judge, you remember that Justice Stone, Justice Brandeis, and Justice Cardozo dissented from that majority opinion of the Supreme Court in the E.J. & E. case. 'Mr. Fletcher. That is right. 'Senator Reed. And Justice Stone wrote the dissenting opinion. 'Mr. Fletcher. Yes. 'Senator Reed. I am inclined to think that the Supreme (sic) as presently constituted, would hold with what was the minority view. 'Mr. Fletcher. I would not express any opinion on that. 'Senator Reed. I speak frankly, being no lawyer myself. 'Mr. Fletcher. Whether that is wise or unwise, I doubt if it ought to be done in this legislation and in this bill. 'Senator Reed. I thought Justice Stone wrote a more logical opinion than Justice Butler did. I think it was Justice Butler who wrote the majority opinion in that E.G. & E. case. 'Mr. Fletcher. I think it was.' (Justice McReynolds wrote the opinion of the Court.) Later, during the testimony of Counsel for Mississippi River System Carriers' Association, the following statements concerning the commodities clause were made: 'Senator Reed. * * * and I think we might give further consideration to that commodities clause. 'Mr. Bayles. It is too drastic, also. 'Senator Reed. It was probably tightened up when, which I say as a layman and therefore not in fear of being criticized, the Supreme Court of the United States made a strange decision in the E.J. & E. case. This was tightened to meet that E.J. & E. decision, because I think that was a strange construction of the law on the part of the Supreme Court of the United States. 'Testimony by counsel for coal operators led to the following: 'Senator White. What changes have been made in the commodities clause. 'Mr. Norman. Very substantial ones. 'The Chairman. Very substantial. 'Mr. Norman. That is on page 44. 'The Chairman. What we tried to do, to be frank with you, was to try to adapt it to meet the decision of the Supreme Court in the E.J. & E. case. 'Senator Reed. I think, of course, what Mr. Norman has in mind is that it goes further than that, in that for the first time we are applying the commodities clause to water carriers. 'Senator White. I understood that, but in what other respects? 'Senator Reed. I think that is the only respect. 'Mr. Norman. Well, no; as the Senator says, it probably would get around the Supreme Court decision in the E.J. & E. case, because it puts in there the words 'subsidiary, affiliate, or controlling person of such carrier.' 'The Chairman. That is right.' A discussion of the effect on coal-industry contract carriers followed. Then: 'Mr. Norman. So that commodities clause, again, is a big one, and certainly ought to be studied before there are any changes made in it. It is loaded with dynamite so far as business is concerned. 'Senator Reed. You may have one kind in mind, but there are many of them. 'The Chairman. There are difficulties on that question, in my mind. Suppose we reenacted the law as it is. The question is whether the courts might say, in view of the Supreme Court's decision, 'In reenacting the law, you approved the decision of the Supreme Court.' On April 10, 1939, the Chairman, in addition to the statements quoted in the body of this opinion, also said: '* * * I want to say that I think it is foolish for a lot of people to come in here and waste our time and their own time in talking about that (the commodities clause) and for that reason I wanted to make it clear by that t atement * * * 'As I said before, this is such a broad subject and it would undoubtedly cause a tremendous upset in many lines of business, that it is questionable whether we would want to make such a radical departure from the present system.' As pointed out in the text, when the Bill was reported to the Senate, the proposed changes in the commodities clause had been abandoned. The Committee report stated: '* * * The commodities clause, forbidding a carrier by railroad to transport any article or commodity in which it has an interest direct or indirect, with certain exceptions not very material (timber and timber products) has been retained * * *.' '* * * Section 12. Commodities Clause. This provision retains the 'commodities clause' (sec. 1(8) of the Interstate Commerce Act), now applicable only to railroads, in its present form. The rewritten commodities clause was considered far too drastic and the subcommittee early decided against any change therein.' 11 See note 10. 1 See Comment, The Commodities Clause and the Regulation of Industrial Railroads, 46 Yale L.J. 299; 36 Col.L.Rev. 1175. 2 The Holding Company owns substantially all the stock in approximately 57 subsidiaries, including the Steel Company and the South Buffalo Railway Company. Some of these produce ore in Chile, Venezuela, Cuba and in the Upper Great Lakes regions; others control coal mines in West Virginia and Pennsylvania. Two subsidiaries operate ocean-going steamship lines, hauling raw materials to steel plants controlled by other subsidiaries. A Great Lakes shipping company owned by the Holding Company carries ore from a mining subsidiary to a producing subsidiary. Seven short-line railroads including South Buffalo, each wholly owned by the Holding Company and having common officers and directors, transport products for the various Bethlehem steel plants. 3 The opinion of the Court seems to assume that the purpose of the commodities clause was to prevent the holding company from favoring 'its shipping subsidiary at the expense of its carrying subsidiary, or vice versa.' 4 Moreover, the conclusion is factually justified by the history of complete domination prior to 1940 plus the fact that former employees of the Steel Company continue to be the principal officers of South Buffalo as well as the other Bethlehem short-line railroads. 'Historical ties and associations, combined with strategic holdings of stock, can on occasion serve as a potent substitute for the more obvious modes of control.' North American Co. v. Securities & Exchange Commission, 327 U.S. 686, 693, 66 S.Ct. 785, 790, 90 L.Ed. 945. 5 S.Rep.No.443, 76th Cong., 1st Sess. 15; Hearings before Senate Committee on Interstate Commerce on S. 2009, 76th Cong., 1st Sess. 427, 590, 772. 6 Senator Reed expressly so stated: 'Judge, you remember that Justice Stone, Justice Brandeis, and Justice Cardozo dissented from that majority opinion of the Supreme Court in the E.J. & E. case * * *. I am inclined to think that the Supreme (sic), as presently constituted, would hold with what was the minority view.' Hearings before Senate Committee on S. 2009, 76th Cong., 1st Sess. 68. He later said that he thought the Elgin decision 'was a strange construction of the law on the part of the Supreme Court of the United States.' Id. at 309. The views of Senator Wheeler seem clearly to the same effect. When it was first suggested that the proposed commodities clause would overrule the Elgin case, he stated (apparently because he was interested primarily in extending the clause to apply to other types of carriers): 'I did not intend such a result.' When the effect of the clause was pointed out to him, he expressed doubt whether that case should be overruled, not because he approved it, but as he explained because 'I am not familiar with the E.J. & E. case.' Id. 67, 68. Three days later, when the point was again under discussion, Senator Wheeler, at this time apparently refreshed in recollection of the Elgin case, frankly stated that one of the purposes of the revised clause was to meet the Supreme Court decision in it. The witness then expressed the view that the revised clause went considerably beyond the decision because it applied to other types of carriers, and to situations where the shipper owned only ten per cent of the carrier's stock. The witness suggested that, if the intent was merely to reverse the Elgin case, it would be better to leave the clause in its present form, because 'I do not believe the decision in the E.J. & E. case is going to be one of the laws of the Medes and the Persians.' Id. 385. After more discussion of the effect of the amended version on water carriers and pipe lines, Senator Wheeler remarked: 'There are difficulties on that question, in my mind. Suppose we reenacted the law as it is. The question is whether the courts might say, in view of the Supreme Court's decision, 'In reenacting the law, you approved the decision of the Supreme Court." Id. 386. The Senator thus was faced with a dilemma. At this point he was apparently persuaded that the extension of the commodities clause to all carriers was a more drastic change than he had originally realized, but hesitated to reenact the old version lest the reenactment be construed as legislative approval of the Elgin case. His fear has now been justified by today's decision. It was not until the following week that he reached the conclusion that the drastic nature of the proposed change outweighed the risk that reenactment would be construed as approval of that case. Id. 427; and see statements quoted in note 12 infra. Such a choice hardly can be construed into 'approval' of the decision. 7 Id. 236, 284—286, 308—310, 385—387, 427—432, 492, 623, 632, 633, 692, 753, 754, 926—928. 8 Id. 386, 589—597, 606—610, 611, 612, 654—660, 736—742. 9 Id. 127, 432, 433. 10 For example, the petroleum industry strenuously opposed the provision because it would have effected the divorcement of pipe line companies from producers. See note 8 supra; cf. id. at 935. Opposition by farm lobbies was directed particularly at the new commodities clause: 'Section 12 appears to endanger the activities of more than 100,000 farmers of our area who have cooperatively associated themselves together and who, because of exorbitant rail rates, are transporting increasing tonnage of grain, livestock, and petroleum products both through cooperative trucking associations and by trucks owned by local or regional cooperatives.' Id. 432—433. See also id. 311. The most vigorous opposition, however, came from parties who would be adversly affected by the applicability of the clause to water carriers. See note 7 supra. They pointed out, as an instance of the far-reaching effect of the amendment, that 65 per cent of the privately owned American merchant marine would be affected by the change. 11 See Hearings 772; cf. note 10 supra. 12 Senator Wheeler explained the basis for the decision to abandon the proposed amendment more than once. To shorten testimony by witnesses interested in the effect of the clause on pipe lines and water carriers he stated: 'You might as well quit wasting your time, because I made an announcement yesterday with reference to that, and I hope you people will not come here with the idea of taking up a lot of time on that. I have said that pipe lines are a subject that ought to be given independent consideration, and we cannot take it up and give it the necessary time and study in this bill. That may be modified or eliminated, so far as pipe lines and water carriers are concerned.' Id. 590. Later he said: 'I have felt, frankly, that in this particular legislation, which does divorce, ships from industry, that it was such a broad subject, and one which requires so muc independent study, that it ought to be handled by separate legislation. No one in the Government service seems to have made a study of the question. I felt that it ought to be eliminated from the provisions of this bill at this time, and be introduced as separate, independent legislation, as has been done in the past.' Id. 772. 13 See note 6. 14 Hearings 541; and see id. 285, 385, 386. 15 Id. 421, 435, 841. 16 See note 6. 17 See also note 4.
78
333 U.S. 740 68 S.Ct. 880 92 L.Ed. 1055 ANDRESv.UNITED STATES. No. 431. Argued Feb. 5, 1948. Decided April 26, 1948. Mr. Oliver P. Soares, of Honolulu, Hawaii, for petitioner. Mr. Vincent Kleinfeld, of Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 On December 17, 1943, the petitioner, Timoteo Mariano Andres, was indicted in the United States District Court for the Territory of Hawaii for murder in the first degree. 18 U.S.C. §§ 451, 452, 18 U.S.C.A. §§ 451, 452. The indictment recited that Andres 'on or about the 23rd day of November, 1943, at Civilian Housing Area No. 3, Pearl Harbor, Island of Oahu, said Civilian Housing Area No. 3 being on lands reserved or acquired for the use of the United States of America * * * did * * * kill * * * Carmen Gami Saguid * * *.' Andres was tried before a jury which returned this verdict: 2 'We, the Jury, duly empaneled and sworn in the above entitled cause, do hereby find the defendant, Timoteo Mariano Andres, guilty of murder in the first degree.' He was sentenced to death by hanging. He appealed his conviction to the Circuit Court of Appeals for the Ninth Circuit. That court affirmed the judgment of the lower court, unanimously. 163 F.2d 468. A petition for a writ of certiorari was filed in this Court and that petition was granted. 68 S.Ct. 266. 3 Four questions were presented in the petition for certiorari. Three of these we do not consider of sufficient doubt or importance to justify an extended discussion. We shall dispose of them before we reach what is, for us, the decisive issue of this case. 4 Andres contends that 18 U.S.C. § 567, 18 U.S.C.A. § 567,1 as interpreted by Winston v. United States, 172 U.S. 303, 19 S.Ct. 212, 43 L.Ed. 456,2 requires that the trial court explain to the jury the scope of their discretion in granting mercy to a defendant. In the Winston case, the judge had charged the jury that they could not qualify their verdict except '* * * in cases that commend themselves to the good judgment of the jury,—cases that have palliating circumstances which would seem to justify and require it.' 172 U.S. at page 306, 19 S.Ct. at page 213. This Court held that instruction erroneous. The Court read the statute to place the question whether the accused should or should not be capitally punished entirely within the discretion of the jury; an exercise of that discretion could be based upon any consideration which appealed to the jury.3 In h e case now before us, the trial judge gave the instructions set forth in the margin.4 It is clear that he left the question of the punishment to be imposed—death or life imprisonment—to the discretion of the jury. We hold that the trial judge's instructions on this issue satisfied the requirements of the statute. 5 It is next contended that the trial was unfair because the instructions quoted below5 indicated to the jury that the indictment against the petitioner reflected a finding by the Grand Jury that he was probably guilty of the crime of murder in the first degree. Perhaps the italicized language in the charge, read out of context, is misleading and it might have been better to omit it completely. However, when the language complained of is read in context, it seems to us that the petitioner had no read ground for complaint. No material error resulted from the words. 6 The petitioner also argues that the District Court for the Territory of Hawaii did not have the power to sentence him to death by hanging. 18 U.S.C. § 542, 18 U.S.C.A. § 542, provides: 'The manner of inflicting the punishment of death shall be the manner prescribed by the laws of the State within which the sentence is imposed. * * * If the laws of the State within which sentence is imposed make no provision for the infliction of the penalty of death, then the court shall designate some other State in which such sentence shall be executed in the manner prescribed by the laws thereof.' The petitioner contends that the phrase 'laws of the State' limits the statute to the forty-eight states and, consequently, provides for no method of inflicting the death penalty where that sentence is imposed by a district court sitting in a Territory.6 We reject that contention as being without merit. In many contexts 'state' may mean only the several states of the United States. Here, however, we hold that its meaning includes the Territory of Hawaii. 7 The last and most difficult issue raised by Andres is the question of the propriety of those instructions by which the trial judge attempted to explain to the jury the requirements of unanimity in their verdict. This issue is a composite of two problems: (1) The proper construction of 18 U.S.C. § 567, 18 U.S.C.A. § 567; and (2) the consideration of whether the instruction given clearly conveyed to the jury the correct statutory meaning. 8 Section 567 of 18 U.S.C., 18 U.S.C.A. § 567, reads as follows: 'In all cases where the accused is found guilty of the crie of murder in the first degree * * * the jury may qualify their verdict by adding thereto 'without capital punishment'; and whenever the jury shall return a verdict qualified as aforesaid, the person convicted shall be sentenced to imprisonment for life.' If a qualified verdict is not returned, the death penalty is mandatory.7 The Government argues that § 567 properly construed requires that the jury first unanimously decide the guilt of the accused and, then, with the same unanimity decide whether a qualified verdict shall be returned. As the statute requires the death penalty on a verdict of guilty, the contention is that the jury acts unanimously in finding guilt and the law exacts the penalty. It follows, that if all twelve of the jurors cannot agree to add the words 'without capital punishment,' the original verdict of guilt stands and the punishment of death must be imposed. The petitioner contends that § 567 must be construed to require unanimity in respect to both guilt and punishment before a verdict can be returned. It follows that one juror can prevent a verdict which requires the death penalty, although there is unanimity in finding the accused guilty of murder in the first degree. The Circuit Court of Appeals held that unanimity of the jury was required both as to guilt and the refusal to qualify the verdict by the words 'without capital punishment.' It interpreted the instructions, however, as requiring this unanimity. 9 The First Congress of the United States provided in an Act of April 30, 1790: 'That if any person or persons shall, within any fort, arsenal, dock-yard, magazine, or in any other place or district of country, under the sole and exclusive jurisdiction of the United States, commit the crime of wilful murder, such person or persons on being thereof convicted shall suffer death.'8 This was the federal law, in the respects here relevant, until 1897. In that year Congress passed and the President signed the Act of January 15, 1897.9 That statute provided: 10 'That in all cases where the accused is found guilty of the crime of murder or of rape under sections fifty-three hundred and thirty-nine or fifty-three hundred and forty-five, Revised Statutes, the jury may qualify their verdict by adding thereto 'without capital punishment;' and whenever the jury shall return a verdict qualified as aforesaid the person convicted shall be sentenced to imprisonment at hard labor for life.' 11 It is this language, substantially unchanged, which we must construe in this case.10 12 The reports of the Congressional Committees and the debates on the floor of Congress do not discuss the particular problem with which we are now concerned.11 There are, however, many expressions which indicate that the general purpose of the statute was to limit the severity of the old law.12 13 Unanimity in jury verdicts is required where the Sixth and Seventh Amendments apply.13 In criminal cases this requirement of unanimity extends to all issues—character or degree of the crime, guilt and punishment—which are left to the jury. A verdict embodies in a single finding the conclusions by the jury upon all the questions submitted to it. We do not think that the grant of authority to the jury by § 567 to qualify their verdict permits a procedure whereby a unanimous jury must first find guilt and then a unanimous jury alleviate its rigor. Therefore, although the interpretation of § 567 urged by the Government cannot be proven erroneous with certainty, since the statute contains no language specifically requiring unanimity on both guilt and punishment before a verdict can be brought in, we conclude that the construction placed upon the statute by the lower court is correct—that the jury's decision upon both guilt and whether the punishment of death should be imposed must be unanimous. This construction is more consonant with the general humanitarian purpose of the statute and the history of the Anglo-American jury system than that presented by the Government.14 14 The only question remaining for decision is whether the instructions given by the trial judge clearly conveyed to the jury a correct understanding of the statute. There was a general charge that 'the unanimous agreement of the jury is necessary to a verdict.' Later, and the instructions on the specific issue under consideration can best be understood by the colloquy, the following took place: 15 '(At 3:45 o'clock, p.m., the jury returned to the courtroom, and the following occurred:) 16 'The Court: Note the presence of the jury and the defendant together with his attorney. I am advised by the bailiff that the jury wishes to ask the Court a question. Which gentlemen (sic) is the foreman—you, Mr. Ham? You are Mr. Ham? 17 'The Foreman: * * * The members of the jury would like to know if a verdict of guilty in the first degree was brought in, whether it would be mandatory on the part of the Judge to sentence the man to death, or hanging, or use his own discretion. 18 'The Court: Just a minute. I want to be right in my answer. You may sit down. Will the counsel come to the bench, please? (Discussion off the record.) 'The Court: Gentlemen of the Jury, the statute, as I recall, answers that question, but I wanted to look at it once again before I gave you a positive answer. The answer to the question is that, in the absence of a qualified verdict, if the verdict is guilty of murder in the first degree, the Court has no discretion, for the statute provides in such event that the person so convicted of such an offense—murder in the first degree—shall suffer the punishment of death. As I told you in your instructions, there is another Federal statute which enables you gentlemen to qualify your verdict and to add, in the event you so uld find the person guilty of murder in the first degree, to add to that verdict, I repeat, the phrase 'without capital punishment.' In that event the man, of course, under the statute so convicted would not suffer the punishment of death but it would life imprisonment, as I recall it under the statute. 19 'Does that answer your question? 20 'The Foreman: Yes. 21 'The Court: Don't discuss your problems here, but if it is an answer to your question, you gentlemen can retire to your jury room if there are no other questions. 22 'The Foreman: No other. 23 'The Court: Counsel have asked me to reread the instructions to you on that particular point as an amplification of my answer to your question. Will you bear with me just a moment until I find that instruction? I will reread one or two instructions to you which bear on the question which you have asked: 24 "You may return a qualified verdict in this case by adding the words 'without capital punishment' to your verdict. This power is conferred solely upon you and in this connection the Court can not extend or prescribe to you any definite rule defining the exercise of this power, but commits the entire matter of its exercise to your judgment.' 25 "Even if you should unanimously agree from the evidence beyond all reasonable doubt that the defendant is guilty as charged, you may, as I have said qualify your verdict by adding thereto 'without capital punishment,' in which case the defendant shall not suffer the death penalty.' 26 "In this connection, I further instruct you that you are authorized to add to your verdict the words 'without capital punishment,' and this you may do no matter what the evidence may be and without regard to the existence of mitigating circumstances.' 27 'And, finally, you will recall I said that you are instructed that before you may return a qualified verdict of murder in the first degree without capital punishment, that your decision to do so must, like your regular verdict, be unanimous.' 28 The Government concedes that if the petitioner's interpretation of § 567 is accepted, these instructions were inadequate and we find ourselves in agreement with this concession. The court below concluded that the instructions were proper and that they did not mislead the jury.15 It based its conclusion upon two factors (1) the common understanding of jurors that 'they are under no legal compulsion to join in a verdict with which they are in disagreement, either in whole or in part; * * *'16 and (2) the general admonition of the trial judge that 'the unanimous agreement of the jury is necessary to a verdict.'17 29 It seems to us, however, that where a jury is told first that their verdict must be unanimous, and later, in response to a question directed to the particular problem of qualified verdicts, that if their verdict is first-degree murder and they desire to qualify it, they must be unanimous in so doing, the jury might reasonably conclude that, if they cannot all agree to grant mercy, the verdict of guilt must stand unqualified. That reasonable men might derive a meaning from the instructions given other than the proper meaning of § 567 is probable. In death cases doubts such as those presented here should be resolved in favor of the accused. The context of § 567 does not defy accurate and precise expression. For example: An instruction that a juror should not join a verdict of guilty, without qualification, if he is convinced that capital punishment should not be inflicted, would have satisfied the statute and protected the defendant. Or the jury might have been instructed that its conclusion on both guilt and punishment must be unanimous before any verdict could be found. 30 As we are of the opinion that the instructions given on this issue did not fully protect the petitioner, the judgment of the lower court is reversed and the case is remanded for a new trial. 31 Reversed and remanded. 32 Mr. Justice FRANKFURTER, concurring. 33 Having had more difficulty than did my brethren in reaching their result, I deem it necessary to state more at length than does the Court's opinion the reasons that outweigh my doubts, which have not been wholly dissipated. 34 This case affords a striking illustration of the task cast upon courts when legislation is more ambiguous than the limits of reasonable foresight in draftsmanship justify. It also proves that when the legislative will is clouded, what is called judicial construction has an inevitable element of judicial creation. Construction must make a choice between two meanings, equally sustainable as a matter of rational analysis, on considerations not derived from a mere reading of the text. 35 For the first hundred years of the establishment of this Government one guilty of murder in the first degree, under federal law, was sentenced to death. Since 1897 a jury, after it found an accused 'guilty of the crime of murder in the first degree * * * may qualify their verdict by adding thereto 'without capital punishment'; and whenever the jury shall return a verdict qualified as aforesaid, the person convicted shall be sentenced to imprisonment for life.' Act of January 15, 1897, 29 Stat. 487, as amended, 35 Stat. 1151, 1152, § 330, Criminal Code, 18 U.S.C. § 567, 18 U.S.C.A. § 567. 36 The statute reflects the movement, active during the ninteenth century, against the death sentence. The movement was impelled both by ethical and humanitarian arguments against capital punishment, as well as by the practical consideration that jurors were reluctant to bring in verdicts which inevitably called for its infliction. Almost every State passed mitigating legislation.1 Only five States met the doubts and disquietudes about capital punishment by its abolition. Most of the other States placed in the jury's hands some power to relieve from a death sentence. But the scope of a jury's power to save one found guilty of murder in the first degree from a death sentence is bound to give rise to a problem of statutory construction when the legislation does not define the power with explicitness. 37 A legislature which seeks to retain capital punishment as a policy but does not make its imposition after a finding of guilty imperative has these main choices that leave little room for construction: 38 (1) Legislation may leave with the jury the duty of finding an accused guilty of murder in the first degree but give them the right of remission of the death sentence, provided there is unanimous agreement on such remission. Any juror, of course, has it in his power to deadlock a jury out of sheer wilfulness or unreasonable obstinacy. But under such a statute the duty laid upon his conscience is to find guilt if there is guilt. The jury can save an accused from death only if they can reach a unanimous agreement to relieve from the doom. 39 (2) The legislature may not require unanimous agreement on remission of the death sentence, but may make such remission effective by a majority vote of the jury, or, as in the case of the Mississippi statute, it may expressly provide that 40 'Every person who shall be convicted of murder shall suffer death, unless the jury rendering the verdict shall fix the punishment at imprisonment in the penitentiary for the life of the convict; or unless the jury shall certify its disagreement as to the punishment * * * in which case the court shall fix the punishment at imprisonment for life.' (Miss.Code Ann. § 2217 (1942).) 41 (3) The legislature may require the jury to specify the punishment in their verdict. Under such legislation it is necessary for the jury's verdict not only to pronounce guilt but also to prescribe the sentence. 42 (4) The jury may be authorized to qualify the traditional verdict of guilty so as to enable the court to impose a sentence other than death. This may be accomplished by i ving such discretionary power to the court simpliciter, or upon recommendation of mercy by the jury. 43 None of these types of legislation would leave any reasonable doubt as to the power and duty of a jury. Unfortunately, the alleviating federal legislation of 1897, to which the Court must now give authoritative meaning, was not cast in any one of the foregoing forms. Congress expressed itself as follows: 44 'In all cases where the accused is found guilty of the crime of murder in the first degree, or rape, the jury may qualify their verdict by adding thereto 'without capital punishment'; and whenever the jury shall return a verdict qualified as aforesaid, the person convicted shall be sentenced to imprisonment for life.' 29 Stat. 487, as amended, 35 Stat. 1151, 1152, § 330, Criminal Code, 18 U.S.C. § 567, 18 U.S.C.A. § 567. 45 The fair spontaneous reading of this provision, in connection with § 275 of the Criminal Code—'Every person guilty of murder in the first degree shall suffer death.' 35 Stat. 1143, 18 U.S.C. § 454, 18 U.S.C.A. § 454—would be that Congress has continued capital punishment as its policy; that one found guilty of murder in the first degree must suffer death if the jury reaches such a verdict but that 'the jury may qualify their verdict by adding thereto 'without capital punishment;" that, since federal jury action requires unanimity, when unanimity is not attained by the jury in order to 'qualify their verdict' by 'adding' the phrase of alleviation, the verdict of murder in the first degree already reached must stand. Certainly, if construction called for no more than reading the legislation of Congress as written by Congress, to interpret it as just indicated would not be blindly literal reading of legislation in defiance of the injunction that the letter killeth. On the contrary, it would heed the dominant policy of Congress that 'every person guilty of murder in the first degree shall suffer death' unless the jury 'qualify their verdict by adding thereto' the terms of remission. 46 But in a matter of this sort judges do not read what Congress wrote as though it were merely a literary composition. Such legislation is an agency of criminal justice and not a mere document. While the proper construction of the power of qualification entrusted to the jury by the Act of 1897 is before us for the first time upon full consideration, the issue was adjudicated more than seventeen years ago by one of the Circuit Courts of Appeals. It rejected the construction for which the Government now contends. Smith v. United States, 9 Cir., 47 F.2d 518. While a failure of the Government to seek a review of that decision by this Court has no legal significance, acquiescence by the Government in an important ruling in the administration of the criminal law, particularly one affecting the crime of murder, carries intrinsic importance where the construction in which the Government acquiesced is not one that obviously is repelled by the policy which presumably Congress commanded. 47 Moreover, we are dealing with a field much closer to the experience of the State courts, as the guardians of those deep interests of society which are reflected in legislation dealing with the punishment for murder and which are predominantly the concern of the States.2 If the strongest current of opinion in State courts dealing with legislation substantially as ambiguous as that before us has resolved the ambiguity in the way in which the Circuit Court of Appeals for the Ninth Circuit resolved it in the Smith case, the momentum of such a current should properly carry us to the same conclusion. History and experience outweigh claims of virgin analysis of a statute which has such wide scope throughout the country and the incidence of which is far greater in the State courts than in the federal courts. This was the approach of the Court in Winston v. United States, 172 U.S. 303, 19 S.Ct. 212, 43 L.Ed. 456, where we held, after reviewing the State lei slation and adjudication, that the statute did not limit the jury's discretion to cases where there were palliating or mitigating circumstances. 48 And so we turn to State law. 49 A. In only four States is death the inevitable penalty for murder in the first degree: Connecticut, Massachusetts, North Carolina, and Vermont. Such has been, until the other day, the law of England despite persistent and impressive efforts to modify it. See, e.g., Minutes of Evidence and Report of the Select Committee on Capital Punishment (1930). It is worthy of note that this effort has just prevailed by the passage, on a free vote, of a provision abolishing the death penalty for an experimental period of five years. See 449 H.C.Deb. (Hansard) cls. 981 et seq. (April 14, 1948), and statement of the Home Secretary that death sentences will be suspended on the basis of this vote, even before the measure gets on the Statute Books. Id., cls. 1307 et seq. (April 16, 1948). 50 B. In five States the death sentence has been abolished for murder in the first degree: Maine, Michigan, Minnesota, Rhode Island, and Wisconsin. 51 C. Most of the States—39 of them—leave scope for withholding the death sentence. The State enactments greatly vary as to the extent of this power of alleviation and in the manner of its exercise, as between court and jury. 52 I. In three States a jury's recommendation of life imprisonment is not binding on the trial court: Delaware, New Mexico, and Utah. 53 II. In fifteen States the jury's verdict must specify whether the sentence is to be death or life imprisonment: Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Missouri, North Dakota, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, and Virginia. 54 III. In eight other States the same result is reached, although the legislation is phrased that one found guilty of murder in the first degree suffers death or life imprisonment 'at the discretion of the jury': Alabama, Arizona, California, Georgia, Idaho, Montana, Nebraska, and Nevada. 55 IV. In two States the punishment is life imprisonment unless the jury specifies the death penalty: New Hampshire and Washington. 56 V. Nine States have statutes more or less like the federal provision here under consideration: Louisiana, Maryland, New Jersey, New York, Ohio, Oregon, South Carolina, West Virginia, and Wyoming. 57 VI. Two States frankly recognize that differences of opinion are likely to occur when the jury has power to mitigate the death sentence and provide for life imprisonment even when the jury is not unanimous: Florida and Mississippi. 58 An examination of State law shows that all but four States have abandoned the death sentence as a necessary consequence of the finding of guilt of murder in the first degree; that most of the States which have retained the death sentence have entrusted the jury with remission of the death sentence, although sentencing is traditionally the court's function, and this is true even in those States where the legislature has not in so many words put this power in the jury's keeping; that even where the jury is not required to designate the punishment but merely has the power of recommending or 'adding' to the verdict the lighter punishment, the most thoroughly canvassed judicial consideration of such power has concluded that the death sentence does not, as a matter of jury duty, automatically follow a finding by them of guilt of murder in the first degree, when the jury cannot unanimously agree that life imprisonment should be imposed. 59 Of the nine States that have enacted legislation more or less like the federal provision under consideration, the statutes of four—Louisiana, Maryland, West Virginia, and Wyoming—are virtually in the identical form. While the highest courts of these States have not passed upon the precise question before us, they have all construed their respective statutes as giving the jury a free choice as to which of the two alternative punishments are to be imposed, although it can fairly be said that such construction runs counter to the obvious reading that the sentence is death unless all of the jurors are agreed as to adding 'without capital punishment.'3 Three of the nine States—Ohio, Oregon, and South Carolina—have statutes providing that the penalty is death unless the jury recommends 'mercy' or 'life imprisonment' in which case the punishment shall be life imprisonment. These have all been construed as providing for alternative punishment in the discretion of the jury.4 While a similar New Jersey statute has been given the literal construction here espoused by the Government, the history of that State's legislation only serves to underscore the force of the decisions in the other States.5 The ninth State, New York, in 1937, amended its legislation, which had made the death penalty mandatory upon all convictions for first-degree murder, by providing that in felony murder cases the jury 'may, as a part of its verdict, recommend that the defendant be imprisoned for the term of his natural life. Upon such recommendation, the court may sentence the defendant to imprisonment for the term of his natural life.' N.Y.Crim.Code and Pen.Law § 1045-a. In People v. Hicks, 287 N.Y. 165, 38 N.E.2d 482, 484, 138 A.L.R. 1222, the Court of Appeals found the following instruction erroneous: 60 'There cannot be any recommendation unless the twelve of you agree. But if you have all agreed that the defendant is guilty, it is nevertheless your duty to report that verdict to the Court. Is that clear? Even though you cannot agree on the recommendation. In other words, you cannot use the recommendation as bait, in determining the guilt or innocence of the defendant. * * * if you are all unanimous that there should be a recommendation, it is your duty to bring in the recommendation; but if you are not unanimous on that proposition it is nevertheless your duty to bring in the verdict of guilty of murder in the first degree, even though you cannot agree on the other. Is that plain?' 287 N.Y. at pages 167, 168, 38 N.E.2d at page 483. 61 The Court of Appeals held that the statute expressly empowered the jury to make a life-imprisonment recommendation a part of their verdict; that it did not expressly, or by implication, require the jury to render a verdict of guilty without the recommendation where they were not all agreed upon so doing; that, until the jury reached agreement on every part of their verdict, they had not agreed upon the verdict; that in such cases the legislature required the jury to determine 62 'First, whether the accused is guilty of the crime charged; second, whether the sentence shall be death or whether the trial judge may pronounce a sentence of life imprisonment. Both questions must be determined by the jury, and the jury's answer to both questions must be embodied in its verdict. A juror considering the question of whether an accused is guilty of the crime charged can no longer be influenced conscios ly or unconsciously by knowledge that the finding of guilt of the crime charged will entail a mandatory penalty which in his opinion is not justified by the degree of moral guilt of the accused. Each juror should now know that the finding of guilt does not carry that mandatory penalty unless the jury fails to make a recommendation of life imprisonment a part of the verdict and each juror should know that he is one of the twelve judges who shall decide what the verdict shall be in all its parts. Until the twelve judges have agreed on every part of the verdict, they have not agreed on any verdict.' Id., 287 N.Y. at page 171, 38 N.E.2d at page 485. 63 And so we reach the real question of this case. Should a federal jury report as their verdict that part of their deliberations which resulted in the finding of guilt of first degree murder if they cannot agree on the alleviating qualification, or should they be advised that their disagreement on the question of appropriate punishment may conscientiously be adhered to so that, if there be no likelihood of an agreement after making such an effort as is due from a conscientious jury, there would be no escape from reporting disagreement. After considerable doubt, as I have indicated, I find that the weight of considerations lies with giving the jury the wider power which the Court's construction affords. 64 'The decisions in the highest courts of the several states under similar statutes are not entirely harmonious, but the general current of opinion appears to be in accord with our conclusion.' Winston v. United States, supra, 172 U.S. at page 313, 19 S.Ct. at page 215. The fair significance to be drawn from State legislation and the practical construction given to it is that it places into the jury's hands the determination whether the sentence is to be death or life imprisonment,6 and, since that is the jury's responsibility, it is for them to decide whether death should or should not be the consequence of their finding that the accused is guilty of murder in the first degree. Since the determination of the sentence is thus, in effect, a part of their verdict, there must be accord by the entire jury in reaching the full content of the verdict. 65 The Government contends that because of its 'clear terms' little weight should be accorded the failure of Congress to repudiate the interpretation placed upon § 330 of the Criminal Code by the Smith case in 1931. That decision and acquiescence in it answer the claim that the section precludes a reading of it opposed to that which the Government offers. Moreover, it is significant that the proposed revision of the Criminal Code7 leaves the form of this provision unchanged. This revision doubtless had the expert scrutiny of the Department of Justice,8 and that Department must have had knowledge of the judicial gloss put upon the retained provision by the Smith case.9 66 The care that trial judges should exercise in making clear to juries their power and responsibility in trials for murder is emphasized by the uncertainties regarding the construction appropriate to the jury's power to affect the punishment on a finding of guilt of murder in the first degree, now resolved by this decision. It fell upon the trial judge here to instruct the jury as to this power. Was his charge in accord with the statute as construed by us? The court below held that it was; the Government concedes that it was not. The charge and the instructions given were such as to permit reasonable minds to differ on this issue, and therein lies the error.10 Charging a jury is not a matter of abracadabra. No part of the conduct of a criminal trial lays a heavier task upon the presiding judge. The charge is that part of the whole trial which probably exercises the weightiest influence upon jurors. It should guide their understanding after jurors have been subjected to confusion and deflection from the relevant by the stiff partisanship of counsel. 67 To avoid reversal on appeal, trial judges err, as they should, on the side of caution. But caution often seeks shelter in meaningless abstractions devoid of guiding concreteness. Clarity certainly does not require a broad hint to a juror that he can hang the jury if he cannot have his way in regard to the power given to him by Congress in determining the sentence of one guilty of first-degree murder. On the other hand, conscientious jurors are not likely to derive clear guidance if told that 'on both guilt and punishment (they) must be unanimous before any verdict can be found.' They should be told in simple, colloquial English that they are under duty to come to an agreement if at all possible within conscience, for a verdict must be unanimous; that a verdict involves a determination not only of guilt but also of the punishment that is to follow upona finding of guilt; that the verdict as to both guilt and punishment is single and indivisible; that if they cannot reach agreement regarding the sentence that should follow a finding of guilt, they cannot render a verdict; and this means that they must be unanimous in determining whether the sentence should be death, which would follow as a matter of course if they bring in a verdict that 'the accused is found guilty of the crime of murder in the first degree,' and they must be equally unanimous if they do not wish a finding of guilt to be followed by a death sentence, which they must express by a finding of guilt 'without capital punishment.' 68 Mr. Justice BURTON concurs in this opinion. Appendix 69 State legislation concerning the punishment for first degree murder.* 70 (1) Conn. Gen.Stat. § 6044 (1930). 71 (2) Mass. Gen.Laws c. 265, § 2 (1930). 72 (3) N.C. Code Ann. § 4200 (1939). 73 (4) Vt. Pub.Laws § 8376 (1933). B. Death penalty abolished: 74 (5) Me. Rev.Stats. c. 117, § 1 (1944). 75 (6) Comp.Laws Mich.Supp. 1940, § 17115-316, Mich. Stat. Ann. § 28.548 (1938). 76 (7) Minn. Stat. § 619.07 (1945), M.S.A. 77 (8) R.I. Gen.Laws c. 606, § 2 (1938) (penalty for murder in first degree is life imprisonment unless person is under life imprisonment sentence at time of conviction). 78 (9) Wis. Stat. § 340.02 (1945). C. Death penalty not mandatory: 79 I. States where jury recommendation of life imprisonment is not binding on trial court: 80 (10) Del. Rev.Code § 5330 (1935). 81 (11) N.M. Stat.Ann. § 105-2226 (1929). 82 (12) Utah Rev.Stat.Ann. § 103—28—4 (1933). 83 II. States where jury's verdict must specify whether the sentence is to be death or life imprisonment: 84 (13) Ark. Dig.Stat. § 4042 (1937) (as interpreted by the courts). 85 (14) Colo. Stat.Ann. c. 48, § 32 (1935). 86 (15) Ill. Ann.Stat. c. 38, § 360 (1935). 87 (16) Ind. Ann.Stat. §§ 10-3401 and 9-1819 (Burns 1942). 88 (17) Iowa Code § 12911 (1939). 89 (18) Kan. Gen.Stat.Ann. § 21-403 (1935). 90 (19) Ky. Rev.Stat.Ann. §§ 435.010 and 431.130. 91 (20) Mo. Rev.Stat.Ann. § 4378 (1939) (as interpreted by the courts). 92 (21) N.D. Comp.Laws Ann. § 9477 (1913). 93 (22) Okl. Stat.Ann. tit. 21, § 707 (1937). 94 (23) Pa. Stat.Ann. tit. 18, § 4701 (1945). 95 (24) S.D. Sess.Laws 1939, c 30, amending S.D. Code § 13.2012 (1939) (but even if jury specifies death sentence, court 'may nevertheless pronounce judgment of life imprisonment'). 96 (25) Tenn. Code Ann. § 10772 (Williams 1934). 97 (26) Vernon's Tex. Pen.Code Ann. art. 1257 (1936). ('The punishment for murder shall be death or confinement in the penitentiary for life or for any term of years not less than two.'—Courts have interpreted statute as requiring jury to specify penalty.) 98 (27) Va. Code Ann. § 4394 (1936) (as interpreted by the courts). 99 III. States where sentence of death or life imprisonment is at the discretion of the jury: 100 (28) Ala. Code Ann. tit. 14, § 318 (1940). 101 (29) Ariz. Code Ann. § 43-2903 (1939). 102 (30) Cal. Pen.Code § 190 (1941). 103 (31) Ga. Code Ann. § 26-1005 (1936). 104 (32) Idaho Code Ann. § 17-1104 (1932). 105 (33) Mont. Rev.Code Ann. § 10957 (1935). 106 (34) Neb. Rev.Stat. § 28-401 (1943). 107 (35) Nev. Comp.Laws Ann. § 10068 (1929). 108 IV. States where the punishment is life imprisonment unless the jury specifies the death penalty: 109 (36) N.H. Rev.Laws c. 455, § 4 (1942). 110 (37) Wash. Rev.Stat.Ann. § 2392 (1932). 111 V. States that have statutes more or less like the federal provision under consideration: 112 (38) La. Code r im.Law & Proc. Ann. art. 409 (1943). 113 (39) Md. Ann. Code Gen.Laws art. 27, § 481 (1939). 114 (40) N.J. Stat.Ann. § 2:138—4 (1939). 115 (41) N.Y. Crim.Code and Pen.Law § 1045-a. 116 (42) Ohio Gen.Code Ann. § 12400 (1939). 117 (43) Ore. Comp.Laws Ann. § 23-411 (1940). 118 (44) S.C. Code Ann. § 1102 (1942). 119 (45) W.Va. Code Ann. § 6204 (1943). 120 (46) Wyo. Comp.Stat.Ann. § 9-201 (1945). 121 VI. States that give effect to jury recommendation for life imprisonment even when jury is not unanimous in making that recommendation: 122 (47) Fla. Stat.Ann. § 919.23 (1944) ('Whoever is convicted of a capital offense and recommended to the mercy of the court by a majority of the jury in their verdict, shall be sentenced to imprisonment for life.') 123 (48) Miss. Code Ann. § 2217 (1942). ('Every person who shall be convicted of murder shall suffer death, unless the jury rendering the verdict shall fix the punishment at imprisonment in the penitentiary for the life of the convict; or unless the jury shall certify its disagreement as to the punishment * * * in which case the court shall fix the punishment at imprisonment for life.') 1 'In all cases where the accused is found guilty of the crime of murder in the first degree, or rape, the jury may qualify their verdict by adding thereto "without capital punishment'; and whenever the jury shall return a verdict qualified as aforesaid, the person convicted shall be sentenced to imprisonment for life.' 2 In Winston v. United States, supra, the question presented was the proper construction of § 1 of the Act of January 15, 1897, 29 Stat. 487. 18 U.S.C. § 567, 18 U.S.C.A. § 567, in its relevant part, has language identical to that of the earlier statute. 3 172 U.S. at pages 312, 313, 19 S.Ct. at page 215: 'The right to qualify a verdict of guilty by adding the words 'without capital punishment' is thus conferred upon the jury in all cases of murder. The act does not itself prescribe, nor authorize the court to prescribe, any rule defining or circumscribing the exercise of this right, but commits the whole matter of its exercise to the judgment and the consciences of the jury. The authority of the jury to decide that the accused shall not be punished capitally is not limited to cases in which the court or the jury is of opinion that there are palliating or mitigating circumstances. But it extends to every case in which, upon a view of the whole evidence, the jury is of opinion that it would not be just or wise to impose capital punishment. How far considerations of age, sex, ignorance, illness, or intoxication, of human passion or weakness, of sympathy or clemency, or the irrevocableness of an executed sentence of death, or an apprehension that explanatory facts may exist which have not been brought to light, or any other consideration whatever, should be allowed weight in deciding the question whether the accused should or should not be capitally punished, is committed by the act of congress to the sound discretion of the jury, and of the jury alone.' 4 'I instruct you that you may return a qualified verdict in this case by adding the words 'without capital punishment' to your verdict. This power is conferred solely upon you and in this connection the Court can not extend or prescribe to you any definite rule defining the exercise of this power, but commits the entire matter of its exercise to your judgment. 'I instruct you, gentlemen of the jury that even if you should unanimously agree from the evidence beyond all reasonable doubt that the defendant is guilty as charged, you may qualify your verdict by adding thereto 'without capital punishment' in which case the defendant shall not suffer the death penalty. 'In this connection, I further instruct you that you are authorized to add to your verdict the words 'without capital punishment,' and this you may do no matter what the evidence may be and without regard to the existence of mitigating circumstances.' 5 'To the indictment which the grand jury returned against this defendant, this defendant entered a plea of not guilty. That is to say, he denied the charge stated in the indictment and placed himself upon his Country for the purpose of trial. The burden is upon the Government o show to your satisfaction, gentlemen, that this defendant is guilty beyond every reasonable doubt. This burden does not change at any time during the course of the trial. The defendant is presumed innocent of the charge stated in the indictment until he is proven guilty by the degree of proof to which I have previously referred. The presumption of innocence in favor of the defendant is not a mere formality to be disregarded by the jury at its pleasure. It is a substantive part of our criminal law. The presumption of innocence continues with the defendant throughout the trial until you are convinced by the evidence that he is guilty beyond every reasonable doubt. 'When the indictment was returned by the grand jury against this defendant, the defendant had had no opportunity to present his side of the case. The indictment was found by the grand jury upon evidence presented to it by the Government alone, and created in the minds of the grand jury a belief that it was probable that a crime had been committed and that this defendant probably committed that crime. 'Upon the evidence (which) it heard, the grand jury indicted this defendant, thereby indicating that it was probable that a crime had been committed, which should be disposed of in this court where both sides could be heard, and this is the stage which we have now reached. 'I advise you, gentlemen, that it is the indictment in this case which frames the assues of the case.' Petitioner complains of the italicized language. 6 Section 542, before its amendment in 1937, read: 'The manner of inflicting the punishment of death shall be by hanging.' 35 Stat. 1151. The changes in the statute from that language to the present language were prompted by the fact that 'Many States * * * use (d) more humane methods of execution, such as electrocution, or gas * * *. (Therefore,) it appear (ed) desirable for the Federal Government likewise to change its law in this respect * * *.' H.Rep. No. 164, 75th Cong., 1st Sess., 1. Since Congress was well aware that federal courts had jurisdiction in territories and possessions, it would be incongruous to hold that they did not use the word 'state' to cover such areas. The purpose of this legislation was remedial: the adoption of the local mode of execution. The intent of Congress would be frustrated by construing the statute to create that hiatus for which the petitioner contends. 7 18 U.S.C. § 454, 18 U.S.C.A. § 454: 'Every person guilty of murder in the first degree shall suffer death. * * *' 8 1 Stat. 113. 9 29 Stat. 487. 10 The Act of January 15, 1897, was incorporated into the Criminal Code of 1909 as § 330 with changes that are here unimportant. 35 Stat. 1152. Section 330 of the Criminal Code is now 18 U.S.C. § 567, 18 U.S.C.A. § 567. 11 Dissatisfaction over the harshness and antiquity of the federal criminal laws led in 1894 to the introduction by N. M. Curtis of New York of a bill to reduce the number of crimes for which the penalty of death could be imposed and to give the jury the right to 'qualify their verdict (in death cases) by adding thereto 'without capital punishment." See H.Rep.No.545, 53d Cong., 2d Sess. The bill as introduced divided murder into degrees §§ 1, 2 of H.R. 5836, 53d Cong., 2d Sess.; it was passed by the House without any substantial changes. 27 Cong.Rec. 823. After severe amendment it was favorably reported to the Senate by the Committee on the Judiciary. See S.Rep.No.846, 53d Cong., 3d Sess. These amendments, however, did not affect § 5 of the original bill, the section which provided for qualified verdicts; that section was retained and became § 1 of the new bill. Id. at p. 3. The committee, however, 'thought it inadvisable to make degrees in the crime of murder, or attempt new definitions.' Ibid. Consequently, it struck out the sections of the original bill which concerned themselves with these matters. The Committee Report stated that 'The leading object of this bill is to diminish the infliction of the death penalty by limiting the offenses upon which it is denounced, and by providing in all cases a latitude in the tribunal which shall try them to withhold the extremest punishment when deemed too severe.' Id. at p. 1. The bill as amended was passed by the Senate and later by the House. 12 See note 11, supra; 28 Cong.Rec. 2649, 2650, 3098—3111, 3651. 13 See American Publishing Co. v. Fisher, 166 U.S. 464, 17 S.Ct. 618, 41 L.Ed. 1079. 14 This conclusion is supported by Smith v. United States, 9 Cir., 47 F.2d 518, which, with the exception of the present case, appears to be the only federal decision on this question. 15 Andres v. United States, 9 Cir., 163 F.2d 468, 471. 16 Id., 163 F.2d at page 471. 17 Ibid. 1 For references to the State legislation see Appendix, pp. 15—18. 2 There were only twenty-three convictions of first-degree murder in the federal district courts in continental United States, the territories, and the possessions, exclusive of the District of Columbia, during the six-year period beginning July 1, 1941, and ending June 30, 1947. Eight of the defendants convicted were sentenced to death, and fifteen were given life imprisonment. Of the eight sentenced to death, three were executed (see Arwood v. United States, 6 Cir., 134 F.2d 1007; Ruhl v. United States, 10 Cir., 148 F.2d 173; United States v. Austin Nelson, District Court for the Territory of Alaska, First Division, April 18, 1947 (unreported)); the sentence of one was commuted to life imprisonment (see Paddy v. United States, 9 Cir., 143 F.2d 847); and the sentences of four (including the petitioner here) have been stayed pending their appeals (see United States v. Sam Richard Shockley and United States v. Miran Edgar Thompson, District Court for the Northern District of California, Dec. 21, 1946 (unreported); United States v. Carlos Romero Ochoa, District Court for the Southern District of California, May 19, 1947 (unreported)). I am indebted for these statistics to the Administrative Office of the United States Courts. 3 The Supreme Court of Louisiana noted that 'in capital cases, it is entirely left to the jury to determine the extent of the punishment in the event of conviction. The jurors, in such cases, are entirely free to choose between a qualified and an unqualified verdict, because the law gives them the unquestioned discretion to return either one or the other.' State v. Henry, 196 La. 217, 233, 198 So. 910, 915. The Court of Appeals of Maryland held that 'In our opinion, it was the purpose of the act to empower juries to unite in a choice of punishments, that is, a choice between limiting punishment to life imprisonment and leaving the court unrestricted in fixing the punishment; and it was intended that all jurors should exercise a discretion in making that choice.' Price v. State, 159 Md. 491, 494, 151 A. 409, 410. The Supreme Court of West Virginia has held that under that State's statute the jury fixes the sentence and that, therefore, it was reversible error for the trial court to fail to 'instruct the jury that it was its duty to find, in the event of a verdict of guilty of murder in the first degree, whether the accused should be hanged or sentenced to the penitentiary for life.' State v. Goins, 120 W.Va. 605, 609, 199 S.E. 873, 875. And the Supreme Court of Wyoming in a case where the defendant had entered a plea of guilty of murder in the first degree, held that ' defendant has the right to have a jury not only to try the issue of guilt or innocence, but also to decide what the punishment shall be. The right to a trial on the issue of guilt or innocence may be waived by a plea of guilty, which leaves only the question of the punishment to be decided by the jury.' State v. Best, 44 Wyo. 383, 389, 390, 12 P.2d 1110, 1111; see also State v. Brown, 60 Wyo. 379, 403, 151 P.2d 950, 958 (where an instruction to the jury that 'person who is found guilty of murder in the first degree shall suffer death or be imprisoned in the penitentiary at hard labor for life, in the discretion of the jury trying the case' was upheld). 4 While the judges of the Supreme Court of Ohio differed in their views as to whether the jury in making the recommendation were restricted to considerations based upon the evidence, they were in agreement that the statute gave the jury full and exclusive discretion as to whether or not to make the recommendation. Howell v. State, 102 Ohio St. 411, 131 N.E. 706, 17 A.L.R. 1108. In Oregon and South Carolina it is sufficient to charge the jury that they may bring in either verdict. State v. Hecker, 109 Or. 520, 559, 560, 221 P. 808; State v. McLaughlin, 208 S.C. 462, 468, 38 S.E.2d 492. 5 Prior to 1916 the death penalty was mandatory in New Jersey. In that year the State legislature amended the law by the enactment of the jury recommendation form of statute. In 1919 the New Jersey Court of Errors and Appeals construed the statute to give the jury absolute discretion to bring in either verdict, and, by a close decision, held that the jury was not confined to the evidence in determining whether or not to make the recommendation. State v. Martin, 92 N.J.L. 436, 106 A. 385, 17 A.L.R. 1090. That same year the legislature enacted into law the views of the dissenting judges requiring that the jury must make the recommendation 'by its verdict, and as a part thereof, upon and after the consideration of all the evidence.' N.J.Stat.Ann. § 2:138—4 (1939). In State v. Molnar, 133 N.J.L. 327, 335, 44 A.2d 197, 202, the court construed the amended statute to mean that '* * * the penalty is death, determined not by the jury, but by the statute, and pronounced by the court. It is not correct to say that the jury imposes the sentence of death where it does not choose to make the recommendation for life imprisonment.' 6 Indeed, we said in the Winston case that Congress by the Act of 1897 established the 'simple and flexible rule of conferring upon the jury, in every case of murder, the right of deciding whether it shall be punished by death or by imprisonment.' 172 U.S. at page 312, 19 S.Ct. at page 215. 7 H.R. 3190, 80th Cong., 1st Sess., § 1111(b), as passed by the House on May 12, 1947, 93 Cong.Rec. 5049. 8 See id. at 5048; Hearings before Subcommittee No. 1 of the House Committee on the Judiciary on H.R. 1600 and H.R. 2055, 80th Cong., 1st Sess., pp. 33—35. It is interesting to note that the proposed revision itself contains most of the different forms by which legislatures have retained capital punishment as a penalty for the commission of certain crimes but have not made its imposition mandatory upon a finding of guilty. E.g., § 2113(e) (murder in commission of bank robbery—'not less than ten years, or punished by death if the verdict of the jury shall so direct'); § 1992 (wrecking train which results in death of any person—'death penalty or to imprisonment for life, if the jury shall ini ts discretion so direct'); § 1201(a) (kidnapping—'(1) by death if the kidnaped person has not been liberated unharmed, and if the verdict of the jury shall so recommend, or (2) by imprisonment for any term of years or for life, if the death penalty is not imposed'); § 2031 (rape—'death, or imprisonment for any term of years or for life'). There is nothing in either the committee's report or the reviser's notes on these sections to indicate whether these are differences in form or in substance. See H.Rep.No.304, 80th Cong., 1st Sess. 9 The various Governmental agencies are apt to see decisions adverse to them from the point of view of their limited preoccupation and too often are eager to seek review from adverse decisions which should stop with the lower courts. The Solicitor General, however, must take a comprehensive view in determining when certiorari should be sought. He is therefore under special responsibility, as occupants of the Solicitor General's office have recognized, to resist importunities for review by the agencies, when for divers reasons unrelated to the merits of a decision, review ought not to be sought. The circumstances of the Smith case present a special situation, and the intention to carry the implication of 'acquiescence' beyond such special circumstances is emphatically disavowed. 10 The jury was instructed that 'before you may return a qualified verdict of murder in the first degree without capital punishment that your decision to do so must be unanimous.' By and of itself this instruction was consonant with either construction of the statute. If the jury had also been instructed either that 'before you may return a verdict of murder in the first degree your decision not to add the qualification 'without capital punishment' must be unanimous' or that 'if you are all agreed that the defendant is guilty but you are not all agreed to add 'without capital punishment' you must return a verdict of murder in the first degree without the qualification,' they would have known which construction of the statute the trial judge adopted, and so would we. * It is appropriate to give warning that the meaning attributed to some of the statutes by this classification does not have the benefit of guiding State adjudication. The ascertainment of the proper construction of a State statute when there is not a clear ruling by the highest court of that State is treacherous business. Nor can one be wholly confident that he has found the latest form of State legislation. A. Death penalty mandatory:
01
334 U.S. 24 68 S.Ct. 847 92 L.Ed. 1187 HURD et al.v.HODGE et al. URCIOLO et al. v. SAME. Nos. 290, 291. Argued Jan. 15, 16, 1948. Decided May 3, 1948. Messrs. Charles H. Houston and Phineas Indritz, both of Washington, D.C., for petitioners. Messrs. Henry Gilligan and James A. Crooks, both of Washington, D.C., for respondents. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for the United States as amicus curiae, by special leave of court. [Argument of Counsel from page 25 intentionally omitted] Mr. Chief Justice VINSON delivered the opinion of the Court. 1 These are companion cases to Shelley v. Kraemer and McGhee v. Sipes, 334 U.S. 1, 68 S.Ct. 836, and come to this Court on certiorari to the United States Court of Appeals for the District of Columbia. 2 In 1906, twenty of thirty-one lots in the 100 block of Bryant Street, Northwest, in the City of Washington, were sold subject to the following covenant: '* * * that said lot shall never be rented, leased, sold, transferred or conveyed unto any Negro or colored person, under a penalty of Two Thousand Dollars ($2,000), which shall be a lien against said property.' The covenant imposes no time limitation on the restriction. 3 Prior to the sales which gave rise to these cases, the twenty lots which are subject to the covenants were at all times owned and occupied by white persons, except for a brief period when three of the houses were occupied by Negroes who were eventually induced to move without legal action. The remaining eleven lots in the same block,1 however, are not subject to a restrictive agreement and, as found by the District Court, were occupied by Negroes for the twenty years prior to the institution of this litigation. 4 These cases involve seven of the twenty lots which are subject to the terms of the restrictive covenants. In No. 290, petitioners Hurd, found by the trial court to be Negroes,2 purchased one of the restricted properties from the white owners. In No. 291, petitioner Urciolo, a white real estate dealer, sold and conveyed three of the restricted properties to the Negro petitioners Rowe, Savage, and Stewart. Petitioner Urciolo also owns three other lots in the block subject to the covenants. In both cases, the Negro petitioners are presently occupying as homes the respective properties which have been conveyed to them. 5 Suits were instituted in the District Court by respondents, who own other property in the block subject to the terms of the covenants, praying for injunctive relief to enforce the terms of the restrictive agreement. The cases were consolidated for trial, and after a hearing, the court entered a judgment declaring null and void the deeds of the Negro petitioners; enjoining petitioner Urciolo and one Ryan, the white property owners who had sold the houses to the Negro petitioners, from leasing, selling or conveying the properties to any Negro or colored person; enjoining the Negro petitioners from leasing or conveying the properties and directing those petitioners 'to remove themselves and all of their personal belongings' from the premises within sixty days. 6 The United States Court of Appeals for the District of Columbia, with one justice dissenting, affirmed the judgment of the District Court.3 The majority of the court was of the opinion that the action of the District Court was consistent with earlier decisions of the Court of Appeals and that those decisions should be held determinative in these cases. 7 Petitioners have attacked the judicial enforcement of the restrictive covenants in these case on a wide variety of grounds. Primary reliance, however, is placed on the contention that such governmental action on the part of the courts of the District of Columbia is forbidden by the due process clause of the Fifth Amendment of the Federal Constitution.4 8 Whether judicial enforcement of racial restrictive agreements by the federal courts of the District of Columbia violates the Fifth Amendment has never been adjudicated by this Court. In Corrigan v. Buckley, 1926, 271 U.S. 323, 46 S.Ct. 521, 70 L.Ed. 969, an appeal was taken to this Court from a judgment of the United States Court of Appeals for the District of Columbia which had affirmed an order of the lower court granting enforcement to a restrictive covenant. But as was pointed out in our opinion in Shelley v. Kraemer, supra, the only constitutional issue which had been raised in the lower courts in the Corrigan case, and consequently, the only constitutional question before this Court on appeal, related to the validity of the private agreements as such. Nothing in the opinion of this Court in that case, therefore, may properly be regarded as an adjudication of the issue presented by petitioners in this case which concerns, not the validity of the restrictive agreements standing alone, but the validity of court enforcement of the restrictive strictive covenants under the due process clause of the Fifth Amendment.5 See Shelley v. Kraemer, supra, 334 U.S. 1, 68 S.Ct. 836. 9 This Court has declared invalid municipal ordinances restricting occupancy in designated areas to persons of specified race and color as denying rights of white sellers and Negro purchasers of property, guaranteed by the due process clause of the Fourteenth Amendment. Buchanan v. Warley, 1917, 245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A.1918C, 210, Ann.Cas.1918A, 1201; Harmon v. Tyler, 1927, 273 U.S. 668, 47 S.Ct. 471, 71 L.Ed. 831; City of Richmond v. Deans, 1930, 281 U.S. 704, 50 S.Ct. 407, 74 L.Ed. 1128. Petitioners urge that judicial enforcement of the restrictive covenants by courts of the District of Columbia should likewise be held to deny rights of white sellers and Negro purchasers of property, guaranteed by the due process clause of the Fifth Amendment. Petitioners point out that this Court in Hirabayashi v. United States, 1943, 320 U.S. 81, 100, 63 S.Ct. 1375, 1385, 87 L.Ed. 1774, reached its decision in a case in which issues under the Fifth Amendment were presented, on the assumption that 'racial discriminations are in most circumstances irrelevant and therefore prohibited * * *.' And see Korematsu v. United States, 1944, 323 U.S. 214, 216, 65 S.Ct. 193, 194, 89 L.Ed. 194. 10 Upon full consideration, however, we have found it unnecessary to resolve the constitutional issue which petitioners advance; for we have concluded that judicial enforcement of restrictive covenants by the courts of the District of Columbia is improper for other reasons hereinafter stated.6 11 Section 1978 of the Revised Statutes, derived from § 1 of the Civil Rights Act of 1866,7 provides: 'All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell hold, and convey real and personal property.'8 12 All the petitioners in these cases, as found by the District Court, are citizens of the United States. We have no doubt that, for the purposes of this section, the District of Columbia is included within the phrase 'every State and Territory.'9 Nor can there be doubt of the constitutional power of Congress to enact such legislation with reference to the District of Columbia.10 13 We may start with the proposition that the statute does not invalidate private restrictive agreements so long as the purposes of those agreements are achieved by the parties through voluntary adherence to the terms. The action toward which the provisions of the statute under consideration is directed is governmental action. Such was the holding of Corrigan v. Buckley, supra. 14 In considering whether judicial enforcement of restrictive covenants is the kind of governmental action which the first section of the Civil Rights Act of 1866 was intended to prohibit, reference must be made to the scope and purposes of the Fourteenth Amendment; for that statute and the Amendment were closely related both in inception and in the objectives which Congress sought to achieve. 15 Both the Civil Rights Act of 1866 and the joint resolution which was later adopted as the Fourteenth Amendment were passed in the first session of the Thirty-Ninth Congress.11 Frequent references to the Civil Rights Act are to be found in the record of the legislative debates on the adoption of the Amendment.12 It is clear that in many significant respects the statute and the Amendment were expressions of the same general congressional policy. Indeed, as the legislative debates reveal, one of the primary purposes of many members of Congress in supporting the adoption of the Fourteenth Amendment was to incorporate the guaranties of the Civil Rights Act of 1866 in the organic law of the land.13 Others supported the adoption of the Amendment in order to eliminate doubt as to the constitutional validity of the Civil Rights Act as applied to the States.14 16 The close relationship between § 1 of the Civil Rights Act and the Fourteenth Amendment was given specific recognition by this Court in Buchanan v. Warley, supra, 245 U.S. at page 79, 38 S.Ct. at page 19, 62 L.Ed. 149, L.R.A.1918C, 210, Ann.Cas.1918A, 1201. There, the Court observed that, not only through the operation of theFourteenth Amendment, but also by virtue of the 'statutes enacted in furtherance of its purpose,' including the provisions here considered, a colored man is granted the right to acquire property free from interference by discriminatory state legislation. In Shelley v. Kraemer, supra, we have held that the Fourteenth Amendment also forbids such discrimination where imposed by state courts in the enforcement of restrictive covenants. That holding is clearly indicative of the construction to be given to the relevant provisions of the Civil Rights Act in their application to the Courts of the District of Columbia. 17 Moreover, the explicit language employed by Congress to effectuate its purposes, leaves no doubt that judicial enforcement of the restrictive covenants by the courts of the District of Columbia is prohibited by the Civil Rights Act. That statute, by its terms, requires that all citizens of the United States shall have the same right 'as is enjoyed by white citizens * * * to inherit, purchase, lease, sell, hold, and convey real and personal property.' That the Negro petitioners have been denied that right by virtue of the action of the federal courts of the District is clear. The Negro petitioners entered into contracts of sale with willing sellers for the purchase of properties upon which they desired to establish homes. Solely because of their race and color they are confronted with orders of court divesting their titles in the properties and ordering that the premises be vacated. White sellers, one of whom is a petitioner here, have been enjoined from selling the properties to any Negro or colored person. Under such circumstances, to suggest that the Negro petitioners have been accorded the same rights as white citizens to purchase, hold, and convey real property is to reject the plain meaning of language. We hold that the action of the District Court directed against the Negro purchasers and the white sellers denies rights intended by Congress to be protected by the Civil Rights Act and that, consequently, the action cannot stand. 18 But even in the absence of the statute, there are other considerations which would indicate that enforcement of restrictive covenants in these cases is judicial action contrary to the public policy of the United States,15 and as such should be corrected by this Court in the exercise of its supervisory powers over the courts of the District of Columbia.16 The power of the federal courts to enforce the terms of private agreements is at all times exercised subject to the restrictions and limitations of the public policy of the United States as manifested in the Constitution, treaties, federal statutes, and applicable legal precedents.17 Where the enforcement of private agreements would be violative of that policy, it is the obligation of courts to refrain from such exertions of judicial power.18 19 We are here concerned with action of federal courts of such a nature that if taken by the courts of a State would violate the prohibitory provisions of the Fourteenth Amendment. Shelley v. Kraemer, supra. It is not consistent with the public policy of the United States to permit federal courts in the Nation's capital to exercise general equitable powers to compel action denied the state courts where such state action has been held to be violative of the guaranty of the equal protection of the laws.19 We cannot presume that the public policy of the United States manifests a lesser concern for the protection of such basic rights against discriminatory action of federal courts than against such action taken by the courts of the States. 20 Reversed. 21 Mr. Justice REED, Mr. Justice JACKSON, and Mr. Justice RUTLEDGE took no part in the consideration or decision of these cases. 22 Mr. Justice FRANKFURTER, concurring. 23 In these cases, the plaintiffs ask equity to enjoin white property owners who are desirous of selling their houses to Negro buyers simply because the houses were subject to an original agreement not to have them pass into Negro ownership. Equity is rooted in conscience. An injunction is, as it always has been, 'an extraordinary remedial process, which is granted, not as a matter of right, but in the exercise of a sound judicial discretion.' Morrison v. Work, 266 U.S. 481, 490, 45 S.Ct. 149, 153, 69 L.Ed. 394. In good conscience, it cannot be 'the exercise of a sound judicial discretion' by a federal court to grant the relief here asked for when the authorization of such an injunction by the State of the Union violates the Constitution—and violates it, not for any narrow technical reason, but for considerations that touch rights so basic to our society that, after the Civil War, their protection against invasion by the States was safeguarded by the Constitution. This is to me a sufficient and conclusive ground for reaching the Court's result. 1 All of the residential property in the block is on the south side of the street, the northern side of the street providing a boundary for a public park. 2 Petitioner James M. Hurd Mintained that he is not a Negro but a Mohawk Indian. 3 1947, 82 U.S.App.D.C. 180, 162 F.2d 233. 4 Other contentions made by petitioners include the following: judicial enforcement of the covenants is contrary to § 1978 of the Revised Statutes, 8 U.S.C.A. § 42, derived from the Civil Rights Act of 1866 and to treaty obligations of the United States contained in the United Nations' charter; enforcement of the covenants is contrary to the public policy; enforcement of the covenants is inequitable. 5 Prior to the present litigation, the United States Court of Appeals for the District of Columbia has considered cases involving enforcement of racial restrictive agreements on at least eight occasions. Corrigan v. Buckley, 1924, 55 App.D.C. 30, 299 F. 899; Torrey v. Wolfes, 1925, 56 App.D.C. 4, 6 F.2d 702; Russell v. Wallace, 1929, 58 App.D.C. 357, 30 F.2d 981; Cornish v. O'Donoghue, 1929, 58 App.D.C. 359, 30 F.2d 983; Grady v. Garland, 1937, 67 App.D.C. 73, 89 F.2d 817; Hundley v. Gorewitz, 1942, 77 U.S. App.D.C. 48, 132 F.2d 23; Mays v. Burgess, 1945, 79 U.S.App.D.C. 343, 147 F.2d 869, 162 A.L.R. 168; Mays v. Burgess, 1945, 80 U.S.App.D.C. 236, 152 F.2d 123. In Corrigan v. Buckley, supra, the first of the cases decided by the United States Court of p peals and relied on in most of the subsequent decisions, the opinion of the court contains no consideration of the specific issues presented to this Court in these cases. An appeal from the decision in Corrigan v. Buckley, was dismissed by this Court. 1926, 271 U.S. 323, 46 S.Ct. 521, 70 L.Ed. 969. See discussion supra. In Hundley v. Gorewitz, supra, the United States Court of Appeals refused enforcement of a restrictive agreement where changes in the character of the neighborhood would have rendered enforcement inequitable. 6 It is a well-established principle that this Court will not decide constitutional questions where other grounds are available and dispositive of the issues of the case. Recent expressions of that policy are to be found in Alma Motor Co. v. Timken-Detroit Axle Co., 1946, 329 U.S. 129, 67 S.Ct. 231; Rescue Army v. Municipal Court, 1947, 331 U.S. 549, 67 S.Ct. 1409. 7 14 Stat. 27. Section 1 of the Act provided: '* * * That all persons born in the United States and not subject to any foreign power, excluding Indians not taxed, are hereby declared to be citizens of the United States; and such citizens, of every race and color, without regard to any previous condition of slavery or involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall have the same right, in every State and Territory in the United States, to make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease sell, hold, and convey real and personal property, and to full and equal benefit of all laws and proceedings for the security of person and property, as is enjoyed by white citizens, and shall be subject to like punishment, pains, and penalties, and to none other, any law, statute, ordinance, regulation, or custom, to the contrary notwithstanding.' The Civil Rights Act of 1866 was reenacted in § 18 of the Act of May 31, 1870, 16 Stat. 144, passed subsequent to the adoption of the Fourteenth Amendment. Section 1977 of the Revised Statutes, 8 U.S.C. § 41, 8 U.S.C.A. § 41, derived from § 16 of the Act of 1870, which in turn was patterned after § 1 of the Civil Rights Act of 8 66, provides: 'All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.' 8 8 U.S.C. § 42, 8 U.S.C.A. § 42. 9 Cf. Talbott v. Silver Bow County, 1891, 139 U.S. 438, 444, 11 S.Ct. 594, 596, 35 L.Ed. 210. 10 See Keller v. Potomac Electric Power Co., 1923, 261 U.S. 428, 442, 443, 43 S.Ct. 445, 448, 67 L.Ed. 731. 11 The Civil Rights Act of 1866 became law on April 9, 1866. The Joint Resolution submitting the Fourteenth Amendment to the States passed the House of Representatives on June 13, 1866, having previously passed the Senate on June 8. Cong. Globe, 39th Cong., 1st Sess. 3148—3149, 3042. 12 See, e.g., Cong. Globe, 39th Cong., 1st Sess. 2459, 2461, 2462, 2465, 2467, 2498, 2506, 2511, 2538, 2896, 2961, 3035. 13 Thus, Mr. Thayer of Pennsylvania, speaking in the House of Representatives, stated: 'As I understand it, it is but incorporating in the Constitution of the United States the principle of the civil rights bill which has lately become a law, * * * in order * * * that that provision so necessary for the equal administration of the law, so just in its operation, so necessary for the protection of the fundamental rights of citizenship, shall be forever incorporated in the Constitution of the United States.' Cong. Globe, 39th Cong., 1st Sess. 2465. And note the remarks of Mr. Stevens of Pennsylvania in reporting to the House the joint resolution which was subsequently adopted as the Fourteenth Amendment. Id. at 2459. See also id. at 2462, 2896, 2961. That such was understood to be a primary purpose of the Amendment is made clear not only from statee nts of the proponents of the Amendment but of its opponents. Id. at 2467, 2538. See Flack, The Adoption of the Fourteenth Amendment 94—96. 14 No doubts were expressed as to the constitutionality of the Civil Rights Act in its application to the District of Columbia. Senator Poland of Vermont stated: 'It certainly seems desirable that no doubt should be left existing as to the power of Congress to enforce principles lying at the very foundation of all republican government if they be denied or violated by the States, and I cannot doubt but that every Senator will rejoice in aiding to remove all doubt upon this power of Congress.' Cong. Globe, 39th Cong., 1st Sess. 2961. See also id. at 2461, 2498, 2506, 2511, 2896, 3035. 15 See United States v. Hutcheson, 1941, 312 U.S. 219,2 35, 61 S.Ct. 463, 467, 85 L.Ed. 788; Johnson v. United States, 1 Cir., 1908, 163 F. 30, 32, 18 L.R.A.,N.S., 1194. 16 Section 240 (a) of the Judicial Code, 43 Stat. 938, 28 U.S.C. § 347 (a), 28 U.S.C.A. § 347(a), provides: 'In any case, civil or criminal, in a circuit court of appeals, or in the Court of Appeals of the District of Columbia, it shall be competent for the Supreme Court of the United States, upon the petition of any party thereto, whether Government or other litigant, to require by certiorari, either before or after a judgment or decree by such lower court, that the cause be certified to the Supreme Court for determination by it with the same power and authority, and with like effect, as if the cause had been brought there by unrestricted writ of error or appeal.' 17 Muschany v. United States, 1945, 324 U.S. 49, 66, 65 S.Ct. 442, 451, 89 L.Ed. 744. And see License Tax Cases, 1867, 5 Wall. 462, 469, 18 L.Ed. 497. 18 Cf. Kennett v. Chambers, 1852, 14 How. 38, 14 L.Ed. 316; Tool Co. v. Norris, 1865, 2 Wall. 45, 17 L.Ed. 868; Sprott v. United States, 1874, 20 Wall. 459, 22 L.Ed. 371; Trist v. Child, 1875, 21 Wall. 441, 22 L.Ed. 623; Oscanyan v. Arms Co., 1881, 103 U.S. 261, 26 L.Ed. 539; Burt v. Union Central Life Insurance Co., 1902, 187 U.S. 362, 23 S.Ct. 139, 47 L.Ed. 216; Sage v. Hampe, 1914, 235 U.S. 99, 35 S.Ct. 94, 59 L.Ed. 147. And see Beasley v. Texas & Pacific R. Co., 1903, 191 U.S. 492, 24 S.Ct. 164, 48 L.Ed. 274. 19 Cf. Gandolfo v. Hartman C.C., 1892, 49 F. 181, 183, 16 L.R.A. 277.
12
334 U.S. 110 68 S.Ct. 947 92 L.Ed. 1245 SCHINE CHAIN THEATRES, Inc., et al.v.UNITED STATES. No. 10. Argued Dec. 15, 1947. Decided May 3, 1948. Petition for Clarification Denied June 1, 1948. See 334 U.S. 831, 68 S.Ct. 1343. Appeal from the District Court of the United States for the Western District of New York. [Syllabus from pages 110-112 intentionally omitted] Mr. Bruce Bromley, of New York City, for appellants. Mr. Robert L. Wright, of Washington, D.C., for appellee. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a companion case to United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, and is here by way of appeal from the District Court. The appellants, who were defendants below, are a parent company, three of its officers and directors, and five of its wholly owned subsidiaries—to whom we refer collectively as Schine. As of May 19, 1942, Schine owned or had a financial interest in a chain of approximately 148 motion picture theatres1 located in 76 towns in 6 states,2 the greater portion being 78 theatres in 41 towns in New York and 36 theatres in 17 towns in Ohio. Of the 76 towns, 60 were closed towns, i.e., places where Schine had the only theatre or all the theatres in town.3 This chain was acquired beginning in 1920 and is the largest independent theatre circuit in the country. Since 1931 Schine acquired 118 theatres. Since 1928 the closed towns increased by 56. In 1941 there were only three towns in which Schine's competitors were playing major film products. 2 The United States sued to prevent and restrain appellants from violating §§ 1 and 2 of the Sherman Act. 26 Stat. 209, 50 Stat. 693, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2. The complaint charged that the Schine interests by pooling their entire circuit buying power in the negotiation of films from the distributors so as to combine its closed and open towns got advantages for itself and imposed restrictions on its competitors which otherwise would not have been possible. It charged that the distributors granted certain favors to Schine which were withheld from Schine's competitors, e.g., giving Schine the first run, refusing at times second runs to Schine's competitors, charging Schine with lower rentals than it charged others, licensing to Schine films in excess of Schine's reasonable requirements. 3 The complaint also charged that Schine had forced or attempted to force competitors out of business and where competitors would not sell out to Schine had threatened to build or had built an opposition theatre, had threatened to deprive or had deprived competitors of a desirable film or run, had cut admission prices, and had engaged in other unfair practices. In these and other ways it was charged that Schine had used its circuit buying power to maintain its monopoly n d to restrain trade. The conspiracy charged was between the Schine defendants themselves and between them and the distributors. 4 The District Court found that the appellants had conspired with each other and with the eight major film distributors4 to violate § 1 and § 2 of the Sherman Act. Its findings may be summarized as follows: 5 The entire circuit buying power was utilized to negotiate films for all the theatres from the distributors, the negotiations ending in master agreements between a distributor and the exhibitor. This large buying power5 gave Schine the 'opportunity to exert pressure on the distributors to obtain preferences.' Moreover, Schine by combining its closed and open towns in its negotiations for films was able 'to dictate terms to the distributors.' Schine bought films for some theatres in which it had no financial interest (but as respects most of which it had an option to purchase). It also performed the service (under so-called pooling agreements) for groups of theatres in which it and others were interested. Through the use of such buying power Schine arbitrarily deprived competitors of first and second-run pictures, was able in many towns to secure unreasonable clearances6 year after year of from 90 to 180 days. obtained long-term agreements for rental of film (franchises) which gave it preferences not given independent operators,7 and received more advantageous concessions from the distributors respecting admission prices than competitors were able to get. Schine made threats to build or to open closed theatres in order to force sales of theatres in various towns or to prevent entry by an independent operator. Schine cut admission prices. Schine obtained from competitors whom it bought out agreements not to compete for long terms of years which agreements at times extended to other towns as well. Schine obtained filmrental concessions not made available to independents. The District Court entered a decree enjoining these practices and requiring a divestiture by Schine of various of its theatres. 63 F.Supp. 229. 6 First. For the reasons stated in United States v. Griffiths, 334 U.S. 100, 68 S.Ct. 941, combining of the open and closed towns for the negotiation of films for the circuit was a restraint of trade and the use of monopoly power in violation of § 1 and § 2 of the Act. The concerted action of the parent company, its subsidiaries, and the named officers and directors in that endeavor was a conspiracy which was not immunized by reason of the fact that the members were closely affiliated rather than independent. See United States v. Yellow Cab Co., 332 U.S. 218, 227, 67 S.Ct. 1560, 1565, 91 L.Ed. 2010; United States v. Crescent Amusement Co., 323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 650. The negotiations which Schine had with the distributors resulted in the execution of master agreements between the distributors and exhibitors. This brought the distributors into unlawful combinations with the Schine defendants. See United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915. The course of business makes plain that the commerce affected was interstate. United States v. Crescent Amusement Co. supra, 332 U.S. pages 180, 183, 184, 65 S.Ct. page 259, 89 L.Ed. 650. 7 Second. Appellants object to admission in evidence of numerous inter-office communications between officials of the distributors with whom Schine dealt. The District Court placed considerable relianceo n them in making its findings. We will advert later to the use of these documents to prove the unreasonableness of clearances. It is sufficient at this point to say that since a conspiracy between Schine and each of the named distributors was established by independent evidence, these inter-office letters and memoranda were admissible against all conspirators as declarations of some of the associates so far as they were in furtherance of the unlawful project. Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229, 249, 38 S.Ct. 65, 71, 62 L.Ed. 260, L.R.A.1918C, 497, Ann.Cas.1918B, 461; United States v. Crescent Amusement Co., supra, 323 U.S. page 184, 65 S.Ct. page 259, 89 L.Ed. 650; United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525. 8 Third. Appellants make detailed challenges to many of the other findings of the District Court on which it based its holdings that appellants violated the Act. 9 (1) They vigorously attack the findings that Schine arbitrarily deprived independents of first-and second-run pictures. Their chief contention is that there is no support for the finding of arbitrary action on the part of Schine, that Schine did not buy pictures beyond its needs in order to keep them away from its competitors, that any successful purchaser of a first- or second-run picture has an exclusive privilege that necessarily deprives competitors of the film for the period of the run, and that any advantage which Schine obtained in this regard was the result of the operation of forces of competiton. 10 As we read the evidence underlying this finding, it was the use of Schine's monopoly power—represented by combining the buying power of the open and closed towns—which enabled it to obtain that which its competitors could not obtain. Deprivation of competitors of first-and second-run pictures in that way was indeed arbitrary in the sense that it was the product of monopoly power, not of competitive forces. That is the construction we give the finding of the District Court; and as so construed it is supported by substantial evidence. There may be exceptions in the case of some subsidiary findings. But we do not stop to relate them. For even if we lay them aside as clearly erroneous for lack of support in the evidence, the conclusion is irresistible that Schine so used its monopoly power to gain advantages and preferences which, on a purely competitive basis, it could not have achieved. 11 (2) Defense of the long-term filmrental agreements—the franchises—is made on the ground that they were accepted methods of doing business in the industry,8 that they were favored by distributors as devices to stabilize their end of the business and to save expense, and that they were not chosen by Schine as instruments to suppress competition. But it seems to us apparent that their use served to intensify the impact of Schine's monopoly power on its competitors. For when Schine's buying power was used to acquire films produced by a distributor for two or three years rather than for one year alone, it plainly strengthened through the exercise of monopoly power such dominant position as Schine had over each of its competitors. 12 Appellants also challenge the finding that Schine obtained preferences through the franchises, in addition to long-term supplies of pictures, which were not granted independent operators. One of these preferences was found to be the unfair and inequitable clearance provisions; another, special film-rental concessions. We will consider these later. The other aspects of the findings we do not stop to analyze. For the franchise agreements § employed by Schine are unreasonable restraints of trade for the reasons stated; and they must be permanently enjoined, even though we assume their collateral aspects are not accurately described by the District Court and so may not be condemned. 13 (3) Appellants challenge the finding that Schine made threats to build theatres or to open closed ones in order to force sales of theatres in various towns or to prevent entry by an independent operator. There are inaccuracies in some of the subsidiary findings. There are episodes which are susceptible of two interpretations, one wholly innocent and the other unlawful. There are still other episodes which have the unmistakable earmarks of the use of monopoly power with intent to expand an empire and to restrain competition. On the whole we think the District Court was justified in drawing the inference of unlawful purpose from the ambiguous episodes and that those coupled with the others are adequate to support these findings of the District Court. 14 (4) We reach the same result as respects the agreements not to compete which Schine exacted from competitors whom it bought out. It is not enough that the agreements may be valid under local law. Even an otherwise lawful device may be used as a weapon in restraint of trade or in an effort to monopolize a part of trade or commerce. Agreements not to compete have at times been used for that unlawful purpose. See United States v. American Tobacco Co., 221 U.S. 106, 174, 31 S.Ct. 632, 646, 55 L.Ed. 663; United States v. Crescent Amusement Co., supra, 323 U.S. page 181, 65 S.Ct. page 258, 89 L.Ed. 650. If we had here only agreements not to complete, the inferences drawn by the District Court might not be warranted. But in the setting of this record, and against the background of Schine's other monopolistic practices, it seems to us that the District Court might infer that the requisite purpose was present and that these agreements were additional weapons in Schine's arsenal of power through the use of which its monopoly was sought to be extended. 15 (5) The finding that Schine obtained film-rental concessions not made available to independent operators is not intelligible to us. For the District Court went on to state that 'These provisions were also in contracts with independents.' How those concessions constitute a restraint of trade is therefore not apparent. We set aside this finding so that it may be clarified on remand of the cause. 16 (6) There is challenge to the findings that Schine's rental agreements contained minimum admission prices, or minimum admission prices lower than those to be charged by the independent operators for subsequent runs, or relieved Schine of requirements for minimum admission prices though imposing them on its competitors. There is evidence to support the findings that minimum prices were fixed. It is well settled that the fixing of minimum prices like other types of price fixing, is unlawful per se. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. The findings that Schine was either granted minimum admission prices more favorable than those required of its competitors, or that Schine, unlike its competitors, was relieved of all requirements for minimum prices, are also supported by evidence. It is said that these provisions of the agreements were not adhered to. But since they did exist, it is not for us to speculate as to what force or sanction they may have had. 17 (7) There is also challenge to the finding that Schine cut admission prices. This seems uncontroverted. But price cutting without more is not a violation of the Sherman Act. It is indeed a competitive practice which this record shows to have been common in the industry. It may be used in violation of the Act. Thus it may be the instrument of monopoly power to eliminate competitors or to bring them to their knees. But since it is not unlawful per se, facts and circumstances must be adduced to show that it was in purpose or effect m ployed as an instrument of monopoly power. Here there is nothing except a bare finding that at times Schine cut admission prices. That finding is not sufficiently discriminating to withstand analysis and is not adequate to support an injunction against price cutting. 18 (8) The finding as to unreasonable clearances presents rather large issues. We have elaborated the point in United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, and need not repeat what is said there. Clearance is an agreement by distributor not to exhibit a filn nor to license others to do so within a given area and for a stated period after the last date of the showing of the film by the licensee with whom the agreement is made.9 It is, in other words, an agreement by a distributor to license films only for specified successive dates. It is in part designed to protect the value of the license which is granted. While it thus protects the income of the first exhibitor, there is no contention that clearance agreements are per se unlawful restraints on competition by reason of the effect they may have on admission prices or otherwise. All the District Court purported to condemn, and all the appellee maintains is unlawful, are 'unreasonable clearances.' If reasonableness is the test, the factors which bear on it would appear to be numerous.10 The findings and opinion of the District Court, however, do not greatly illuminate the problem. What standards or criteria of unreasonableness were applied does not clearly appear. There are, however, in some of the subsidiary findings in this case a few clues as to the basis used by the District Court in classifying clearances as unreasonable. Thus it said that Schine got some clearances 'over towns in which Schine did not operate.' (63 F.Supp. 238.) But that is irrelevant to the problem of reasonableness of clearances, since by definition clearances run to both theatres and towns not owned by him who has the clearance. 19 The District Court also found that clearances 'were given over towns over which there had been no previous clearance.' But that without more would not make a cleaa nce 'unreasonable.' The District Court found that Schine got clearances over 'some towns distant from 10 to upwards of 20 miles' and that clearances were also obtained over 'outside towns of comparably small population, distant so far that no clearance is justified.' If the basis for these findings is that the towns were in different competitive areas, it would come closest to revealing the standard used by the District Court in determining whether the clearances were or were not reasonable, unless possibly it be the finding that in a few instances Schine got clearances over towns where there were no theatres. 20 The District Court cites instances of clearances which in its view were illegal because unreasonable as to time. But some of these turn out to be situations where clearances were granted over towns where Schine had the only theatre in town. So perhaps the District Court used as a basis for some of its findings of unreasonable clearances the absence of any competition between the theatres in question. But as to that we can only guess in each case and then wonder whether our guess was correct, because appellee suggests that one vice of Schine's clearances was that they ran not to specified theatres but to specified towns. We are, however, left somewhat inthe dark whether the District Court followed that theory or made the reasonableness of clearances turn on whether or not the theatres affected were in different competitive areas. 21 Appellee also suggests that proof of the unreasonableness of Schine's clearances is that their periods were almost uniformly the same even though there were wide variations in the condition and size of theatres and of the type of pictures played in the various theatres. But we are given no clue in the findings whether that was the view of the District Court. On its face it seems more like an attempt of the appellee to show what findings could have been made on the basis of the record had some discrimination been made in appraising the evidence. 22 Appellee seems to argue that standards of reasonableness can be dispensed with by reason of statements in the inter-office memoranda of the distributors that many of Schine's clearances were 'unreasonable.' On the matter of clearances, however, the interests of distributors and exhibitors are not necessarily identical. For the self-interest of exhibitors which would call for long clearances would militate against the best interests of distributors.11 So it is not clear that these declarations can properly be said to fall within the scope of the unlawful project which the two groups were sponsoring. Cf. Pinkerton v. United States, 328 U.S. 640, 647, 648, 66 S.Ct. 1180, 1184, 90 L.Ed. 1489. But however that may be, these statements do not advance us very far with the problem because they too fail to give specific content to the concept of unreasonable as applied to clearances. 23 As a last resort appellee seeks to sustain these findings on the ground that Schine got at least some of its clearances by refusing to make any deal for the circuit unless its terms were met. But any clearance so obtained, though otherwise reasonable, would be unlawful, for it would be the product of the exercise of monopoly power. It is evident, however, that that was not the theory adopted by the District Court for it did not look to see what clearances had been obtained in that manner. 24 The short of the matter is that since we do not know for certain what the findings of the District Court on clearances mean, they must be set aside. In doing so we of course do not intimate here, any more than we do in case of the other findings we have set aside in the case, that the record would not sustain findings adverse to Schine. We only hold that before we can pass on the questions tendered, findings on clearances must be made which reflect an appraisal of the complex of factors bearing on this question of reasonableness. That is a function of the District Court. 25 Fourth. The decree entered by the District Court enjoins appellants from specified acts or practices.12 To the extent that these provisions are directed to practices reflected in findings which we set aside, they must be re-examined by the District Court on remand of the case. 26 Appellants object to the generality of the injunction against 'monopolizing' first-and second-run films.13 The statutory requirement is that these injunctions 'shall be specific in terms, and shall describe in reasonable detail, and not by reference to the bill of complaint or other document, the act or acts sought to be restrained.' 38 Stat. 738, 28 U.S.C. § 383, 28 U.S.C.A. § 383. And see Federal Rules of Civil Procedure, rule 65(d), 28 U.S.C.A. following section 723c. We need not determine whether the provision in question if read, as it must be, in light of the other paragraphs of the decree (Swift & Co. v. United States, 276 U.S. 311, 328, 48 S.Ct. 311, 315, 72 L.Ed. 587) would pass muster. For we think the public interest requires that a more specific decree be entered on this phase of the case. The precise practices found to have violated the act should be specifically enjoined. 27 We have considered the objections to the other parts of the injunction (apart from provisions as to divestiture which we discuss later) and find them without merit. 28 Fifth. The District Court included in its decree a divestiture provision adjudging that appellant companies be 'dissolved, realigned, or reorganized in their ownership and control so that fair competition between them and other theatres may be restored and thereafter maintained.' The parties subsequently submitted various plans and after hearings the one submitted by the Department of Justice was approved with modifications. The plan does not provide for the dissolution of the Schine circuit through the separation of the several affiliated corporations as was done in United States v. Crescent Amusement Co., supra, 323 U.S. pages 188, 189, 65 S.Ct. pages 261, 262, 89 L.Ed. 650. It keeps the circuit intact in that sense but requires Schine to sell certain theatres. The plan requires Schine to sell its interest in all but one theatre of its selection in each of 33 towns, all but two in each of four larger towns, n d two of four theatres in Rochester, New York.14 Schine is to be divested of more than 50 of its theatres. The towns affected are over 40 out of the 70-odd in which Schine is operating.15 The one-theatre towns of Schine are unaffected. 29 The decree also dissolves the pooling agreements. A trustee is appointed to make the sales which are ordered. Schine is prohibited from acquiring any financial interest in additional theatres 'except after an affirmative showing that such acquisition will not unreasonably restrain competition.' Schine is ordered not to buy or book films for any theatre other than those in which it owns a financial interest. The District Court concluded that this program of divestiture was necessary in order to restore 'free enterprise and open competition amongst all branches of the motion picture industry.' 30 As we have noted, the District Court did not follow the procedure of United States v. Crescent Amusement Co., supra, and order the dissolution of the combination of the affiliated corporations. Schine presented such a plan and it was rejected. That plan contemplated the division of the Schine theatres among three separate corporations, with members of the Schine family owning each corporation. The District Court rejected that plan because it did not furnish such separation of ownership as would assure discontinuance of the practices which had constituted violations of the Act. The District Court did not pursue further the prospect of dismemberment of the Schine circuit through separation of the theatres into geographical groupings under separate and unaffiliated ownerships. Nor do the findings reflect an inquiry to determine what theatres had been acquired by Schine through methods which violate the Act. So far as the findings reveal, the theatres which are ordered divested may be properties which in whole or in part were lawfully acquired; and theatres which Schine is permitted to retain may, so far as the findings reveal, be ones which it obtained as the result of tactics violating the Act. 31 In this type of case we start from the premise that an injunction against future violations is not adequate to protect the public interest. If all that was done was to forbid a repetition of the illegal conduct, those who had unlawfully built their empires could preserve them intact. They could retain the full dividends of their monopolistic practices and profit from the unlawful restraints of trade which they had inflicted on competitors. Such a course would make enforcement of the Act a futile thing unless perchance the United States moved in at the incipient stages of the unlawful project. For these reasons divestiture or dissolution is an essential feature of these decrees. See United States v. Crescent Amusement Co., supra, 323 U.S. page 189, 65 S.Ct. page 262, 89 L.Ed. 650, and cases cited. 32 To require divestiture of theatres unlawfully acquired is not to add to the penalties that Congress has provided in the antitrust laws. Like restitution it merely deprives a defendant of the gains from his wrongful conduct. It is an equitable remedy designed in the public interest to undo what could have been prevented had the defendants not outdistanced the government in their unlawful project. Nor is United States v. National Lead Co., 332 U.S. 319, 351—353, 67 S.Ct. 1634, 1649—1650, 91 L.Ed. 2077, opposed to this view. For in that case there was no showing that the plants sought to be divested were either unlawfully acquired or used in a manner violative of the antitrust laws. 33 Divestiture or dissolution must take account of the present and future conditions in the particular industry as well as past violations. It serves several functions: (1) It puts an end to the combination or conspiracy when that is itself the violatio. (2) It deprives the antitrust defendants of the benefits of their conspiracy. (3) It is designed to break up or render impotent the monopoly power which violates the Act. See United States v. Crescent Amusement Co., supra, 323 U.S. pages 188—190, 65 S.Ct. pages 261, 262, 89 L.Ed. 650; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941. 34 The last two phases of this problem are the ones presented in this case. But the District Court purported to deal with only one of them. It did not determine what dividends Schine had obtained from the conspiracy. In United States v. Crescent Amusement Co., supra, 323 U.S. pages 181, 189, 65 S.Ct. pages 258, 262, 89 L.Ed. 650, some of the affiliated corporations through which that empire was built were products of the conspiracy. Hence that fact without more justified the direction in the decree to unscramble them. There are no findings which would warrant such a course in this case. But an even more direct method of causing appellants to surrender the gains from their conspiracy is to require them to dispose of theatres obtained by practices which violate the antitrust acts. We do not know what findings on that score would be supported by the record, for the District Court did not address itself to the problem. The upshot of the matter is that the findings do not reveal what the rewards of the conspiracy were; and consequently the court did not consider what would be the preferable way of causing appellants to surrender them. The case must therefore be remanded so that the District Court may make appropriate findings on this phase of the case. 35 While such an inquiry is the starting point for determining to what extent divestiture should be ordered, the matter does not end there. For it may be that even after appellants are deprived of the fruits of their conspiracy, the Schine circuit might still constitute a monopoly power of the kind which the Act condemns (see American Tobacco Co. v. United States, 328 U.S. 781, 809, 811, 66 S.Ct. 1125, 1138, 1139, 90 L.Ed. 1575), in spite of the restrictive provisions of the decree. Monopoly power is not condemned by the Act only when it was unlawfully obtained. The mere existence of the power to monopolize, together with the purpose or intent to do so, constitutes an evil at which the Act is aimed. United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 432. But whether that condition will obtain in this case must await the findings on the other phase of the case. 36 We accordingly set aside the divestiture provisions of the decree so that the District Court can make the findings necessary for an appropriate decree. We approve the dissolution of the pooling agreements, the prohibition against buying or booking films for theatres in which Schine has no financial interest, and the restriction on future acquisitions of theatres. See United States v. Crescent Amusement Co., supra, 323 U.S. pages 185—187, 65 S.Ct. pages 260, 261, 89 L.Ed. 650. We do not reach the question of the appointment of a trustee to sell theatres as that merely implements the divestiture provisions which must be reconsidered by the District Court. 37 The judgment of the District Court is affirmed in part and reversed in part and the cause is remanded to it for proceedings in conformity with this opinion. 38 So ordered. 39 Affirmed in part and reversed in part. 40 Mr. Justice FRANKFURTER concurs in the result. 41 Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of the case. 1 These figures do not include 18 which were closed and had been or were being converted to other uses. 2 New York (78), Ohio (36), Kentucky (18), Maryland (12), Delaware (2), Virginia (2). 3 Schine had the only theatre in each of 21 towns, both theatres in 21 towns that had two each, all theatres in 16 towns that had three each, and all theatres in one town that had six theatres and in another that had four theatres. Of these theatres approximately 87 per cent are located in cities or villages with populations under 25,000 and 60 per cent in cities or villages with populations under 10,000. 4 Fox, Loew, Paramount, RKO, Warner, Columbia, Universal, and United Artists. 5 In the 1939-1940 season Schine paid $1,647,000 to six distributors in film rental. 6 By clearance is meant the period of time agreed upon which must elapse between runs of the same feature within a particular area or in specified theatres. 7 The District Court used 'independents' or 'independent operators' to mean competitors other than the exhibitor-distributors. Schine, of course, is an independent circuit, as that term is used in the industry. 8 A consent order was entered in the present case on May 19, 1942, which provided, inter alia, that appellants would not enter into any agreement licensing films released by any distributor during a period of more than one year and that all agreements in existence having a longer term should be void as to all films released after the thirtieth day following the date of the consent order. 9 See note 6, supra. 10 See Bertrand, Evans & Blanchard, The Motion Picture Industry—A Pattern of Control 40-41 (TNEC Monograph No. 43, 1941): 'The establishment of clearance schedules is an intricate procedure. It involves a complex bargaining process and the balance of a variety of opposing economic interests. It may be stated initially that the primary objective of the distributor is, of course, to maximize his total revenue from each picture. This aim gives him a very direct interest in clearance periods. The higher rental fees paid by the prior-run exhibitor are directly conditioned on the extent of the protection which he is granted, and in general the longer the clearance period before subsequent showing, the higher the rental fee the prior-run exhibitor will pay. 'On the other hand, the distributor's revenue from subsequent-run exhibition is also important to him; this income may mean the difference between black or red ink on his ledgers. But the longer the clearance period, the smaller will be these returns—not only because more customers will have attended the prior showing rather than wait for subsequent exhibition, but also because the effects of the advertising and exploitation efforts made when the picture was released will have been vitiated over this time. In general, the greater the total box-office return earned by a film in all showings, the greater will be the distributor's revenue. 'The relation between run, clearance and zoning, admission price, seating capacity, and rental fees is indeed a complex one. The range covered by these factors is indicated by this fact: a license fee amounting to many thousands of dollars may be paid for the first showing of a film in a large metropolitan theater, and within a year the same film may be exhibited in some small theater in the same city for a fee of less than $20.' 11 See note 10, supra. 12 This part of the decree provides: 'Each of the defendants is hereby enjoined and restrained: '1. From monopolizing the supply of major first run films in any situation where there is a competing theatre suitable for first run exhibition thereof and from monopolizing the supply of second run film in any situation where there is a suitable theatre for second run exhibition thereof. '2. From demanding or receiving clearance over theatres operated by others which unreasonably restricts their ability to compete with a theatre owned or operated by a defendant corporation controlled by it and from attempting to control the admission prices charged by others by agreement with distributors, demands made upon distributors, or by any means whatsoever. '3. From conditioning the licensing of films in any competitive situation outside of Buffalo, New York, upon the licensing of films in any other situation and from entering into any film franchise. '5. From enforcing any existing agreements heretofore entered into (1) not to compete or (2) to restrict the use of any real estate to non-theatrical purposes. '6. From using any threats or deception as a means whereby a competitor is induced to sell. '7 From continuing any contract, conspiracy or combination with each other or with any other person which has the purpose or effect of maintaining the exhibition or theatre monopolies of the defendants or of preventing any other theatre or exhibitor from competing with the defendants or any of them, and from entering into any similar contract, conspiracy, or combination for the purpose or with the effect of restraining or monopolizing trade and commerce between the States.' 13 See note 12, supra, paragraph 1. 14 It also requires Schine to sell specific theatres remaining unsold under the consent decree of May 19, 1942. 15 Schine had withdrawn from five towns pursuant to the consent order of May 19, 1942.
78
334 U.S. 100 68 S.Ct. 941 92 L.Ed. 1236 UNITED STATESv.GRIFFITH et al. No. 64. Argued Dec. 15, 1947. Decided May 3, 1948. Appeal from the District Court of the United States for the Western District of Oklahoma. Mr. Robert L. Wright, of Washington, D.C., for appellant. Mr. Charles B. Cochran, of Oklahoma City, Okl., for appellees. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a suit brought by the United States in the District Court to prevent and restrain appellees from violating §§ 1 and 2 of the Sherman Act, 26 Stat. 209, as amended, 20 Stat. 693, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2. The District Court, finding there was no violation of the Act in any of the respects charged in the complaint, dismissed the complaint on the merits. 68 F.Supp. 180. The case is here by appeal under § 2 of the Expediting Act of February 11, 1903, 32 Stat. 823, as amended, 15 U.S.C. § 29, 15 U.S.C.A. § 29, and § 238 of the Judicial Code, as amended by the Act of February 13, 1925, 43 Stat. 936, 938, 28 U.S.C. § 345, 28 U.S.C.A. § 345. 2 The appellees are four affiliated corporations and two individuals who are associated with them as stockholders and officers.1 The corporations operate (or own stock in corporations which operate) moving picture theatres in Oklahoma, Texas, and New Mexico. With minor exceptions, the theatres which each corporation owns do not compete with those of its affiliates but are in separate towns. In April, 1939, when the complaint was filed, the corporate appellees had interests in theatres in 85 towns. In 32 of those towns there were competing theatres. Fifty-three of the towns (62 percent) were closed towns, i.e., towns in which there were no competing theatres. Five years earlier the corporate appellees had theatres in approximately 37 towns, 18 of which were competitive and 19 of which (51 per cent) were closed. It was during that five-year period that the acts an practices occurred which, according to the allegations of the complaint, constitute violations of §§ 1 and 2 of the Sherman Act. 3 Prior to the 1938—1939 season these exhibitors used a common agent to negotiate with the distributors for films for the entire circuit.2 Beginning with the 1968—1939 season one agent negotiated for the circuit represented by two of the corporate appellees, and another agent negotiated for the circuit represented by the other two corporate appellees. A master agreement was usually executed with each distributor covering films to be released by the distributor during an entire season.3 There were variations among the master agreements. But in the main they provided as follows: (a) They lumped together towns in which the appellees had no competition and towns in which there were competing theatres. (b) They generally licensed the first-run exhibition in practically all of the theatres in which appellees had a substantial interest of substantially all of the films to be released by the distributor during the period of a year.4 (c) They specified the towns for which second runs were licensed for exhibition by appellees, the second-run rental sometimes being included in the first-run rental. (d) The rental specified often was the total minimum required to be paid (in equal weekly or quarterly installments) by the circuit as a whole for use of the films throughout the circuit, the appellees subsequently allocating the rental among the theatres where the films were exhibited. (e) Films could be played out of the order of their release, so that a specified film need not be played in a particular theatre at any specified time.5 4 The complaint charged that certain exclusive privileges which these agreement granted the appellee exhibitors over their competitors unreasonably restrained competition by preventing their competitors from obtaining enough first-or second-run films from the distributors6 to operate successfully. The exclusive privileges charged as violations were preemption in the selection of films and the receipt of clearances over competing theatres. It also charged that the use of the buying power of the entire circuit in acquiring those exclusive privileges violated the Act. 5 The District Court found no conspiracy between the appellee exhibitors or between them and the distributors, which violated the Act. It found that the agreements under h ich films were distributed were not in restraint of trade; that the appellees did not monopolize or attempt to monopolize the licensing or supply of film for first run or for any subsequent run; that the appellees did not conspire to compel the distributors to grant them the exclusive privilege of selecting films before the films were made available to any competing exhibitor; that there was no agreement between defendants and distributors granting defendants unreasonable clearances; that the appellees did not compel or attempt to compel distributors to grant them privileges not granted their competitors or which gave them any substantial advantage over their competitors; and that appellees did not condition the licensing of films in any competitive situation on the licensing of such films in a non-competitive situation, or vice versa. 6 The appellant introduced evidence designed to show the effect of the master agreements in some twenty-odd competitive situations. The District Court made detailed findings on this phase of the case to the effect that difficulties which competitors had in getting desirable films after appellee exhibitors entered their towns, the inroads appellees made on the business of competitors, and the purchases by appellees of their competitors were not the result of threats or coercion nor the result of an unlawful conspiracy, but solely the consequence of lawful competitive practices. 7 In United States v. Crescent Amusement Co., 323 U.S. 173, 65 S.Ct. 254, 89 L.Ed. 650, a group of affiliated exhibitors, such as we have in the present case, were found to have violated §§ 1 and 2 of the Sherman Act by the pooling of their buying power and the negotiation of master agreements similar to those we have here. A difference between that case and the present one, which the District Court deemed to be vital, was that in the former the buying power was used for the avowed purpose of eliminating competition and of acquiring a monopoly of theatres in the several towns, while no such purpose was found to exist here. To be more specific, the defendants in the former case through the pooling of their buying power increased their leverage over their competitive situations by insisting that they be given monopoly rights in towns where they had competition, else they would give a distributor no business in their closed towns. 8 It is, however, not always necessary to find a specific intent to restrain trade or to build a monopoly in order to find that the anti-trust laws have been violated. It is sufficient that a restraint of trade or monopoly results as the consequence of a defendant's conduct or business arrangements. United States v. Pattern, 226 U.S. 525, 543, 33 S.Ct. 141, 145, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; United States v. Masonite Corporation, 316 U.S. 265, 275, 62 S.Ct. 1070, 1076, 86 L.Ed. 1461. To require a greater showing would cripple the Act. As stated in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 432, 'no monopolist monopolizes unconscious of what he is doing.' Specific intent in the sense in which the common law used the term is necessary only where the acts fall short of the results condemned by the Act. The classical statement is that of Mr. Justice Holmes speaking for the Court in Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 279, 49 L.Ed. 518: 9 'Where acts are not sufficient in themselves to produce a result which the law seeks to prevent—for instance, the monopoly but require further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probability that it will happen. Commonwealth v. Peaslee, 177 Mass. 267, 272, 59 N.E. 55. But when that intent and the consequent dangerous probability exist, this statute, like many others, and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result.' 10 And see United States v.A luminum Co. of America, supra, 148 F.2d pages 431, 432. And so, even if we accept the District Court's findings that appellees had no intent or purpose unreasonably to restrain trade or to monopolize, we are left with the question whether a necessary and direct result of the master agreements was the restraining or monopolizing of trade within the meaning of the Sherman Act. 11 Anyone who owns and operates the single theatre in a town, or who acquires the exclusive right to exhibit a film, has a monopoly in the popular sense. But he usually does not violate § 2 of the Sherman Act unless he has acquired or maintained his strategic position, or sought to expand his monopoly, or expanded it by means of those restraints of trade which are cognizable under § 1. For those things which are condemned by § 2 are in large measure merely the end products of conduct which violates § 1. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 61, 31 S.Ct. 502, 516, 55 L.Ed. 619, 34 L.R.A., N.S., 834, Ann.Cas.1912D, 734. But that is not always true. Section 1 covers contracts, combinations, or conspiracies in restraint of trade.7 Section 2 is not restricted to conspiracies or combinations to monopolize8 but also makes it a crime for any person to monopolize or to attempt to monopolize any part of interstate or foreign trade or commerce. So it is that monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains unexercised.9 For § 2 of the Act is aimed, inter alia, at the acquisition or retention of effective market control. See United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 428, 429. Hence the existence of power 'to exclude competition when it is desired to do so' is itself a violation of § 2, provided it is coupled with the purpose or intent to exercise that power. American Tobacco Co. v. United States, 328 U.S. 781, 809, 811, 814, 66 S.Ct. 1125, 1139, 1140, 1141, 90 L.Ed. 1575. It is indeed 'unreasonable, per se, to foreclose competitors from any substantial market.' International Salt Co. v. United States, 332 U.S. 392, 396, 68 S.Ct. 12, 15. The anti-trust laws are as much violated by the prevention of competition as by its destruction. United States v. Aluminum Co. of America, supra. It follows a fortiori that the use of monopoly power, however lawfully acquired, to foreclose competition, to gain a competitive advantage, or to destroy a competitor, is unlawful. 12 A man with a monopoly of theatres in any one town commands the entrance for all films into that area. If he uses that strategic position to acquire exclusive privileges in a city where he has competitors, he is employing his monopoly power as a trade weapon against his competitors. It may be a feeble, ineffective weapon where he has only one closed or monopoly town. But as those towns increase in number throughout a region, his monopoly power in them may be used with crushing effect on competitors in other places.10 He need not be as crass as the exhibitors in United States v. Crescent Amusement Co., supra, in order to make his monopoly power effective in his competitive situations. Though he makes no threat to withhold the business of his closed or monopoly towns unless the distriu tors give him the exclusive film rights in the towns where he has competitors, the effect is likely to be the same where the two are joined. When the buying power of the entire circuit is used to negotiate films for his competitive as well as his closed towns, he is using monopoly power to expand his empire. And even if we assume that a specific intent to accomplish that result is absent, he is chargeable in legal contemplation with that purpose since the end result is the necessary and direct consequence of what he did. United States v. Patten, supra, 226 U.S. page 543, 33 S.Ct. page 145, 57 L.Ed. 333, 44 L.R.A.,N.S., 325. 13 The consequence of such a use of monopoly power is that films are licensed on a non-competitive basis in what would otherwise be competitive situations. That is the effect whether one exhibitor makes the bargain with the distributor or whether two or more exhibitors lump together their buying power, as appellees did here. It is in either case a misuse of monopoly power under the Sherman Act. If monopoly power can be used to beget monopoly, the Act becomes a feeble instrument indeed. Large-scale buying is not, of course, unlawful per se. It may yield price or other lawful advantages to the buyer. It may not, however, be used to monopolize or to attempt to monopolize interstate trade or commerce. Nor, as we hold in United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, may it be used to stifle competition by denying competitors less favorably situated access to the market. 14 Appellees were concededly using their circuit buying power to obtain films. Their closed towns were linked with their competitive towns. No effort of concealment was made as evidenced by the fact that the rental specified was at times the total minimum amount required to be paid by the circuit as a whole. Monopoly rights in the form of certain exclusive privileges were bargained for and obtained. These exclusive privileges, being acquired by the use of monopoly power, were unlawfully acquired. The appellees, having combined with each other and with the distributors to obtain those monopoly rights, formed a conspiracy in violation of §§ 1 and 2 of the Act. It is plain from the course of business that the commerce affected was interstate. United States v. Crescent Amusement Co., supra, 323 U.S. pages 180, 183, 184, 65 S.Ct. page 259, 89 L.Ed. 650. 15 What effect these practices actually had on the competitors of appellee exhibitors or on the growth of the Griffith circuit we do not know. The District Court, having started with the assumption that the use of circuit buying power was wholly lawful, naturally attributed no evil to it and thus treated the master agreements as legitimate weapons of competition. Since it found that no competitors were driven out of business, or acquired by appellees, or impeded in their business by threats or coercion, it concluded that appellees had not violated the Sherman Act in any of the ways charged in the complaint. These findings are plainly inadequate if we start, as we must, from the premise that the circuit buying power was unlawfully employed. On the record as we read it, it cannot be doubted that the monopoly power of appellees had some effect on their competitors and on the growth of the Griffith circuit. Its extent must be determined on a remand of the cause. We remit to the District Court not only that problem but also the fashioning of a decree which will undo as near as may be the wrongs that were done and prv ent their recurrence in the future. See United States v. Crescent Amusement Co., supra, 323 U.S. pages 189, 190, 65 S.Ct. page 262, 89 L.Ed. 650; Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947; United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915. 16 Reversed. 17 Mr. Justice FRANKFURTER dissents, substantially for the reasons set forth in the opinion of the District Court, 68 F.Supp. 180. 18 Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of this case. 1 Griffith Amusement Co., Consolidated Theatres, Inc., R. E. Griffith Theatres, Inc., Westex Theatres, Inc., H. J. Griffith, and L. C. Griffith. R. E. Griffith, a brother of H. J. and L. C. Griffith, was a defendant, but died while the suit was pending in the District Court and the action was not revived against his estate or personal representative. 2 The circuit includes the four corporate appellees and their affiliated exhibitors. When less than the full ownership of a theatre was acquired, the contract would provide that the buying and booking of films was exclusively in the hands of the Griffith interests. 3 The agreement negotiated by the common agent would be executed between a distributor and each of the corporate appellees or between a distributor and an individual exhibitor. 4 There were a few franchise agreements covering films to be released by a distributor during a term of years, usually for three years and in one instance for five years. The theatres of appellees in Oklahoma City were second, not first, run theatres. 5 The privilege was frequently conditioned on the playing of, or paying for, a designated quantity of the film obligation during stated portions of the season. 6 Those are the eight major film distributors who originally were defendants. The charge that these distributors conspired with each other was eliminated from the complaint and they were dismissed as defendants by stipulation or on motion of appellant. But the charge that each of the distributors had conspired with the appellee exhibitors was retained. 7 Section 1 provides: 'Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. * * *' 8 Section 2 provides: 'Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor * * *.' 9 So also a conspiracy to monopolize violates § 2 even though monopoly power was never acquired. American Tobacco Co. v. United States, 328 U.S. 781, 789, 66 S.Ct. 1125, 1129, 90 L.Ed. 1575. 10 It was said in United States v. United States Steel Corporation, 251 U.S. 417, 451, 40 S.Ct. 293, 299, 64 L.Ed. 343, 8 A.L.R. 1121, that mere size is not outlawed by § 2. But size is of course an earmark of monopoly power. Moreover, as stated by Justice Cardozo, speaking for the Court in United States v. Swift & Co., 286 U.S. 106, 116, 52 S.Ct. 460, 463, 76 L.Ed. 999, 'size carries with it an opportunity for abuse that is not to be ignored when the opportunity is proved to have been utilized in the past.'
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334 U.S. 182 68 S.Ct. 958 92 L.Ed. 1305 SCHWABACHER et al.v.UNITED STATES et al. No. 258. Argued Jan. 6, 7, 1948. Decided May 3, 1948. As Amended May 10, 1948. Appeal from the District Court of the United States for the Eastern District of Virginia. Mr. Carl McFarland, of Washington, D.C., for appellants. Mr. Daniel H. Kuk el, of Washington, D.C., for appellee I.C.C. [Argument of Counsel from page 183 intentionally omitted] Mr. George D. Gibson, of Richmond, Va., for appellee C. & O. Ry. Co. and others. Mr. Justice JACKSON delivered the opinion of the Court. 1 This controversy grows out of the voluntary merger of Chesapeake & Ohio Railway Company and Pere Marquette Railway Company, which companies, together with Alleghany Corporation, sought approval by the Interstate Commerce Commission. Pere Marquette is incorporated under the laws of Michigan, while Chesapeake & Ohio is chartered by Virginia. Chesapeake & Ohio acquired and for some years exercised active control of Pere Marquette, whose properties and operations complement rather than compete with those of Chesapeake & Ohio. Late in 1945 merger proceedings were commenced under enabling statutes of the two states and were consummated with approval of considerably more than the number of shares made necessary by statutes of the respective states. The Interstate Commerce Commission found, and there is no attack upon the findings, that the public interest is served by merger and unification of these properties and operations. The Commission also concluded that the plan as a whole, and as applied to each group of shareholders, is just and reasonable, and there is no attack upon this conclusion except that by the appellants which is treated fully herein. Consequently, details of the plan are of little importance to this litigation. 2 Appellants are owners of 2,100 shares of $100 par 5% cumulative preferred stock of Pere Marquette. Their interests aggregate a little less than 2% of the outstanding stock of this class. Dividends on this stock have been unpaid since 1931 and, as of the commencement of this controversy, were in arrears in the sum of $72.50 per share, an amount that is increasing with time. The Pere Marquette charter provides for full payment of the stock at par, plus accrued unpaid dividends, 'in the event of dissolution, liquidation, or winding up of the company, voluntary or involuntary * * * before any amounts are paid to holders of the * * * common stock.' The appellants contend that the merger hereinafter described terminates the corporate existence and, under this clause as construed by Michigan law, amounts to a 'winding up.' They insist that since the merger makes provision for some compensation to common stockholders these appellants have the right, under Michigan law, to have their shares recognized on the basis of at least $172.50 each. The Commission found the market value per share ranged, at different times, from $87 to.$99, while the merger terms give stocks in exchange which would have realized about $90 and $111 per share on the same dates. Appellants dissented from the merger, but Michigan law provides no specific right or procedure for appraisal and retirement of the holdings of a stockholder dissenting from a railroad merger. 3 When application was filed with the Interstate Commerce Commission under § 5 of the Interstate Commerce Act as amended (49 U.S.C. § 5, 49 U.S.C.A. § 5), for approval and authorization of the merger,1 as well as for other relief, appellants intervened and asked that body to determine, recognize and protect their asserted right to the full legal liquidation figure. The Commission approved the merger and the merger terms, finding them just and reasonable as to each class of stockholders. However, it disclaimed jurisdiction to pass upon the further claims of the appellants asserted on the basis of their interpretation of Michigan law. It reviewed at some length the economic position of the stock. It recited that these shares had received no dividends since 1931 and that appellants' witnesses agreed that these stockholders could not expect to receive any dividends for many years, apart from the merger. The Commission also pointed out the deficit in operations of Pere Marquette for the first quarter of 1946 as contrasted with the net income of Chesp eake and Ohio, and concluded that 'On the whole it would seem that the prospects of Pere Marquette stockholders for returns on their investments would be enhanced by the merger of their company into Chesapeake & Ohio.' The Commission did not question that the stockholders, on liquidation, dissolution or winding up of Pere Marquette, would be entitled to be paid in full the par value of their shares and accumulated dividends before any payment to holders of common stock. It did not undertake to determine the ultimate worth of these stocks in case of an actual liquidation, but it considered their present intrinsic value on a capitalized earnings basis, an actual yield basis, and its present market position and concluded: 'Accordingly, considering Pere Marquette's investment according to its books, other property values, the company's history as to earnings, its future prospects, and the market appraisal of its stocks, all as set forth above, we find that as to the stockholders of both parties generally the proposed ratios of exchange, stock issues and assumptions of indebtedness, are just and reasonable.' 4 The Commission then noted the contention of the appellants that as to them the terms were not just and reasonable, because they are deprived of contract rights under Michigan law, which they have not waived. It is contended that the Commission should not remit the dissenting stockholders to remedies in state courts as the Commission would thereby decline the jurisdiction conferred by § 5 and § 20a of the Act.2 But the Commission considered that it was entrusted with authority to decide the public interest aspects of the merger of these transportation facilities and that it could not be expected to enter into the question of 'compensation of dissenting stockholders on specified bases' before approval and merger. It thought that, having found the treatment of each class to be just and reasonable, it had done its full duty 'when we make certain that all stockholders of the same class are to be treated alike.' It declined to decide the Michigan law question as to what rights of dissenting stockholders were, and whether the merger was equivalent to a liquidation, but said: 'This does not mean that the Chesapeake & Ohio and the Pere Marquette do not remain free to settle controversies with dissenting stockholders through negotiation and litigation in the courts.' Taking into account the small percentage of the dissenting shares, the current assets position of the Chesapeake & Ohio, and the maximum possible cost to the merged company of the settlement of these claims on the basis most favorable to appellants, it considered that the company was amply able to bear 'any probable expenditure of cash that it might be required to make in connection with the merger. Accordingly it appears that consummation of the merger will not involve a burden of excessive expenditure.' The Commission thus left in a state of suspense, subject to further litigation or negotiation, these claims concerning the extent of the capital obligations of a constituent company, after examining them sufficiently to determine only that, however settled, they did not involve enough to affect the solvency of the new company or jeopardize its operations. 5 The Commission denied appellants' petition for rehearing and they filed suit in the United States District Court for the Eastern District of Virginia to set aside the order authorizing the merger. A court of three judges, convened as required by law,3 sustained the Commission, 72 F.Supp. 560. Appellants bring to us4 the question whether the Commission, in view of its authority over mergers, which is declared to be exclusive and plenary, could decline to determine just what the dissenting stockholders'l egal rights were under the Michigan law and the Pere Marquette charter, and to recognize them in full by the terms of the merger. 6 The disposition of appellants' claims, as well as the nature of the claims themselves, requires consideration of the relative function and authority of federal and state law in regulating and approving voluntary railroad mergers. The appellants contend that their share in the merged company is to be measured by, or their remedies as dissenters are to be found in, state law, but that the federal agency is bound to determine and apply that law. The Commission on the other hand refuses either finally to foreclose or to allow these claims. It apparently leaves it open to the state courts, or to the parties by negotiation, to add to the surviving carrier's capital obligations which the Commission has found to be just and reasonable, others founded only in state law and as to which it has made no such findings. We conclude that neither position is wholly consistent with the federal statutory plan for authorization and approval of mergers. 7 It is not for us to adjudicate the existence or the measure of any rights that Michigan law may confer upon dissenting stockholders. Neither the Commission nor this Court can make a plenary and exclusive decision as to what the law of a state may be, for the function of declaring and interpreting its own law is left to each state of the Union. But the effect of the state law in relation to a constitutional Act of Congress, in view of the constitutional provision, art. 6, cl. 2, that the latter shall be 'the supreme Law of the Land,' 'Laws of any State to the Contrary notwithstanding,' is for us to determine. Our first inquiry here, therefore, is whether the Interstate Commerce Act accords recognition to those state law rights, if any exist. To determine this federal question we assume, but do not decide, that Michigan law would consider this merger to be a liquidation, and would regard the recognition given to the common stock as entitling these dissenters to 'full payment' in cash or its equivalent for both the par value of their preferred shares and accrued unpaid dividends thereon. Assuming such to be their rights under the law of the State, we must decide whether approval of a railroad merger under the Transportation Act of 19405 is conditioned upon observance of such state law rights or can be made by the Commission contingently subject to them. A resume of the history of that Act throws light on the problem dealt with by that legislation. 8 The basic railroad facilities of the United States were constructed under state authorization and restrictions by corporations whose powers and limitations were prescribed by state legislatures, or resulted from limitations on the states themselves. Construction in reference primarily to local or regional transportation needs created duplicating and competing facilities in some areas and provided inadequate ones in others. Expansion necessary to serve advancing national frontiers was stimulated by extensive subsidies from the Federal Government, largely in the form of land grants. But the stress and strain of World War I brought home to us that the railroads of the country did not function as a really national system of transportation. That crisis also made plain the confusions, inefficiencies, inadequacies and dangers to our national defense and economy flowing from the patchwork railroad pattern that local interests under local law had created. 9 The demand for an integrated, efficient and coordinated system of rail transport, equal to the needs of our national economy and defense, resulted in the Transportation Act of 1920.6 In a series of decisions on particular problems, this Court defined the general purposes of that Act to be the establishment of a new federal railway o licy7 to insure adequate transportation service by means of securing a fair return on capital devoted to the service, restoration of impaired railroad credit, and regulation of rates, security issues, consolidations and mergers in the interest of the public. The tenor of all of these was to confirm the power and duty of the Interstate Commerce Commission, regardless of state law, to control rate and capital structures, physical make-up and relations between carriers, in the light of the public interest in an efficient national transportation system. Railroad Commission of Wisconsin v. Chicago, B. & Q.R. Co., 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086; New England Divisions Case, (Akron, C. & Y.R. Co. v. United States,) 261 U.S. 184, 43 S.Ct. 270, 67 L.Ed. 605; Dayton—Goose Creek R. Co. v. United States, 263 U.S. 456, 44 S.Ct. 169, 68 L.Ed. 388, 33 A.L.R. 472; Railroad Commission of California v. Southern Pac. R. Co., 264 U.S. 331, 44 S.Ct. 376, 68 L.Ed. 713; Texas & P.R. Co. v. Gulf, C. & S.F.R. Co., 270 U.S. 266, 46 S.Ct. 263, 70 L.Ed. 578.8 10 As a means to this end, the 1920 Act required9 the Commission to prepare and adopt a plan for nationwide consolidations of the railway properties of the country. It made this master plan the governing consideration in approving voluntary consolidations of railroads which were permitted only if in harmony with and in furtherance of the Commission's overall plans.10 If they met that test, Congress provided that mergers could be consummated notwithstanding any restraint or prohibition by state authority.11 11 By 1940 it had become apparent that the ambitious nation-wide plan of consolidation was not bearing fruit. Various studies and investigations12 led to the conclusion that it was a case where the best was an enemy of the good and waiting for the perfect official plan was defeating or postponing less ambitious but more attainable voluntary iprovements. The Transportation Act of 1940 relieved the Commission of formulating a nationwide plan of consolidations. Instead, it authorized approval by the Commission of carrier-initiated, voluntary plans of merger or consolidation if, subjc t to such terms, conditions and modifications as the Commission might prescribe, the proposed transactions met with certain tests of public interest, justice and reasonableness, in which case they should become effective regardless of state authority.13 The Act does not specify every consideration to which the Commission must give weight in determining whether or not any plan meets the tests. Section 5(2) provides only that 'among others,' the Commission shall consider the effect upon adequate transportation service, the effect of inclusion or failure to include other railroads, total fixed charges, and the interests of the carrier employees affected. This Court has recently and unanimously said in reference to this Act, 'Congress has long made the maintenance and development of an economical and efficient railroad system a matter of primary national concern. Its legislation must be read with this purpose in mind.' Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 68 S.Ct. 426, 430.14 12 So reading the legislation relevant to this merger, we find that approval of a voluntary railroad merger which is within the scope of the Act is dependent upon three, and upon only three, considerations: First, a finding that it 'will be consistent with the public interest.' (§ 5(2)(b).) Second, a finding that, subject to any modification made by the Commission, it is 'just and reasonable.' (§ 5(2)(b).) Third, assent of a 'majority, unless a different vote is required under applicable State law, in which case the number so required shall assent, of the votes of the holders of the shares entitled to vote.' (§ 5(11).) When these conditions have been complied with, the Commission-approved transaction goes into effect without need for invoking any approval under state authority, and the parties are relieved of 'restraints, limitations, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transactions so approved or provided for in accordance with the terms and conditions, if any, imposed by the Commission, and to hold, maintain, and operate any properties and exercise any control or franchise acquired through such transaction.' (§ 5(11).) 13 The Commission, under this Act as well as the Act of 1920, was also given complete control of the capital structure to result from a merger.15 The carrier, even if permitted by state law which creatd it, may issue no stock, bond or evidence of indebtedness without approval. It may assume no obligation in respect of the securities of another person or corporation except with approval. And the approval is to be given only on a finding that it '(a) is for some lawful object within its corporate purposes, and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the carrier of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose.' 49 U.S.C. § 20a(2), 49 U.S.C.A. § 20a(2). 14 The jurisdiction of the Commission under both § 5 and § 20a is made plenary and exclusive and independent of all other state or federal authority. § 5(11);16 § 20a(7).17 15 The Commission, as we have seen, has found that the liabilities asserted by appellants, if settled by litigation or negotiation, will not impair the carrier's ability to perform its service, but it has not found the assumption of such liabilities to be compatible with the public interest under § 5 and § 20a. Indeed, since these claims exceed what the Commission has found to be just and reasonable, it could hardly find that assumption of such claims would be compatible with the public interest. 16 It appears to us inconsistent with the Interstate Commerce Act18 for the Commission to leave claims growing out of the capital structure of one of the constituent companies to be added to the obligations of the surviving carrier, contingent upon the decision of some other tribunal or agreement of the parties themselves. We think that the Commission must pass upon and approve all capital liabilities which the merged company will assume or discharge as a result of merger. If some greater amount than that specified in the agreement is to be allowed to any class of stockholders, it must either deplete the cash or inflate the liabilities or capital issues of the new company. It may be that in this case the merged company will be strong enough to carry this burden and still perform its public service. But that is not the sole purpose of the supervision provided by statute. It is also in the public interest that no capitalization or indebtedness be carried over except that which meets the test of the Act in all other respects. We think the Commission was in error in assuming that it did not have, or was at liberty to renounce or delegate, power finally to settle the amount of capital liabilities of the new company and the proportion or amount thereof which each class of stockholders should receive on account of its contributions to the new entity. 17 We think it is equally clear that the Commission must look for standards in passing on a voluntary merger only to the Interstate Commerce Act. In matters within its scope it is the supreme law of the land. Its purpose to bring within its scope everything pertaining to the capital structures of such mergers could hardly be made more plain. Indeed, the very fact on which appellants rely heavily, that the Commission's jurisdiction is 'plenary' and 'exclusive,' argues with equal force that federal law is also plenary and exclusive. The Commission likely would not and probably could not be given plenary and exclusive jurisdiction to interpret and apply any state's law.W hatever rights the appellants ask the Commission to assure must be founded on federal, not on state, law. 18 Apart from meeting the test of the public interest, the merger terms, as to stockholders, must be found to be just and reasonable. These terms would be largely meaningless to the stockholders if their interests were ultimately to be settled by reference to provisions of corporate charters and of state laws. Such charters and laws usually have been drawn on assumptions that time and experience have unsettled. Public regulation is not obliged and we cannot lightly assume it is intended to restore values, even if promised by charter terms, if they have already been lost through the operation of economic forces. Cf. Market St. Ry. Co. v. Railroad Commission, 324 U.S. 548, 65 S.Ct. 770, 89 L.Ed. 1171. In appraising a stockholder's position in a merger as to justice and reasonableness, it is not the promise that a charter made to him but the current worth of that promise that governs, it is not what he once put into a constituent company but what value he is contributing to the merger that is to be made good. 19 In construing the words 'fair and equitable' in a federal statute of very similar purposes, we have held that although the full priority rule applies in liquidation of a solvent holding company pursuant to a federal statute, the priority is satisfied by giving each class the full economic equivalent of what they presently hold, and that, as a matter of federal law, liquidation preferences provided by the charter do not apply. We said that, although the company was in fact being liquidated in compliance with an administrative order, the rights of the stockholders could be valued 'on the basis of a going business and not as though a liquidation was taking place.' Consequently the liquidation preferences were only one factor in valuation rather than determinative of amounts payable. Otis & Co. v. Securities and Exchange Commission, 323 U.S. 624, 65 S.Ct. 483, 488, 89 L.Ed. 511. 20 The appellants here, although the enterprise is to continue, insist on a valuation according to the letter of the charter. By this method the longer their stock is in default of dividends or earnings, the greater interest it would have in the merged properties if the common stock was to be recognized at all. The Commission, however, did not consider that a long continued default and the prospect of further default added greatly to the present intrinsic or market value of the stock in exchange. Its measuring rod was an economic rather than a legalistic one. The Commission considered the stock's past yield, present market value, and future prospects. It found that, all things considered, the merger terms gave to these appellants in new stock the fair economic equivalent of what they already held. It considered the deal just and reasonable on an exchange basis for a continuing enterprise. But it did not undertake to say whether, under the letter of their charter as construed under the law of Michigan, the preferred stockholders may not have a contract that would exact more than an economic equivalent. 21 Since the federal law clearly contemplates merger as a step in continuing the enterprise, it follows that what Michigan law might give these dissenters on a winding-up or liquidation is irrelevant, except insofar as it may be reflected in current values for which they are entitled to an equivalent. It would be inconsistent to allow state law to apply a liquidation basis to what federal law designates as a basis for continued public service. Federal law requires that merger terms be just and reasonable to all groups of stockholders, in contemplation of the continued use of their capital in the public calling to which it has been dedicated. Congress has made no provision by which minority stockholders, dissatisfied with a proposed railroad merger, may block it or compel retirement of their capital, as statutes often permit to be done in the case of private corporationsw here the public interest is not much concerned with its effect on the enterprise. And since Congress dealt with the subject of stockholders' consent, its failure to provide for withdrawal of nonconsenting capital cannot be considered an oversight to be supplied by us. A part of the capital dedicated to a railroad enterprise cannot withdraw itself without authorization any more than all of the capital can withdraw itself and abandon the railroad without approval. It must submit to regulations and to readjustments in the public interest on just and reasonable terms. 22 In determining whether each class of stockholder receives an equivalent of what it turns in, the Commission, of course, is under a duty to see that minority interests are protected, especially when there is an absence of arm's length bargaining or the terms of the merger have been imposed by management interests adverse to any class of stockholders. The Commission indicates both awareness and discharge of this duty in this case. Its finding that this plan is just and reasonable is not challenged here except on the basis of Michigan law. When stockholders are given what it is just and reasonable they should have, the Interstate Commerce Act does not permit state law to impose greater obligations on the financial structure of the merging railroads with consequent increased calls upon their assets or earning capacity. 23 We therefore hold that no rights alleged to have been granted to dissenting stockholders by state law provision concerning liquidation survive the merger agreement approved by the requisite number of stockholders and approved by the Commission as just and reasonable. Any such rights are, as a matter of federal law, accorded recognition in the obligation of the Commission not to approve any plan which is not just and reasonable. In making that determination, those rights are to be considered to the extent that they may affect intrinsic or market values. While the Commission has found that what the appellants are given in this plan is just and reasonable, the record indicates that it may have declined to consider these claims, even if they are found to have some effect on the intrinsic value of the stock, because it thought it lacked jurisdiction. Under these circumstances, we cannot be sure that in arriving at its conclusion that the plan was just and reasonable it did not exclude some factors that it should consider under the views set out in this opinion. We therefore reverse the judgment below and remand the case to the Commission for reconsideration under the principles herein expressed. 24 Reversed and remanded. 25 Mr. Justice REED took no part in the consideration or decision of this case. 26 Mr. Justice FRANKFURTER, dissenting. 27 The railroads of this country are operated by not less than 693 corporations. These exist by virtue of charters granted by the several States,1 the laws of which govern their internal affairs, and, more particularly, the rights and liabilities of their stockholders. The Chesapeake & Ohio is chartered by Virginia, the Pere Marquette by Michigan. The laws of Virginia and Michigan respectively determine the conditions under which each may combine with other corporations. The votes of sufficient stockholders of these two corporations to satisfy the laws of their respective States were in favor of a voluntary agreement for the absorption of the Pere Marquette by the Chesapeake & Ohio. To consummate this agreement, however, required the authorization of the Interstate Commerce Commission under the terms of § 5(2) of the Interstate Commerce Act, as amended by the Transportation Act of 1940. The agreement provided, in short, that the total outstanding securities of the Pere Marquette, amounting to 450,460 shares of common, 124,290 of cumulative preferred, and 112,000 of prior preference, were to be exchanged for 211,429.4 shares of Chesapeake & Ohio common and 312,272.2 preferred. All but 9% of the security holders of h e Pere Marquette cumulative preferred assented to this arrangement. The appellants, holding less than 2% of that class of stock, stood on their rights under Michigan law, claiming that they were entitled to the dividends unpaid since 1931, amounting to $72.50 per share. 28 The Interstate Commerce Commission approved the proposed merger but refused to pass on the legal claims thus asserted under Michigan law by the appellants. The Commission ruled that it was not called upon to pass upon individual rights against a merged road when the potential recognition of such rights, under appropriate State law, could not affect the public interest which it is requisite for the Commission to safeguard before authorizing a merger. For the Commission held that, even if the appellants' claims were sustained by Michigan law, the amount involved would in nowise affect either the security structure or the cash position of the Chesapeake & Ohio. 29 The Chesapeake & Ohio is capitalized at $191,433,919. An additional $28,949,745 of stock is to be issued, under the merger plan, for Pere Marquette shareholders, making a total capitalization for the Chesapeake & Ohio, after merger, of $220,383,595. The appellants own 2,100 shares of Pere Marquette cumulative preferred. The merger agreement offered them securities found by the Commission to be worth $111.60 per share, or $234,360. If their claim for full book value of $172.50 per share were honored, it would amount to $362,250. This contingent liability of $127,890, the Commission concluded, did not affect its finding as to the soundness, from the point of view of the 'public interest,' of the financial structure devised and approved for this merger. The Commission further pointed out that even if 2% of each class of Pere Marquette stock—the maximum number contemplated by the agreement—were to refuse to participate, the difference between the value of the Chesapeake & Ohio shares offered to them and the book value of their Pere Marquette shares could, if required, readily be absorbed by a soundly based quarter-billion-dollar carrier. 30 Both the Chesapeake & Ohio and the Interstate Commerce Commission here urge this view of the law. The Court, however, reads the Commission's duty under the Act quite differently, although in reaching its conclusion the Commission applied its settled administrative practice. 31 I think that the Commission was right in the view it took of its powers and duties. Even if the matter were doubtful, the Court does not seem to me to give to the Commission's construction of the Act the weight to be accorded its experienced judgment, which we held in United States v. American Trucking Ass'ns, 310 U.S. 534, 549, 60 S.Ct. 1059, 1067, 84 L.Ed. 1345, to be required. Since the Commission disclaims rather than asserts a power, there is all the more reason to feel assured of its disinterestedness and to resolve ambiguity in favor of its choice of construction. 32 Until the Transportation Act of 1920, carriers, while subject to the Sherman law, 15 U.S.C.A. § 1 et seq., could combine without leave of the Interstate Commerce Commission. See Northern Securities Co. v. United States, 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679. The Transportation Act of 1920 required the authorization of the Commission for acquisition by one carrier of the control over another, to the extent defined by § 5 of the Interstate Commerce Act, as amended. By the Transportation Act of 1940, the voluntary merger of the properties of two or more carriers into one corporation was sanctioned, subject, however, to the scrutiny of the Interstate Commerce Commission for the due protection of the 'public interest.' Congress defined wt h particularity the factors that constituted the 'public interest' put into the Commission's keeping. 33 The Court now holds that State law governing the relations between State-chartered carriers and their stockholders is impliedly supplanted as to those who have refused to assent to a merger, even when the Commission finds that to leave the adjudication of those rights to the law that created them in nowise touches the 'public interest' that is the sole condition to carrying out a wholly voluntary arrangement, and even though such a voluntary arrangement by itself could not affect the rights of dissenters. I have no doubt that Congress could compel the unification of railroad properties theretofore in separate ownership and in so doing override State-created legal rights of stockholders of the constituent carriers. In the case of financially embarrassed carriers, Congress, in the exercise of its bankruptcy powers, has empowered the Interstate Commerce Commission to formulate plans of reorganization, the terms of which, if fair and equitable, may override State-created legal rights of stockholders who do not assent. In the interests of a more efficient national railroad system, Congress may accomplish like results under the Commerce Clause. But that is precisely what Congress has refused to do. It was besought to eliminate the waste and inefficiencies due to the congeries of corporate instrumentalities through which the railroads of the United States operate, by providing for compulsory consolidations. It was also besought to do away with the complexities and confusion resulting from State corporations conducting the country's interstate railroad business, by requiring federal incorporation. Congress rejected both demands. See H.R.Rep. No. 650, 66th Cong., 2d Sess., pp. 63—64. It left mergers of separate railroad properties into larger units to the will of their private owners, merely lodging a veto power in the Commission if such voluntary mergers run counter to the defined public interest. And Congress explicitly negatived the possibility of construing such supervision by the Commission as the creation, 'directly or indirectly, of a federal corporation.' 34 The Commission was charged with seeing to it that the very limited requirements of § 5(2) were observed, and to that end was given 'exclusive and plenary' authority. § 5(11). The purpose was to authorize a voluntary arrangement, to sanction an agreement, not to formulate a plan and to coerce its adoption, as is true of § 77. The law specifically enumerates the requirements that constitute the 'public interest' which the voluntary agreement must satisfy to secure the Commission's approval. These are: the effect of the proposal on the public transportation service; the effect of including or failing to include other railroads in the plan; the resulting fixed charges; and the interest of the carrier employees affected. These factors have no bearing on whether the appellants' claim should be allowed. The great difference between these requirements and the detailed and comprehensive provisions of § 77, 11 U.S.C. § 205, 11 U.S.C.A. § 205, carries a sharp legal contrast between the authorization which Congress required for voluntary mergers and the coercion of an imposed plan of reorganization in the case of insolvent roads. 35 Appropriate accommodation between federal and State interests in the construction of the Interstate Commerce Act is needlessly sacrificed by adding, to the detailed provisions whereby the Commission is merely authorized to approve voluntary mergers, an implied abrogation of State law in no respect inconsistent with such limited power of authorization, since the Commission found that survival of a claim under State law would not impinge upon 'the public interest.' It ignores the salutary principle of construction, so strikingly illustrated by the Los Angeles Terminal cases from which it was drawn, 'that the Congress may circumscribe its regulation and occupy a limited field, andt hat the intention to supersede the exercise by the state of its authority as to matters not covered by the federal legislation is not to be implied unless the Act of Congress fairly interpreted is in conflict with the law of the State.' Atchison, T. & S.F.R. Co. v. Railroad Commission, 283 U.S. 380, 392, 393, 51 S.Ct. 553, 556, 557, 75 L.Ed. 1128. See also Palmer v. Massachusetts, 308 U.S. 79, 60 S.Ct. 34, 84 L.Ed. 93. 36 Since it is needless, it is undesirable to draw in implication so destructive of State law from the Congressional scheme for allowing voluntary mergers. In fact, Congress has manifested not an intention to abrogate State law where the Commission finds no collision with the public interest; it has manifested an intention not to abrogate State law unless it interferes with carrying out an approved merger. Thus, it made the necessary proportion of assenting stockholders dependent on State law. It hardly seems congruous to provide that State law should determine when the opposition of stockholder may prevent a voluntary merger, but should have no effect on the rights which such dissenters have under State law, even where the Interstate Commerce Commission finds no national interest involved in determining and enforcing such rights. Again, while § 5(11) relieves parties to an approved merger from the restraints of other laws, 'Federal, State, or municipal,' it does so only 'insofar as may be necessary to enable them to carry into effect the transaction so approved or provided for in accordance with the terms and conditions, if any, imposed by the Commission * * *.' This paragraph further contains an expressed disclaimer of authorization of federal incorporation. The prohibition of federal incorporation surely implied a desire to retain to the fullest possible extent the ties between the States and their chartered corporations. One of the vital consequences of incorporation in a given State is the subjection of the relationship between stockholders and their corporation to the law of that State except insofar as federal law unmistakably overrides it. 37 The considerations relevant to voluntary railroad mergers sharply differ from those that control liquidations and reorganizations under § 77 of the Bankruptcy Act (See also Railroad Reorganization Act of 1948 Pub.L.No. 478, 80th Cong., 2d Sess., April 9, 1948, 11 U.S.C.A. § 208, 49 U.S.C.A. § 20b.) A railroad in reorganization is administered by a bankruptcy court which has control of all its assets. The power of dealing with all claims is inevitably concentrated in that court. In merger proceedings, however, there is no obstacle to the practice pursued by the Commission of deciding what is 'just and reasonable' and in 'the public interest' as to each class of securities, while at the same time permitting any dissenter to stand on the terms of the particular stock issue, leaving to State law to determine what those terms are, provided only that the function of the new corporation, as part of an economic and efficient national railroad system, would not be affected by allowance of such claims. The Commission has here ruled that the appellants assert an unliquidated claim against the Pere Marquette sufficiently negligible not to affect the financial position of its successor, even if it be ultimately allowed in full. I fail to see that the effect on the Chesapeake & Ohio will be any different than that of negligence claims for the same amount. Every operating railroad is likely to have such claims outstanding against it at all times. Their existence does not interfere with the consummation of a voluntary merger. A reasonable amount of contingent obligations may easily be allowed for. In any event, the determination whether or not eventual liability for contingent claims of dissenting stockholders are such as to affect 'the public interest' required to be protected by authorization of a proposed merger is precisely the function of the Interstate Commerce Commission and should appropriately bel eft to the exercise of its informed discretion. 38 The Commission has control, under § 20a, over securities, which of course it does not have over a contingent demand for compensation for loss resulting from negligence. But differences in the foundation of contingent claims do not determine their relevance to the Commission's authority in approving a merger and in leaving the determination of such claims to State law. While the rights asserted by the appellants arise out of their holding of securities, they may be paid off in cash, if their claims turn out to be well founded, and need not be satisfied out of the securities of the successor corporation. 39 Neither what Congress has written, nor what it has implied by the purpose underlying what it has written, persuades me that a power which the Commission itself has vigorously disclaimed it must now exercise. The Commission has consistently declined to adjudicate as a matter of State law—or what is now found to be federal law—contested claims not deemed relevant to its determination of 'the public interest.' E.g., Sullivan-Purchase-Service Freight Line, Inc., 38 M.C.C. 621; Jessup-Control-Safeway Trails, Inc., 39 M.C.C. 233, 241; Lee-Control; Carolina M. Exp. Lines, Inc.—Lease and Purchase—Reed, 40 M.C.C. 405, 407. See also New York Central Securities Corporation v. United States, 287 U.S. 12, 26, 27, 53 S.Ct. 45, 48, 49, 77 L.Ed. 138; Cleveland, C., C. & St. L.R. Co. v. United States, 275 U.S. 404, 414, 48 S.Ct. 189, 193, 72 L.Ed. 338. 40 The Court is holding, in essence, that while State law governs the rights of railroad stockholders before and after voluntary merger proceedings it is supplanted during such proceedings. In thus thrusting upon the Commission a jurisdiction which it itself has rejected, the Court is depriving the States of a measure of control over their own corporations when this is not required by a fair reading of the Transportation Act, and although the survival of such State law does not interfere with the national interest as found by the agency selected by Congress for determining that interest. 41 I would affirm the judgment. 42 The CHIEF JUSTICE and Mr. Justice BURTON join in this dissent. 1 Section 5 as amended provides in part as follows: '(2) (a) It shall be lawful, with the approval and authorization of the Commission, as provided in subdivision (b)— '(i) for two or more carriers to consolidate or merge their properties or franchises, or any part thereof, into one corporation for the ownership, management, and operation of the properties theretofore in separate ownership * * * '(b) Whenever a transaction is proposed under subparagraph (a), the carrier or carriers or persons seeking authority therefor shall present an application to the Commission, and thereupon the Commission shall notify the Governor of each State in which any part of the properties of the carriers involved in the proposed transaction is situated, and also such carriers and the applicant or applicants, * * * and shall afford a reasonable opportunity for interested parties to be heard. * * * If the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed transaction is within the scope of subparagraph (a) and will be consistent with the public interest, it shall enter an order approving and authorizing such transaction, upon the terms and conditions, and with the modifications, so found to be just and reasonable * * * '(c) In passing upon any proposed transaction under the provisions of this paragraph (2), the Commission shall give weight to the following considerations, among others: (1) The effect * * * upon adequate transportation service to the public; (2) the effect upon the public interest of the inclusion, or failure to include, other railroads in the territory * * *; (3) the total fixed charges resulting from the proposed transaction; and (4) the interest of the carrier employees affected. * * '(e) No transaction which contemplates a guaranty or assumption of payment of dividends or of fixed charges, shall be approved by the Commission under this paragraph (2) except upon a specific finding by the Commission that such guaranty or assumption is not inconsistent with the public interest. * * * '(4) It shall be unlawful for any person, except as provided in paragraph (2), to enter into any transaction within the scope of subparagraph (a) thereof * * * '(11) The authority conferred by this section shall be exclusive and plenary, and any carrier or corporation participating in or resulting from any transaction approved by the Commission thereunder, shall have full power (with the assent, in the case of a purchase and sale, a lease, a corporate consolidation, or a corporate merger, of a majority, unless a different vote is required under applicable State law, in which case the number so required shall assent, of the vote of the holders of the shares entitled to vote of the capital stock of such corporation at a regular meeting of such stockholders, the notice of such meeting to incu de such purpose, or at a special meeting thereof called for such purpose) to carry such transaction into effect and to own and operate any properties and exercise any control or franchises acquired through said transaction without invoking any approval under any State authority; and any carriers or other corporations, and their officers and employees and any other persons, participating in a transaction approved or authorized under the provisions of this section shall be and they are hereby relieved from the operation of the antitrust laws and of all other restraints, limitations, and prohibitions of law, Federal, State, or municipal, insofar as may be necessary to enable them to carry into effect the transaction so approved or provided for in accordance with the terms and conditions, if any, imposed by the Commission, and to hold, maintain, and operate any properties and exercise any control or franchises acquired through such transaction. Nothing in this section shall be construed to create or provide for the creation, directly or indirectly, of a Federal corporation, but any power granted by this section to any carrier or other corporation shall be deemed to be in addition to and in modification of its power under its corporate charter or under the laws of any State.' 2 For pertinent provisions of § 5 and § 20a, 49 U.S.C.A. §§ 5, 20a, see notes 1 and 15 respectively. 3 28 U.S.C. § 47, 28 U.S.C.A. § 47. 4 28 U.S.C. § 47a, 28 U.S.C.A. § 47a; 28 U.S.C. § 345, 28 U.S.C.A. § 345. 5 Act of September 18, 1940, 54 Stat. 898. 6 Act of February 28, 1920, 41 Stat. 456. 7 'It is manifest * * * that the act made a new departure. * * *' Chief Justice Taft, in Railroad Commission of Wisconsin v. Chicago, B. & Q.R. Co., 257 U.S. 563, 585, 42 S.Ct. 232, 236, 66 L.Ed. 371, 22 A.L.R. 1086. 8 In Dayton—Goose Creek R. Co. v. United States, 263 U.S. 456, 478, 44 S.Ct. 169, 172, 68 L.Ed. 388, 33 A.L.R. 472, in referring to the Wisconsin case, 257 U.S. 563, 42 S.Ct. 232, 66 L.Ed. 371, 22 A.L.R. 1086, and the New England Divisions Case, 261 U.S. 184, 43 S.Ct. 270, 67 L.Ed. 605, the late Chief Justice said: 'In both cases it was pointed out that the Transportation Act adds a new and important object to previous interstate commerce legislation which was designed primarily to prevent unreasonable or discriminatory rates against persons and localities. The new act seeks affirmatively to build up a system of railways prepared to handle promptly all the interstate traffic of the country. It aims to give the owners of the railways an opportunity to earn enough to maintain their properties and equipment in such a state of efficiency that they can carry well this burden. To achieve this great purpose, it puts the railroad systems of the country more completely than ever under the fostering guardianship and control of the Commission which is to supervise their issue of securities, their car supply and distribution, their joint use of terminals, their construction of new lines, their abandonment of old lines, and by a proper division of joint rates, and by fixing adequate rates for interstate commerce, and in case of discrimination, for intrastate commerce, to secure a fair return upon the properties of the carriers engaged.' 9 § 407(4), 49 U.S.C.A. § 5(4). 10 § 407(6)(a), 49 U.S.C.A. § 5(6)(a). 11 § 407(8), 49 U.S.C.A. § 5(8). 12 See, for example, report and recommendations by the President's Committee of Six, appointed September 20, 1938, whose report dated December 23, 1938, is considered part of the legislative history of the Transportation Act of 1940. 13 See note 1, supra. 14 The Act itself included a statement of the 'National Transportation Policy' in these terms: 'It is hereby declared to be the national transportation policy of the Congress to provide for fair and impartial regulation of all modes of transportation subject to the provisions of this Act, so administered as to recognize and preserve the inherent advantages of each; to promote safe, adequate, economical, and efficient service and foster sound economic conditions in transportation and among the several carriers; to encourage the establishment and maintenance of reasonable charges for transportation services, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices; to cooperate with the several States and the duly authorized officials thereof; and to encourage fair wages and equitable working conditions;—all to the end of developing, coordinating, and preserving a national transportation system by water, highway, and rail, as well as other means, adequate to meet the needs of the commerce of the United States, of the Postal Service, and of the national defense. All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy.' 49 U.S.C.A. preceding section 1. 15 Repeated recommendations of the Commission that the federal government occupy the field of regulation of railroad security issues and assumption of obligations were followed in 1920 by addition of § 20a to the Interstate Commerce Act (§ 439 of the Transportation Act of 1920, 41 Stat. 494). As early as 1907 the Commission had stated that 'the time has come when some reasonable regulation should be imposed upon the issuance of securities by railways engaged in interstate commerce.' 12 I.C.C. 277, 306. This recommendation was renewed in the Commission's annual report for 1907, p. 24, and in every succeeding annual report up to and including 1919. The Commission incorporated in the 1919 report the statement concerning recommended legislation it had submitted to the Senate Interstate Commerce Committee, which included a recommendation for regulation of security issues. House Report No. 456, 66th Cong., 1st Sess. (November 10, 1919), said with respect to the section which later became § 20a: '* * * The enactment of the pending bill will put the control over stock and bond issues exclusively in the hands of the Federal Government and will result in uniformity and greater promptness of action.' Section 20a as enacted in 1920 remained unchanged by the Transportation Act of 1940 and provides in part as follows: '(2) * * * it shall be unlawful for any carrier to issue any share of capital stock or any bond or other evidence of interest in or indebtedness of the carrier * * * or to assume any obligation or liability as lessor, lessee, guarantor, indorser, surety, or otherwise, in respect of the securities of any other person, natural or artificial, even though permitted by the authority creating the carrier corporation, unless and until, and then only to the extent that, upon application by the carrier, and after investigation by the commission of the purposes and uses of the proposed issue and the proceeds thereof, or of the proposed assumption of obligation or liability in respect of the securities of any other person, natural or artificial, the commission by order authorizes such issue or assumption. The commission shall make such order only if it finds that such issue or assumption: (a) is for some lawful object within its corporate purposes, and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the carrier of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose. * * * '(6) Upon receipt of any such application for authority the commission shall cause notice thereof to be given to and a copy filed with the governor of each State in which the applicant carrier operates. The railroad commissions, public service, or utilities commissions, or other appropriate State authorities of the State shall have the right to make before the commission such representations as they may deem just and proper for preserving and conserving the rights and interests of their people and the States, respectively, involved in such proceedings. The commission may hold hearings, if it sees fit, to enable it to determine its decision upon the application for authority. * * * '(7) The jurisdiction conferred upon the commission by this section shall be exl usive and plenary, and a carrier may issue securities and assume obligations or liabilities in accordance with the provisions of this section without securing approval other than as specified herein. * * *' 16 For text of § 5(11) see note 1. 17 For text of § 20a(7) see note 15. 18 In an early case (Pittsburgh & W.V.R. Co. v. Interstate Commerce Commission, 54 App.D.C. 34, 293 F. 1001, 1004, appeal dismissed 266 U.S. 640, 45 S.Ct. 124, 69 L.Ed. 483) in which the constitutionality of § 20a had been upheld, the Court said: 'If 'a fair return on capital devoted to the transportation service' (New England Divisions Case, 261 U.S. 184, 189, 43 S.Ct. 270, 273, 67 L.Ed. 605) was to be insured the railway companies, and at the same time proper service and equitable rates accorded the public, the supervision of the issuance of stock, the incurring of bonded indebtedness, the extension and consolidation of railway lines, becomes of the utmost importance. Without this power to supervise the issue of stocks and bonds, and thus limit the dividend and interest obligations of the carriers, as well as the expenditures in extensions and improvements, the fixing of adequate rates to insure a just return to the carrier, and at the same time equitable protection to the public, would be impossible. * * *' 1 According to the annual reports of Class I and Class II carriers on file with the Interstate Commerce Commission there is at present only one operating carrier chartered by Congress: the Texas and Pacific Railway. See the Act of March 3, 1871, 16 Stat. 573, as amended by the Act of February 9, 1923, 42 Stat. 1223.
910
334 U.S. 1 68 S.Ct. 836 92 L.Ed. 1161 SHELLEY et ux.v.KRAEMER et ux. McGHEE et ux. v. SIPES et al. Nos. 72, 87. Argued Jan. 15, 16, 1948. Decided May 3, 1948. Messrs. George L. Vaughn and Herman Willer, both of St. Louis, Mo., for petitioners Shelley. Messrs. Thurgood Marshall, of New York City, Loren Miller, for petitioners McGhee. Mr. Gerald L. Seegers, of St. Louis, Mo., for respondents Kraemer. Messrs. Henry Gilligan and James A. Crooks, both of Washington, D.C. for respondents Sipes and others. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for the United States, as amicus curiae, by special leave of Court. Mr. Cheif Justice VINSON delivered the opinion of the Court. 1 These cases present for our consideration questions relating to the validity of court enforcement of private agreements, generally described as restrictive covenants, which have as their purpose the exclusion of persons of designated race or color from the Basic constitutional issues of obvious importance have been raised. 2 The first of these cases comes to this Court on certiorari to the Supreme Court of Missouri. On February 16, 1911, thirty out of a total of thirty-nine owners of property fronting both sides of Labadie Avenue between Taylor Avenue and Cora Avenue in the city of St. Louis, signed an agreement, which was subsequently recorded, providing in part: 3 '* * * the said property is hereby restricted to the use and occupancy for the term of Fifty (50) years from this date, so that it shall be a condition all the time and whether recited and referred to as (sic) not in subsequent conveyances and shall attach to the land, as a condition precedent to the sale of the same, that hereafter no part of said property or any portion thereof shall be, for said term of Fifty-years, occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property for said period of time against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race.' 4 The entire district described in the agreement included fifty-seven parcels of lamd. The thirty owners who signed the agreement held title to forty-seven parcels, including the particular parcel involved in this case. At the time the agreement was signed, five of the parcels in the district were owned by Negroes. One of those had been occupied by Negro families since 1882, nearly thirty years before the restrictive agreement was executed. The trial court found that owners of seven out of nine homes on the south side of Labadie Avenue, within the restrit ed district and 'in the immediate vicinity' of the premises in question, had failed to sign the restrictive agreement in 1911. At the time this action was brought, four of the premises were occupied by Negroes, and had been so occupied for periods ranging from twenty-three to sixty-three years. A fifth parcel had been occupied by Negroes until a year before this suit was instituted. 5 On August 11, 1945, pursuant to a contract of sale, petitioners Shelley, who are Negroes, for valuable consideration received from one Fitzgerald a warranty deed to the parcel in question.1 The trial court found that petitioners had no actual knowledge of the restrictive agreement at the time of the purchase. 6 On October 9, 1945, respondents, as owners of other property subject to the terms of the restrictive covenant, brought suit in Circuit Court of the city of St. Louis prarying that petitioners Shelley be restrained from taking possession of the property and that judgment be entered divesting title out of petitioners Shelley and revesting title in the immediate grantor or in such other person as the court should direct. The trial court denied the requested relief on the ground that the restrictive agreement, upon which respondents based their action, had never become final and complete because it was the intention of the parties to that agreement that it was not to become effective until signed by all property owners in the district, and signatures of all the owners had never been obtained. 7 The Supreme Court of Missouri sitting en banc reversed and directed the trial court to grant the relief for which respondents had prayed. That court held the agreement effective and concluded that enforcement of its provisions violated no rights guaranteed to petitioners by the Federal Constitution.2 At the time the court rendered its decision, petitioners were occupying the property in question. 8 The second of the cases under consideration comes to this Court from the Supreme Court of Michigan. The circumstances presented do not differ materially from the Missouri case. In June, 1934, one Ferguson and his wife, who then owned the property located in the city of Detroit which is involved in this case, executed a contract providing in part: 9 'This property shall not be used or occupied by any person or persons except those of the Caucasian race. 10 'It is further agreed that this restriction shall not be effective unless at least eighty percent of the property fronting on both sides of the street in the block where our land is located is subjected to this or a similar restriction.' 11 The agreement provided that the restrictions were to remain in effect until January 1, 1960. The contract was subsequently recorded; and similar agreements were executed with respect to eighty percent of the lots in the block in which the property in question is situated. 12 By deed dated November 30, 1944, petitioners, who were found by the trial court to be Negroes, acquired title to the property and thereupon entered into its occupancy. On January 30, 1945, respondents, as owners of property subject to the terms of the restrictive agreement, brought suit against petitioners in the Circuit Court of Wayne County. After a hearing, the court entered a decree directing petitioners to move from the property within ninety days. Petitioners were further enjoined and restrained from using or occupying the premises in the future. On appeal, the Supreme Court of Michigan affirmed, deciding adversely to petitioners' contentions that they had been denied rights protected by the Fourteenth Amendment.3 13 Petitioners have placed primary reliance on their contentions, first raised in the state courts, that judicial enforcement of the restrictive agreements in these cases has violated rights guaranteed to petitioners by the Fourteenth Amendment of the Federal Constitution and Acts of Congress passed pursuant to that Amendment.4 Specifically, petitioners urge that they have been denied the equal protection of the laws, deprived of property without due process of law, and have been denied privileges and immunities of citizens of the United States. We pass to a consideration of those issues. I. 14 Whether the equal protection clause of the Fourteenth Amendment inhibits judicial enforcement by state courts of restrictive covenants based on race or color is a question which this Court has not heretofore been called upon to consider. Only two cases have been decided by this Court which in any way have involved the enforcement of such agreements. The first of these was the case of Corrigan v. Buckley, 1926, 271 U.S. 323, 46 S.Ct. 521, 70 L.Ed. 969. There, suit was brought in the courts of the District of Columbia to enjoin a threatened violation of certain restrictive covenants relating to lands situated in the city of Washington. Relief was granted, and the case was brought here on appeal. It is apparent that that case, which had originated in the federal courts and involved the enforcement of covenants on land located in the District of Columbia, could present no issues under the Fourteenth Amendment; for that Amendment by its terms applies only to the States. Nor was the question of the validity of court enforcement of the restrictive covenants under the Fifth Amendment properly before the Court, as the opinion of this Court specifically recognizes.5 The only constitutional issue which the appellants had raised in the lower courts, and hence the only constitutional issue before this Court on appeal, was the validity of the covenant agreements as such. This Court concluded that since the inhibitions of the constitutional provisions invoked, apply only to governmental action, as contrasted to action of private individuals, there was no showing that the covenants, which were simply agreements between private property owners, were invalid. Accordingly, the appeal was dismissed for want of a substantial question. Nothing in the opinion of this Court, therefore, may properly be regarded as an adjudication on the merits of the constitutional issues presented by these cases, which raise the question of the validity, not of the private agreements as such, but of the judicial enforcement of those agreements. 15 The second of the cases involving racial restrictive covenants was Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741. In that case, petitioners, white property owners, were enjoined by the state courts from violating the terms of a restrictive agreement. The state Supreme Court had held petitioners bound by an earlier judicial determination, in litigation in which petitioners were not parties, upholding the validity of the restrictive agreement, although, in fact, the agreement had not been signed by the number of owners necessary to make it effective under state law. This Court reversed the judgment of the state Supreme Court upon the ground that petitioners had been denied due process f law in being held estopped to challenge the validity of the agreement on the theory, accepted by the state court, that the earlier litigation, in which petitioners did not participate, was in the nature of a class suit. In arriving at its result, this Court did not reach the issues presented by the cases now under consideration. 16 It is well, at the outset, to scrutinize the terms of the restrictive agreemens involved in these cases. In the Missouri case, the covenant declares that no part of the affected property shall be (355 Mo. 814, 198 S.W.2d 681) 'occupied by any person not of the Caucasian race, it being intended hereby to restrict the use of said property * * * against the occupancy as owners or tenants of any portion of said property for resident or other purpose by people of the Negro or Mongolian Race.' Not only does the restricton seek to proscribe use and occupancy of the affected properties by members of the excluded class, but as construed by the Missouri courts, the agreement requires that title of any person who uses his property in violation of the restriction shall be divested. The restriction of the covenant in the Michigan case seeks to bar occupancy by persons of the excluded class. It provides that (316 Mich. 614, 25 N.W.2d 642) 'This property shall not be used or occupied by any person or persons except those of the Caucasian race.' 17 It should be observed that these covenants do not seek to proscribe any particular use of the affected properties. Use of the properties for residential occupancy, as such, is not forbidden. The restrictions of these agreements, rather, are directed toward a designated class of persons and seek to determine who may and who may not own or make use of the properties for residential purposes. The excluded class is defined wholly in terms of race or color.; 'simply that and nothing more.'6 18 It cannot be doubted that among the civil rights intended to be protected from discriminatory state action by the Fourteenth Amendment are the rights to acquire, enjoy, own and dispose of property. Equality in the enjoyment of property rights was regarded by the framers of that Amendment as an essential pre-condition to the realization of other basic civil rights and liberties which the Amendment was intended to guarantee.7 Thus, s 1978 of the Revised Statutes, derived from § 1 of the Civil Rights Act of 1866 which was enacted by Congress while the Fourteenth Amendment was also under consideration,8 provides: 19 'All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.'9 20 This Court has given specific recognition to the same principle. Buchanan v. Warley, 1917, 245 U.S. 60, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A.1918C, 210, Ann.Cas.1918A, 1201. 21 It is likewise clear that restrictions on the right of occupancy of the sort sought to be created by the private agreements in these cases could not be squared with the requirements of the Fourteenth Amendment if imposed by state statute or local ordinance. We do not understand respondents to urge the contrary. In the case of Buchanan v. Warley, supa, a unanimous Court declared unconstitutional the provisions of a city ordinance which denied to colr ed persons the right to occupy houses in blocks in which the greater number of houses were occupied by white persons, and imposed similar restrictions on white persons with respect to blocks in which the greater number of houses were occupied by colored persons. During the course of the opinion in that case, this Court stated: 'The Fourteenth Amendment and these statutes enacted in furtherance of its purpose operate to qualify and entitle a colored man to acquire property without state legislation discriminating against him solely because of color.'10 22 In Harmon v. Tyler, 1927, 273 U.S. 668, 47 S.Ct. 471, 71 L.Ed. 831, a unanimous court, on the authority of Buchanan v. Warley, supra, declared invalid an ordinance which forbade any Negro to establish a home on any property in a white community or any white person to establish a home in a Negro community, 'except on the written consent of a majority of the persons of the opposite race inhabiting such community or portion of the City to be affected.' 23 The precise question before this Court in both the Buchanan and Harmon cases, involved the rights of white sellers to dispose of their properties free from restrictions as to potential purchasers based on considerations of race or color. But that such legislation is also offensive to the rights of those desiring to acquire and occupy property and barred on grounds of race or color, is clear, not only from the language of the opinion in Buchanan v. Warley, supra, but from this Court's disposition of the case of City of Richmond v. Deans, 1930, 281 U.S. 704, 50 S.Ct. 407, 74 L.Ed. 1128. There, a Negro, barred from the occupancy of certain property by the terms of an ordinance similar to that in the Buchanan case, sought injunctive relief in the federal courts to enjoin the enforcement of the ordinance on the grounds that its provisions violated the terms of the Fourteenth Amendment. Such relief was granted, and this Court affirmed, finding the citation of Buchanan v. Warley, supra, and Harmon v. Tyler, supra, sufficient to support its judgment.11 24 But the present cases, unlike those just discussed, do not involve action by state legislatures or city councils. Here the particular patterns of discrimination and the areas in which the restrictions are to operate, are determined, in tne first instance, by the terms of agreements among private individuals. Participation of the State consists in the enforcement of the restrictions so defined. The crucial issue with which we are here confronted is whether this distinction removes these cases from the operation of the prohibitory provisions of the Fourteenth Amendment. 25 Since the decision of this Court in the Civil Rights Cases, 1883, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835, the principle has become firmly embedded in our constitutional law that the action inhibited by the first section of the Fourteenth Amendment is only such action as may fairly be said to be that of the States. That Amendment erects no shield against merely private conduct, however discriminatory or wrongful.12 26 We conclude, therefore, that the restrictive agreements standing alone cannot be regarded as a violation of any rights guaranteed to pt itioners by the Fourteenth Amendment. So long as the purposes of those agreements are effectuated by voluntary adherence to their terms, it would appear clear that there has been no action by the State and the provisions of the Amendment have not been violated. Cf. Corrigan v. Buckley, supra. 27 But here there was more. These are cases in which the purposes of the agreements were secured only by judicial enforcement by state courts of the restrictive terms of the agreements. The respondents urge that jjdicial enforcement of private agreements does not amount to state action; or, in any event, the participation of the State is so attenuated in character as not to amount to state action within the meaning of the Fourteenth Amendment. Finally, it is suggested, even if the States in these cases may be deemed to have acted in the constitutional sense, their action did not deprive petitioners of rights guaranteed by the Fourteenth Amendment. We move to a consideration of these matters. II. 28 That the action of state courts and of judicial officers in their official capacities is to be regarded as action of the State within the meaning of the Fourteenth Amendment, is a proposition which has long been established by decisions of this Court. That principle was given expression in the earliest cases involving the construction of the terms of the Fourteenth Amendment. Thus, in Commonwealth of Virginia v. Rives, 1880, 100 U.S. 313, 318, 25 L.Ed. 667, this Court stated: 'It is doubtless true that a State may act through different agencies,—either by its legislative, its executive, or its judicial authorities; and the prohibitions of the amendment extend to all action of the State denying equal protection of the laws, whether it be action by one of these agencies or by another.' In Ex parte Commonwealth of Virginia, 1880, 100 U.S. 339, 347, 25 L.Ed. 676, the Court observed: 'A State acts by its legislative, its executive, or its judicial authorities. It can act in no other way.' In the Civil Rights Cases, 1883, 109 U.S. 3, 11, 17, 3 S.Ct. 18, 21, 27 L.Ed. 835, this Court pointed out that the Amendment makes void 'state action of every kind' which is inconsistent with the guaranties therein contained, and extends to manifestations of 'state authority in the shape of laws, customs, or judicial or executive proceedings.' Language to like effect is employed no less than eighteen times during the course of that opinion.13 29 Similar expressions, giving specific recognition to the fact that judicial action is to be regarded as action on the State for the purposes of the Fourteenth Amendment, are to be found in numerous cases which have been more recently decided. In Twining v. New Jersey, 1908, 211 U.S. 78, 90, 91, 29 S.Ct. 14, 16, 53 L.Ed. 97, the Court said: 'The judicial act of the highest court of the state, in authoritatively construing and enforcing its laws, is the act of the state.' In Brinkerhoff—Faris Trust & Savings Co. v. Hill, 1930, 281 U.S. 673, 680, 50 S.Ct. 451, 454, 74 L.Ed. 1107, the Court, through Mr. Justice Brandeis, stated: 'The federal guaranty of due process extends to state action through its judicial as well as through its legislative, executive, or administrative branch of government.' Further examples of such declarations in the opinions of this Court are not lacking.14 30 One of the earliest applications of the prohibitions contained in the Fourteenth Amendment to action of state judicial officials occurred in cases in which Negroes had been excluded from jury service in criminal prosecutions by reason of their race or color. These cases demonstrate, also, the early recognition by this Court that state action in violation of the Amendment's provisions is equally repugnant to the constitutional commands whether directed by state statute or taken by a judicial official in the absence of statute. Thus, in Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664, this Court declared invalid a state statute restricting jury service to white persons as amounting to a denial of the equal protection of the laws to the colored defendant in that case. In the notice and opportunity to defend, has, Ex parte Virginia, supra, held that a similar discrimination imposed by the action of a state judge denied rights protected by the Amendment, despite the fact that the language of the state statute relating to jury service contained no such restrictions. 31 The action of state courts in imposing penalties or depriving parties of other substantive rights without providing adequate notice and opportunity to defen, has, of course, long been regarded as a denial of the due process of law guaranteed by the Fourteenth Amendment. Brinkerhoff-Faris Trust & Savings Co. v. Hill, supra. Cf. Pennoyer v. Neff, 1878, 95 U.S. 714, 24 L.Ed. 565.15 32 In numerous cases, this Court has reversed criminal convictions in state courts for failure of those courts to provide the essential ingredients of a fair hearing. Thus it has been held that convictions obtained in state courts under the domination of a mob are void. Moore v. Dempsey, 1923, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. And see Frank v. Mangum, 1915, 237 U.S. 309, 35 S.Ct. 582, 59 L.Ed. 969. Convictions obtained by coerced confessions,16 by the use of perjured testimony known by the prosecution to be such,17 or without the effective assistance of counsel,18 have also been held to be exertions of state authority in conflict with the fundamental rights protected by the Fourteenth Amendment. 33 But the examples of state judicial action which have been held by this Court to violate the Amendment's commands are not restricted to situations in which the judicial proceedings were found in some manner to be procedurally unfair. It has been recognized that the action of state courts in enforcing a substantive common-law rule formulated by those courts, may result in the denial of rights guaranteed by the Fourteenth Amendment, even though the judicial proceedings in such cases may have been in complete accord with the most rigorous conceptions of procedural due process.19 Thus, in American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855, enforcement by state courts of the common-law policy of the State, which resulted in the restraining of peaceful picketing, was held to be state action of the sort prohibited by the Amendment's guaranties of freedom of discussion.20 In Cantwell v. Connecticut, 1940, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352, a conviction in a state court of the common-law crime of breach of the peace was, under the circumstances of the case, found to be a violation of the Amendment's commonds relating to freedom of religion. In Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346, enforcement of the state's common-law rule relating to contempts by publication was held to be state action inconsistent with the prohibitions of the Fourteenth Amendment.21 And cf. Chicago, B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979. 34 The short of the matter is that from the time of the adoption of the Fourteenth Amendment until the present, it has been the consistent ruling of this Court that the action of the States to which the Amendment has reference, includes action of state courts and state judicial officials. Although, in construing the terms of the Fourteenth Amendment, differences have from time to time been expressed as to whether particular types of state action may be said to offend the Amendment's prohibitory provisions, it has never been suggested that state court action is immunized from the operation of those provisions simply because the act is that of the judicial branch of the state government. III. 35 Against this background of judicial construction, extending over a period of some three-quarters of a century, we are called upon to consider whether enforcement by state courts of the restrictive agreements in these cases may be deemed to be the acts of those States; and, if so, whether that action has denied these petitioners the equal protection of the laws which the Amendment was intended to insure. 36 We have no doubt that there has been state action in these cases in the full and complete sense of the phrase. The undisputed facts disclose that petitioners were willing purchasers of properties upon which they desired to establish homes. The owners of the properties were willing sellers; and contracts of sale were accordingly consummated. It is clear that but for the active intervention of the state courts, supported by the full panoply of state power, petitioners would have been free to occupy the properties in question without restraint. 37 These are not cases, as has been suggested, in which the States have merely abstained from action, leaving private individuals free to impose such discriminations as theys ee fit. Rather, these are cases in which the States have made available to such individuals the full coercive power of government to deny to petitioners, on the grounds of race or color, the enjoyment of property rights in premises which petitioners are willing and financially able to acquire and which the grantors are willing to sell. The difference between judicial enforcement and nonenforcement of the restrictive covenants is the difference to petitioners between being denied rights of property available to other members of the community and being accorded full enjoyment of those rights on an equal footing. 38 The enforcement of the restrictive agreements by the state courts courts in these cases was directed pursuant to the common-law policy of the States as formulated by those courts in earlier decisions.22 In the Missouri case, enforcement of the covenant was directed in the first instance by the highest court of the State after the trial court had determined the agreement to be invalid for want of the requisite number of signatures. In the Michigan case, the order of enforcement by the trial court was affirmed by the highest state court.23 The judicial action in each case bears the clear and unmistakable imprimatur of the State. We have noted that previous decisions of this Court have established the proposition that judicial action is not immunized from the operation of the Fourteenth Amendment simply because it is taken pursuant to the state's common-law policy.24 Nor is the Amendment ineffective simply because the particular pattern of discrimination, which the State has enforced, was defined initially by the terms of a private agreement. State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms. And when the effect of that action is to deny rights subject to the protection of the Fourteenth Amendment, it is the obligation of this Court to enforce the constitutional commands. 39 We hold that in granting judicial enforcement of the restrictive agreements in these cases, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand. We have noted that freedom from discrimination by the States in the enjoyment of property rights was among the basic objectives sought to be effectuated by the framers of theFourteenth Amendment. That such discrimination has occurred in these cases is clear. Because of the race or color of these petitioners they have been denied rights of ownership or occupancy enjoyed as a matter of course by other citizens of different race or color.25 The Fourteenth Amendment declares 'that all persons, whether colored or white, shall stand equal before the laws of the States, and, in regard to the colored race, for whose protection the amendment was primarily designed, that no discrimination shall be made against them by law because of their color.'26 Strauder v. West Virginia, supra, 100 U.S. at 307, 25 L.Ed. 664. Only recently this Court has had occasion to declare that a state law which denied equal enjoyment of property rights to a designated class of citizens of specified race and ancestry, was not a legitimate exercise of the state's police power but violated the guaranty of the equal protectin of the laws. Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269. Nor may the discriminations imposed by the state courts in these cases be justified as proper exertions of state police power.27 Cf. Buchanan v. Warley, supra. 40 Respondents urge, however, that since the state courts stand ready to enforce restrictive covenants excluding white persons from the ownership or occupancy of property covered by such agreements, enforcement of covenants excluding colored persons may not be deemed a denial of equal protection of the laws to the colored persons who are thereby affected.28 This contention does not bear scrutiny. The parties have directed our attention to no case in which a court, state or federal, has been called upon to enforce a covenant excluding members of the white majority from ownership or occupancy of real property on grounds of race or color. But there are more fundamental considerations. The rights ceated by the first section of the Fourteenth Amendment are, by its terms, guaranteed to the individual. The rights established are personal rights.29 It is, therefore, no answer to these petitioners to say that the courts may also be induced to deny white persons rights of ownership and occupancy on grounds of race or color. Equal protection of the laws is not achieved through indiscriminate imposition of inequalities. 41 Nor do we find merit in the suggestion that property owners who are parties to these agreements are denied equal protection of the laws if denied access to the courts to enforce the terms of restrictive covenants and to assert property rights which the state courts have held to be created by such agreements. The Constitution confers upon no individual the right to demand action by the State which results in the denial of equal protection of the laws to other individuals. And it would appear beyond question that the power of the State to create and enforce property interests must be exercised within the boundaries defined by the Fourteenth Amendment. Cf. Marsh v. Alabama, 1946, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265. 42 The problem of defining the scope of the restrictions which the Federal Constitution imposes upon exertions of power by the States has given rise to many of the most persistent and fundamental issues which this Court has been called upon to consider. That problem was foremost in the minds of the framers of the Constitution, and since that early day, has arisen in a multitude of forms. The task of determining whether the action of a State offends constitutional provisions is one which may not be undertaken lightly. Where, however, it is clear that the action of the State violt es the terms of the fundamental charter, it is the obligation of this Court so to declare. 43 The historical context in which the Fourteenth Amendment became a part of the Constitution should not be forgotten. Whatever else the framers sought to achieve, it is clear that the matter of primary concern was the establishment of equality in the enjoyment of basic civil and political rights and the preservation of those rights from discriminatory action on the part of the States based on considerations of race or color. Seventy-five years ago this Court announced that the provisions of the Amendment are to be construed with this fundamental purpose in mind.30 Upon full consideration, we have concluded that in these cases the States have acted to deny petitioners the equal protection of the laws guaranteed by the Fourteenth Amendment. Having so decided, we find it unnecessary to consider whether petitioners have also been deprived of property without due process of law or denied privileges and immunities of citizens of the United States. 44 For the reasons stated, the judgment of the Supreme Court of Missuri and the judgment of the Supreme Court of Michigan must be reversed. 45 Reversed. 46 Mr. Justice REED, Mr. Justice JACKSON, and Mr. Justice RUTLEDGE took no part in the consideration or decision of these cases. 1 The trial court found that title to the property which petitioners Shelley sought to purchase was held by one Bishop, a real estate dealer, who placed the property in the name of Josephine Fitzgerald. Bishop, who acted as agent for petitioners in the purchase, concealed the fact of his ownership. 2 Kraemer v. Shelley, 1946, 355 Mo. 814, 198 S.W.2d 679. 3 Sipes v. McGhee, 1947, 316 Mich 614, 25 N.W.2d 638. 4 The first section of the Fourteenth Amendment provides: 'All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.' 5 Corrigan v. Buckley, 1926, 271 U.S. 323, 330, 331, 46 S.Ct. 521, 523, 524, 70 L.Ed. 969. 6 Buchanan v. Warley, 1917, 245 U.S. 60, 73, 38 S.Ct. 16, 18, 62 L.Ed. 149, L.R.A.1918C, 210, Ann.Cas.1918A, 1201. 7 Slaughter-House Cases, 1873, 16 Wall. 36, 70, 81, 21 L.Ed. 394. See Flack, The Adoption of the Fourteenth Amendment. 8 In Oyama v. California, 1948, 332 U.S. 633, 640, 68 S.Ct. 269, 272, the section of the Civil Rights Act herein considered is described as the federal statute, 'enacted before the Fourteenth Amendment but vindicated by it.' The Civil Rights Act of 1866 was reenacted in § 18 of the Act of May 31, 1870, subsequent to the adoption of the Fourteenth Amendment. 16 Stat. 144. 9 14 Stat. 27, 8 U.S.C. § 42, 8 U.S.C.A. § 42. 10 Buchanan v. Warley, 1917, 245 U.S. 60, 79, 38 S.Ct. 16, 62 L.Ed. 149, L.R.A. 1918C, 210, Ann.Cas.1918A, 1201. 11 Courts of Georgia, Maryland, North Carolina, Oklahoma, Texas, and Virginia have also declared similar statutes invalid discussed, do not involve action by state Amendment. Glover v. Atlanta, 1918, 148 Ga. 285, 96 S.E. 562; Jackson v. State, 1918, 132 Md. 311, 103 A. 910; Clinard v. Winston-Salem, 1940, 217 N.C. 119, 6 S.E.2d 867, 126 A.L.R. 634; Allen v. Oklahoma City, 1936, 175 Okl. 421, 52 P.2d 1054; Liberty Annex Corp. v. Dallas, Tex.Civ.App. 1927, 289 S.W. 1067; Irvine v. Clifton Forge, 1918, 124 Va. 781, 97 S.E. 310. 12 And see United States v. Harris, 1883, 106 U.S. 629, 1 S.Ct. 601, 27 L.Ed. 290; United States v. Cruikshank, 1876, 92 U.S. 542, 23 L.Ed. 588. 13 Among the phrases appearing in the opinion are the following: 'the operation of state laws, and the action of state officers, executive or judicial'; 'state laws and state proceedings'; 'state law * * * or some state action through its officers or agents'; 'state laws and acts done under state authority'; 'state laws or state action of some kind'; 'such laws as the states may adopt or enforce'; 'such acts and proceedings as the states may commit or take'; 'state legislation or action'; 'state law or state authority.' 14 Neal v. Delaware, 1881, 103 U.S. 370, 397, 26 L.Ed. 567; Scott v. McNeal, 1894, 154 U.S. 34, 45, 14 S.Ct. 1108, 1112, 38 L.Ed. 896; Chicao , B. & Q.R. Co. v. Chicago, 1897, 166 U.S. 226, 233—235, 17 S.Ct. 581, 583, 584, 41 L.Ed. 979; Hovey v. Elliott, 1897, 167 U.S. 409, 417, 418, 17 S.Ct. 841, 844, 42 L.Ed. 215; Carter v. Texas, 1900, 177 U.S. 442, 447, 20 S.Ct. 687, 689, 44 L.Ed. 839; Martin v. Texas, 1906, 200 U.S. 316, 319, 26 S.Ct. 338, 50 L.Ed. 497; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 35, 36, 28 S.Ct. 7, 12, 52 L.Ed. 78, 12 Ann.Cas. 757; Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 286, 287, 33 S.Ct. 312, 314, 57 L.Ed. 510; Prudential Ins. Co. v. Cheek, 1922, 259 U.S. 530, 548, 42 S.Ct. 516, 524, 66 L.Ed. 1044, 27 A.L.R. 27; American Ry. Exp. Co. v. Kentucky, 1927, 273 U.S. 269, 274, 47 S.Ct. 353, 355, 71 L.Ed. 639; Mooney v. Holohan, 1935, 294 U.S. 103, 112, 113, 55 S.Ct. 340, 341, 342, 79 L.Ed. 791, 98 A.L.R. 406; Hansberry v. Lee, 1940, 311 U.S. 32, 41, 61 S.Ct. 115, 117, 85 L.Ed. 22, 132 A.L.R. 741. 15 And see Standard Oil Co. v. Missouri, 1912, 224 U.S. 270, 281, 282, 32 S.Ct. 406, 409, 56 L.Ed. 760, Ann.Cas.1913D, 936; Hansberry v. Lee, 1940, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22, 132 A.L.R. 741. 16 Brown v. Mississippi, 1936, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Chambers v. Florida, 1940, 309 U.S. 227, 60 S.Ct. 472, 84 L.Ed. 716; Ashcraft v. Tennessee, 1944, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192; Lee v. Mississippi, 1948, 332 U.S. 742, 68 S.Ct. 300. 17 See Mooney v. Holohan, 1935, 294 U.S. 103, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406; Pyle v. Kansas, 1942, 317 U.S. 213, 63 S.Ct. 177, 87 L.Ed. 214. 18 Powell v. Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Williams v. Kaiser, 1945, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Tomkins v. Missouri, 1945, 323 U.S. 485, 65 S.Ct. 370, 89 L.Ed. 407; DeMeerleer v. Michigan, 1947 329 U.S. 663, 67 S.Ct. 596. 19 In applying the rule of Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 144 A.L.R. 1487, it is clear that the common-law rules enunciated by state courts in judicial opinions are to be regarded as a part of the law of the State. 20 And see Bakery Drivers Local v. Wohl, 1942, 315 U.S. 769, 62 S.Ct. 816, 86 L.Ed. 1178; Cafeteria Employees Union v. Angelos, 1943, 320 U.S. 293, 64 S.Ct. 126, 88 L.Ed. 58. 21 And see Pennekamp v. Florida, 1946, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295; Craig v. Harney, 1947, 331 U.S. 367, 67 S.Ct. 1249. 22 See Swain v. Maxwell, 1946, 355 Mo. 448, 196 S.W.2d 780; Koehler v. Rowland, 1918, 275 Mo. 573, 205 S.W. 217, 9 A.L.R. 107. See also Parmalee v. Morris, 1922, 218 Mich. 625, 188 N.W. 330, 38 A.L.R. 1180. Cf. Porter v. Barrett, 1925, 233 Mich. 373, 206 N.W. 532, 42 A.L.R. 1267. 23 Cf. Home Telephone and Telegraph Co. v. Los Angeles, 1913, 227 U.S. 278, 33 S.Ct. 312, 57 L.Ed. 510; Raymond v. Chicago Union Traction Co., 1907, 207 U.S. 20, 28 S.Ct. 7, 52 L.Ed. 78, 12 Ann.Cas. 757. 24 Bridges v. California, 1941, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346; American Federation of Labor v. Swing, 1941, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855. 25 See Yick Wo v. Hopkins, 1886, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664; Truax v. Raich, 1915, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283. 26 Restrictive agreements of the sort involved in these case have been used to exclude other than Negroes from the ownership or occupancy of real property. We are informed that such agreements have been directed against Indians, Jews, Chinese, Japanese, Mexicans, Hawaiians, Puerto Ricans, and Filipinos, among others. 27 See Bridges v. California, 1941, 314 U.S. 252, 261, 62 S.Ct. 190, 193, 86 L.Ed. 192, 159 A.L.R. 1346; Cantwell v. Connecticut, 1940, 310 U.S. 296, 307, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213, 128 A.L.R. 1352. 28 It should be observed that the restrictions relating to residential occupancy contained in ordinances involved in the Buchanan, Harmon and Deans cases, cited supra, and declared by this Court to be inconsistent with the requirements of the Fourteenth Amendment, applied equally to white persons and Negroes. 29 McCabe v. Atchison, Topeka & Santa Fe R. Co., 1914, 235 U.S. 151, 161—162, 35 S.Ct. 69, 71, 59 L.Ed. 169; Missouri ex rel. Gaines v. Canada, 1938, 305 U.S. 337, 59 S.Ct. 232, 83 L.Ed. 208; Oyama v. California, 1948, 332 U.S. 633, 68 S.Ct. 269. 30 Slaughter-House Cases, 1873, 16 Wall 36, 81, 21 L.Ed. 394; Strauder v. West Virginia, 1880, 100 U.S. 303, 25 L.Ed. 664. See Flack, The Adoption of the Fourteenth Amendment.
12
334 U.S. 62 68 S.Ct. 972 92 L.Ed. 1212 REPUBLIC NATURAL GAS CO.v.STATE OF OKLAHOMA et al. No. 134. Argued Jan. 6, 1948. Decided May 3, 1948. Appeal from the Supreme Court of the State of Oklahoma. Messrs. Robert M. Rainey, of Oklahoma City, Okl., and John F. Eberhardt, of Wichita, Kan., for appellant. Mr. Earl Pruet, of Oklahoma City, Okl., for appellees. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This is an appeal from a decision of the Supreme Court of Oklahoma, arising from an order of the State Corporation Commission which concerned the correlative rights of owners of natural gas drawn from a common source. 2 Since 1913, Oklahoma has regulated the extraction of natural gas, partly to prevent waste and partly to avoid excessive drainage as between producers sharing the same pool. The legislation provided that owners might take from a common source amounts of gas proportionate to the natural flow of their respective wells, but not more than 25% of that natural flow without the consent of the Corporation Commission; that any person taking gas away from a gas field, except for certain specified purposes, 'shall take ratably from each owner of the gas in proportion to his interest in said gas'; and that such ratable taking was to be upon terms agreed upon by the various well owners, or, in the event of failure to agree, upon terms fixed by the Corporation Commission.1 3 The Hugoton Gas Field is one of the largest in the United States, covering a vast area in several States, including Oklahoma. It was discovered in 1924 or 1925, but the Oklahoma portion was not developed until 1937. Republic, a Delaware corporation, obtained permission to do business in Oklahoma in 1938, purchased gas leases in this field and drilled wells, removing the gas in its own pipelines. In 1944, the Peerless Oil and Gas Company completed a well in a portion of the gas field otherwise tapped only by Republic. It had no market for the gas obtained from this well, nor means of transporting such gas to any market. It offered to sell the gas to Republic, which refused it. Peerless then applied to the Corporation Commission for an order requiring Republic to take such gas from it 'ratably'—that is, to take the same proportion of the natural flow of Peerless' well as Republic took of the natural flow of its own wells. After a hearing, the Commission found that the production of natural gas in the Hugoton field was in excess of the market demand; that Republic had qualified to do business in Oklahoma with full knowledge of the existing legislation requiring the ratable taking of natural gas; and that Republic was taking more than its ratable share of gas from that portion of the field tapped both by its wells and that belonging to Peerless, thereby draining gas away from Peerless' tract and, in effect, taking property belonging to Peerless. The Commission ordered Republic: 4 '1. * * * to take gas ratably from applicant's (Peerless') well * * *, and to make necessary connection as soon as applicant lays a line connecting said well with respondent's (Republic's) line, and to continue to do so until the further order of this Commission; provided that, applicant shall lay its line from its well to the lines of respondent at some point designated by the respondent, but in said Section 14 in which said well of Peerless Oil and Gas Company has been drilled; and said respondent is required to make said designation immediately and without unreasonable delay, and in event of failure of respondent so to do, respondent shall no longer be permitted to produce any of its wells located in the Hugoton Oklahoma Gas Field. 5 '2. The terms and conditions of such taking of natural gas by Republic Natural Gas Company from said Peerless Oil and Gas Company's well shall be determined and agreed upon by and between applicant and respondent; and in the event said parties are unable to agree, applicant and respondent are hereby granted the right to make further application to the Commission for an order fixing such terms and conditions; and the Commission retains jurisdiction hereof for said purpose.' 6 On appeal, the Oklahoma Supreme Court affirmed, holding that Republic, having been given leave to enter the State on the basis of the legislation governing natural gas production, might not challenge its validity, and that neither the order nor the legislation on which it is based runs counter to asserted constitutional rights. 198 Okl. 350, 180 P.2d 1009. The court interpreted the Commission's order as giving Republic 'a choice between taking the gas from Peerless and paying therefor direct, or marketing the gas and accounting to Peerless therefor, or to shut in its own production from the same common source of supply.' 198 Okl. at page 356, 180 P.2d at page 1016. Invoking both the Due r ocess and the Equal Protection clauses of the Fourteenth Amendment, Republic appealed to this Court. 7 This case raises thorny questions concerning the regulation of fugacious minerals, of moment both to States whose economy is especially involved and to the private enterprises which develop these natural resources. Cf. Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 57 S.Ct. 364, 81 L.Ed. 510; Railroad Commission of Texas v. Rowan & Nichols Oil Co., 310 U.S. 573, 60 S.Ct. 1021, 84 L.Ed. 1368, Id., 311 U.S. 570, 61 S.Ct. 343, 85 L.Ed. 358. Before reaching these constitutional issues, we must determine whether or not we have jurisdiction to do so. 8 Ever since 1789, Congress has granted this Court the power of review in State litigation only after 'the highest court of a State in which a decision in a suit could be had' has rendered a 'final judgment or decree.' § 237 of the Judicial Code, 28 U.S.C. § 344, 28 U.S.C.A. § 344, rephrasing § 25 of the Act of September 24, 1789, 1 Stat. 73, 85. Designed to avoid the evils of piecemeal review, this reflects a marked characteristic of the federal judicial system, unlike that of some of the States. This prerequisite for the exercise of the appellate powers of this Court is especially pertinent when a constitutional barrier is asserted against a State court's decision on matters peculiarly of local concern. Close observance of this limitation upon the Court is not regard for a strangling technicality. History bears ample testimony that it is an important factor in securing harmonious State-federal relations. 9 No self-enforcing formula defining when a judgment is 'final' can be devised. Tests have been indicated which are helpful in giving direction and emphasis to decision from case to case. Thus, the requirement of finality has not been met merely because the major issues in a case have been decided and only a few loose ends remain to be tied up—for example, where liability has been determined and all that needs to be adjudicated is the amount of damages. Bruce v. Tobin, 245 U.S. 18, 38 S.Ct. 7, 62 L.Ed. 123; Martinez v. International Banking Corp., 220 U.S. 214, 223, 31 S.Ct. 408, 411, 55 L.Ed. 438; Mississippi Central R. Co. v. Smith, 295 U.S. 718, 55 S.Ct. 830, 79 L.Ed. 1673. On the other hand, if nothing more than a ministerial act remains to be done, such as the entry of a judgment upon a mandate, the decree is regarded as concluding the case and is immediately reviewable. Board of Commissioners v. Lucas, 93 U.S. 108, 23 L.Ed. 822; Mower v. Fletcher, 114 U.S. 127, 5 S.Ct. 799, 29 L.Ed. 117. 10 There have been instances where the Court has entertained an appeal of an order that otherwise might be deemed interlocutory, because the controversy had proceeded to a point where a losing party would be irreparably injured if review were unavailing. Cf. Clark v. Williard, 294 U.S. 211, 55 S.Ct. 356, 79 L.Ed. 865, 98 A.L.R. 347; Gumbel v. Pitkin, 113 U.S. 545, 5 S.Ct. 616, 28 L.Ed. 1128 and compare Forgay v. Conrad, 6 How. 201, 204, 12 L.Ed. 404, with Barnard v. Gibson, 7 How. 650, 657, 12 L.Ed. 857. For related reasons, an order decreeing immediate transfer of possession of physical property is final for purposes of review even though an accounting for profits is to follow. In such cases the accounting is deemed a severed controversy and not part of the main case. Forgay v. Conrad, supra; Carondelet Canal & Navigation Co. v. Louisiana, 233 U.S. 362, 34 S.Ct. 627, 58 L.Ed. 1001; Radio Station WOW v. Johnson, 326 U.S. 120, 65 S.Ct. 1475, 89 L.Ed. 2092. But a decision that a taking by eminent domain is for a public use, where the amount of compensation has not been determined, is not deemed final, certainly where the property will not change hands until after the award of compensation. Grays Harbor Logging Co. v. Coats-Fordney Logging Co., 243 U.S. 251, 37 S.Ct. 295, 61 L.Ed. 702; cf. Luxton v. North River Bridge Co., 147 U.S. 337, 13 S.Ct. 356, 37 L.Ed. 194; Catlin v. United States, 324 U.S. 229, 6 S.Ct. 631, 89 L.Ed. 911.2 One thing is clear. The considerations that determine finality are not abstractions but have reference to very real interests—not merely those of the immediate parties but, more particularly, those that pertain to the smooth functioning of our judicial system. 11 On which side of the line, however faint and faltering at times, dividing judgments that were deemed 'final' from those found not to be so, does the judgment before us fall? The order of the Oklahoma Corporation Commission, as affirmed below, terminates some but not all issues in this proceeding. Republic is required to take ratably from Peerless, but it may do so in any one of three ways. If, as is most probable, Republic would choose not to close down its own wells, under the Commission's order it must allow Peerless to connect its well to Republic's pipeline. But there has been left open for later determination, in event of failure to reach agreement, the terms upon which Republic must take the gas, the rates which it must pay on purchase, or may charge if it sells as agent of Peerless. Does either its alternative character, or the fact that it leaves matters still open for determination, so qualify the order as to make it short of 'final' for present review? 12 We turn first to the latter point. Certainly what remains to be done cannot be characterized as merely 'ministerial.' Whether or not the amount of gas to be taken by Republic from Peerless can be ascertained through application of a formula, the determination of the price to be paid for the gas if purchased, or the fees to be paid to Republic for marketing it if sold on behalf of Peerless, clearly requires the exercise of judgment.3 Nor is there any immediate threat of irreparable damage to Republic, rendering postponed review so illusory as to make the decree 'final' now or never. The Commission's order requires Republic to designate a point on its pipeline at which Peerless might attach a line, and after Peerless had done so to connect it immediately. But it does not appear that the order requires Republic to commence taking Peerless' gas before the terms of taking have either been agreed upon or ordered by the Commission. Nor does it appear that Republic would have to bear the expense of connecting the pipeline, nor that such expense would be substantial. Indeed, the incurring of some loss, before a process preliminary to review nere is exhausted, is not in itself sufficient to authorize our intervention. Cf. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50—52, 58 S.Ct. 459, 463, 464, 82 L.Ed. 638. But even if the Commission's order were construed to require Republic to take and dispose of Peerless' gas immediately—and we are not so advised by the State Court—there is no ground for assuming that any loss that Republic might incur could not be recovered should the completed direction of the Oklahoma Commission, on affirmance by that State's Supreme Court ultimately be found to be unconstitutional. Merely because a party to a litigation may be temporarily out of pocket, is not sufficient to warrant immediate review of an incomplete State judgment. Appellant, of course, has the burden of affirmatively establishing this Court's jurisdiction. Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 651, 62 S.Ct. 857, 859, 86 L.Ed. 1090. The policy against premature constitutional adjudications demands that any doubts in maintaining this burden be resolved against jurisdiction. See citation of cases in the concurring opinion of Mr. Justice Brandeis in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 341, 345, 348, 56 S.Ct. 466, 480, 482, 483, 80 L.Ed. 688. 13 The condemnation precedents attract this case more persuasively than do the accounting cases. Where it is claimed that a decree transferring property overrides an asserted federal right, as in Forgay v. Conrad, supra, and Radio Station WOW v. Johnson, supra, no disposition of the subsequent accounting proceeding can possibly make up for the defeated party's loss, since the party who has lost the property must also pay to his opponent what the accounting decrees. Hence his desire to appeal the issue of the right to the property will almost certainly persist. On the other hand, in an eminent domain case, as in a case like this, the fate of the whole litigation may well be affected by the fate of the unresolved contingencies of the litigation. An adequate award in an eminent domain case or a profitable rate in the case before us might well satisfy the losing party to acquiesce in the disposition of the earlier issue. It is of course not our province to discourage appeals. But for the soundest of reasons we ought not to pass on constitutional issues before they have reached a definitive stop. Another similarity between this case and the condemnation cases calls for abstention until what is organically one litigation has been concluded in the State. It is that the matters left open may generate additional federal questions. This brings into vivid relevance the policy against fragmentary review. In accounting cases, that which still remains to be litigated can scarcely give rise to new federal questions. The policy against fragmentary review has therefore little bearing. But contests over valuation in eminent domain cases, as price-fixing in this type of case, are inherently provocative of constitutional claims. This potentiality of additional federal questions arising out of the same controversy has led this Court to find want of the necessary finality of adjudicated constitutional issues in condemnation decrees before valuation has been made. Like considerations are relevant here. 14 In short, the guiding considerations for determining whether the decree of the court below possesses requisite finality lead to the conclusion that this case must await its culmination in the judicial process of the State before we can assume jurisdiction. 'Only one branch of the case has been finally disposed of below; therefore none of it is ripe for review by this court.' Collins v. Miller, 252 U.S. 364, 371, 40 S.Ct. 347, 350, 64 L.Ed. 616. This makes it unnecessary to consider whether the mere fact that the decree gave alternative commands precluded it from being final. Cf. Paducah v. East Tennessee Tel.Co., 229 U.S. 476, 33 S.Ct. 816, 57 L.Ed. 1286; Jones' Adm'r v. Craig, 127 U.S. 213, 8 S.Ct. 1175, 32 L.Ed. 147; Note, 48 Harv.L.Rev. 302, 305—306. Since the judgment now appealed from lacks the necessary finality, we cannot consider the merits. All of Republic's constitutional objections are of course saved. 15 Appeal dismissed. 16 Mr. Justice DOUGLAS, concurring. 17 The judgment of the Oklahoma court is not 'final' merely because it establishes that Republic has no right to drain away the Peerless gas without paying for it. I think it would be conceded that, even so, the judgment would not be 'final' if it offered appellant three alternative ways to comply and there were doubts as to the constitutionality of any one of them. Then we would wait to see which of the alternatives was ultimately selected or imposed before reviewing the constitutionality of any of them. But there would be no more reason to defer decision on the merits in that case than in this. For the constitutional questions would be isolated in each and we woud be as uncertain in one as in the other which of the alternatives would actually apply to appellant. And the principle seems to me to be the same even when a majority of us would sustain the order whatever alternative was chosen as its sanction. 18 There is, of course, in the one case the chance of saving the order only if one remedy rather than another is chosen, while in the other the order would survive whichever was chosen. But in each we would be giving needless constitutional dissertations on some points. That is nontheless true in a case where the constitutional questions seem to a majority of us simple, uncomplicated and of no great dignity. For the single constitutional question necessary for decision will not be isolated until the precise pinch of the order on the appellant is known. It will not be known in the present case at least until appellant elects or is required (1) to shut down, (2) to become a carrier of the Peerless gas, or (3) to purchase it. 19 The legal, as well as the economic, relationship which Republic will bear to Peerless will vary as one or another choice is made. To make Republic a 'carrier' is to submit it to different business risks than to make it a 'purchaser.' The fact that each would raise only questions of 'due process' under the Fourteenth Amendment does not mean that the questions are identical. Even when reasonableness is the test, judges have developed great contrariety of opinions. The point is that today the variables are presented only in the abstract. Tomorrow the facts will be known, when the precise impact of the order on appellant will be determined. Thus to me the policy against premature constitutional adjudication precludes us from saying the judgment in the present case is 'final.' 20 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK, Mr. Justice MURPHY, and Mr. Justice BURTON join, dissenting. 21 I think the Oklahoma Supreme Court's judgment is final for the purposes of § 237 of the Judicial Code, 28 U.S.C. § 344, 28 U.S.C.A. § 344, that the state commission's order is valid, and that deferring decision on the merits to some indefinite future time will only prolong an already lengthy litigation unnecessarily and with possible irreparable harm to one party or the other. 22 Appellant, Republic Natural Gas Company, has operated gas wells in the Hugoton Gas Field for many years. It was the first major producer to exploit the Oklahoma portion of the field,1 having constructed its own gathering system and pipe lines extending from Oklahoma into Kansas. With only minor exceptions Republic has never carried any but its own gas in its pipe lines.2 198 Okl. at page 352, 180 P.2d 1009. 23 In 1944 appellee, Peerless Company, completed its only well in Oklahoma, in the Hugoton field. This well is not connected to any pipe line. It therefore presently lies dormant. Surrounding Republic wells drilled into the same reservoir concededly are draining gas constantly from under the Peerless land.3 Except for the part of Republic's gathering system which runs across the Peerless land, no market outlet that would take sufficient gas to justify production of the Peerless well is close enough to make it financially practical for Peerless to construct its own pipe line. It is undisputed that the only feasible method of producing the well is to require Republic to take Peerless gas into its gathering system.4 24 For this reason Peerless applied to the Oklahoma Corporate Commission for an order compelling Republic to connect its pipe line to the Peerless well and to purchase gas from Peerless at a price to be fixed by the commission. After hearing, the commission concluded that the applicable Oklahoma statutes5 required it to enforce ratable taking and ratable production of gas as between Republic and Peerless. 25 The commission recognized alternative methods of protecting Peerless from loss due to drainage, first by ordering all wells in the area to shut down completely, and second by ordering Republic to purchase from Peerless. Since the first method was considered harsh, the second was preferred. Accordingly the commission issued an order requiring Republic to take gas ratably from the Peerless well as soon as the necessary connection could be made, allowing it, however, the alternative of closing down all of its wells in the Oklahoma portion of the field if it preferred this to taking the Peerless gas. The terms and conditions of the taking were to be determined by the parties; but, in the event of failure to agree, they were 'granted the right to make further application to the Commission for an order fixing such terms and conditions * * *.'6 The taking, however, was not to await this agreement or further order; it was to begin at once.7 26 Affirming the order, the Supreme Court of Oklh oma construed the state statutes to authorize the administrative action. 198 Okl. 350, 180 P.2d 1009. The case thus presents on the merits the question whether a state, as a means of adjusting private correlative rights in a common reservoir, has the power in such circumstances as these to compel one private producer to share his market with another, when otherwise his production would drain off that other's ratable share of the gas in place and thus appropriate it to himself. I. 27 The majority consider that the proceedings in the state tribunals have not terminated in a final judgment from which appeal to this Court lies, and therefore refuse to adjudicate this question. 28 In the strictest sense the state proceedings will not be completed until the parties have agreed upon the terms and conditions of Republic's taking of gas from Peerless or, if they do not agree, until the commission has issued an additional order fixing those terms. Since it is not certain that the parties will agree, the possibility remains that a further order may be required before all phases of the controversy are disposed of. It is this possibility, as I think a remote one, which furnishes one of the grounds for concluding that the Oklahoma court's judgment is not final within the meaning and policy of § 237. 29 The fact that all phases of the litigation are not concluded does not necessarily defeat our jurisdiction. This is true, although as recently as Gospel Army v. Los Angeles, 331 U.S. 543, 67 S.Ct. 1428, 91 L.Ed. 1662, we reiterated that, for a judgment to be final and reviewable under § 237, 'it must end the litigation by fully determining the rights of the parties, so that nothing remains to be done by the trial court 'except the ministerial act of entering the judgment which the appellate court * * * directed." 331 U.S. at page 546, 67 S.Ct. at page 1430. This is the general rule, grounded in a variety of considerations reflected in the statutory command8 and coming down to the sum that, in exercising the jurisdiction conferred by § 237, this Court is not to be concerned with reviewing inconclusive, piecemeal, or repetitious determinations. The Gospel Army case represents a typical instance for applying the terms and the policy of § 237.9 But not every decision by a state court of last resort leaving the controversy open to further proceedings and orders is either inconclusive of the issues or premature for purposes of review under § 237. This appears most recently from the decision in Radio Station WOW v. Johnson, 326 U.S. 120, 65 S.Ct. 1475, 89 L.Ed. 2092, which applied a settled line of authorities to that effect. Cf. Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156, 91 L.Ed. 80. 30 In such cases the formulation of the test of finality made in the Gospel Army and like decisions has not been followed. Instead that question, in the special circumstances, has been treated as posing essentially a practical problem, not one to be determined either by the label attached to the state court judgment by local law, Richfield Oil Corp. v. State Board of Equalization, supra, or by the merely mechanical inquiry whether some further order or proceeding beyond 'the ministerial act of entering the judgment' may be had or necessary after our decision is rendered. Radio Station WOW v. Johnson, supra, 326 U.S. at page 125, 65 S.Ct. at page 1478. 31 The WOW opinion noted that the typical case for applying the broader, less e chanical approach to the question of finality had involved judgments directing the immediate delivery of property, to be followed by an accounting decreed in the same order. It stated, with reference to these and like situations: 'In effect, such a controversy is a multiple litigation allowing review of the adjudication which is concluded because it is independent of, and unaffected by, another litigation with which it happens to be entangled.' 326 U.S. at page 126, 65 S.Ct. at page 1479. Accordingly, since the two phases of the controversy were separate and distinct, we exercised our jurisdiction to determine the federal questions involved in the phase concluded by the state court's decision. This was done, although the judgment required further and possibly extensive judicial proceedings before the other and separable phase of the accounting could reach a final determination.10 Those further proceedings involved very much more than 'ministerial acts'; indeed the determination of a complicated accounting requires the highest order of judicial discretion. 32 Notwithstanding this and despite the want of strict finality, jurisdiction was sustained bcause a number of factors were felt to require that action in order to give effect to the policy of § 237 providing for review, rather than to a merely mechanical application of its terms for denying review. 33 There was nothing tentative or inconclusive about the Nebraska court's judgment for immediate delivery of the property. Nor was it necessary to execution of that phase of the judgment to have contemporaneous conclusion of the accounting phase. Except for the latter, the judgment was ripe for review. Indeed immediate execution without review of the federal questions affecting the delivery phase until after the accounting had been completed, offered the possibility of irreparable harm to one or possibly both of the parties. This factor obviously tended to make later full review partly or wholly futile. Moreover, until the delivery phase had been settled, it could not be known whether the accounting would be necessary, for that need was consequentially incident to and dependent upon determination of the core of the litigation, which was the right to delivery. 34 In these circumstances it was rightly considered more consistent with the intent and purpose of § 237 to allow immediate review, notwithstanding the possibility of a later further review in the accounting phase, than to deny review with the chance that a later one might not fully save the parties' rights. The section's policy to furnish full, adequate and prompt review outweighed any design to secure absolute and literal 'finality.' 35 In all these respects this case presents a parallel to the WOW case too close, in my opinion, for distinguishing between them. Republic is not directed to negotiate terms and on completing the negotiation to make its facilities available to Peerless. It is ordered to make a connection with Peerless and to begin carrying gas at once. That phase of the order, like the delivery phase in the accounting cases, does not await the fixing of the terms whether by agreement or by further order.11 It is a present obligation, effective immediately and without qualification.12 See Knox Nat. Farm Loan Ass'n v. Phillips, 300 U.S. 194, 198, 57 S.Ct. 418, 420, 81 L.Ed. 599, 108 A.L.R. 738. 36 Moreover there is nothing tentative or inconclusive about this phase of the order or the state judgment sustaining it. That phase not only is separable from the matter of fixing the terms; like the order for delivery in the WOW case, it is the main core of the controversy to which the aspect of fixing terms is both consequential and incidental. The WOW order required immediate delivery of property, with consequent possibility of irreparable harm. Here the order required immediate acceptance of delivery, with similar possibility of injury for one party or the other.13 37 Neither is there greater likelihood of piecemeal consideration of constitutional and other questions than in the WOW case. Cf. 326 U.S. at page 127, 65 S.Ct. at page 1480. The matter of fixing terms here hardly can be more difficult practically or more complex legally than making the accounting in the WOW case.14 It is hard also to see how one would be either more or less likely to throw up new constitutional issues than the other. Nor can the WOW case be taken to rule that this Court could not or would not consider constitutional issues arising on the accounting phase, unlikely though the necessity for its doing so may have been. There is thus a substantially complete parallel between the situation now presented and that in the WOW line of cases. 38 In one respect this case is stronger for finding appealable finality. For here no further order may be necessary or made, since present resolution of the basic constitutional problem in all probability will end the entire controversy. That certainly would be the result if the decision should go against Peerless or if Republic should elect to shut down production. And if the decision should be in Peerless' favor, it is hardly likely that the parties will be unable to agree upon terms since, in case of failure to agree, the commission will prescribe them.15 The case indeed is not basically a controversy over terms at all. They present only a contingent, collateral matter. What is fundamentally at stake is the right of Republic to take the gas from beneath Peerless' land and market it without paying Peerless for it. Once that question is finally determined, as it can be only by this Court's decision of the constitutional question, the need for a further order will become highly improbable. 39 This case therefore is one in which the need for further proceedings may never arise and almost certainly would not do so if the constitutional question were now determined. Indeed, in a closer factual application that the WOW case, it presents in the jurisdictional aspect an almost exact parallel to the order reviewed in Pierce Oil Corp. v. Phoenix Refining Co., 259 U.S. 125, 42 S.Ct. 440, 66 L.Ed. 855, where the Oklahoma commission required the appellant to carry oil for the appellee at unspecified rates. Cf. Gulf Refining Co. v. United States, 269 U.S. 125, 46 S.Ct. 52, 70 L.Ed. 195; Clark v. Williard, 292 U.S. 112, 54 S.Ct. 615, 78 L.Ed. 1160. 40 The parallel to the WOW line of decisions, however, is put aside and this case is decided by analogy to condemnation cases, particularly Grays Harbor Logging Co. v. Coats-Fordney Logging Co., 243 U.S. 251, 37 S.Ct. 295, 61 L.Ed. 702. The analogy is inapposite. It is true that in such cases this Court generally, though not uniformly,16 has held that the trial court judgment is not final until after the award of compensation is made. The decisions were properly rendered, but for reasons not applicable here. In the Grays Harbor case the state constitution and controlling legislation prohibited the transfer of the condemned property until after the compensation had been determined and paid. Thus the issue of the right to take was necessarily dependent for final resolution on the determination of the amount of compensation.17 The controversy was not separable into distinct phases as in the WOW case and here. 243 U.S. at page 256, 37 S.Ct. at page 297.18 Nor had the state judgment already affected the appellant's property rights, as was true in the WOW case and is true here. 41 In Catlin v. United States, 324 U.S. 229, 65 S.Ct. 631, 89 L.Ed. 911, the question of the right to take was settled conclusively below before the award of damages was fixed. But there to have permitted an appeal from the order transferring possession would have produced delays inconsistent with the overriding purpose and policy of the War Purposes and Declaration of Taking Acts. 26 Stat. 316, as amended by 40 Stat. 241, 518, 50 U.S.C.A. § 171; 46 Stat. 1421, 40 U.S.C.A. §§ 258a—258e. 324 U.S. at pages 235, 238, 240, 65 S.Ct. at pages 634, 636, 637. Here the converse is true, for to refuse to pass on the merits can serve only to prolong the litigation without compensating advantage for the policy of § 237 or other enactment. There is no overriding policy of independent legislation, comparable to that of the War Purposes and Declaration of Taking Acts, dictating denial or deferring of review. 42 The asserted analogy to the Grays Harbor, Catlin and Luxton (see note 17) cases therefore does not hold for the entirely different situations now presented. In them either there was no separable phase of the litigation; or statutory policy independent of § 237 or other like requirement of finality forbade review before ultimate disposition of every phase of the litigation in the state or inferior federal courts. The condemnation cases therefore, though generally uniform in denying review of orders for condemnation prior to award of damages, are not uniform in resting this result wholly on the requirement of 'finality' made by § 237 and like provisions for review, but frequently rest on other and independent grounds pertinent to the application of those provisions. 43 The 'penumbral area' of appealable finality, see 326 U.S. at page 124, 65 S.Ct. at page 1478, may not be sweeping in its scope. It is nevet heless one essential to prevent the letter of the section from overriding its reason. For this purpose it would seem to comprehend any situation presenting separable phases of litigation, one involving the core or crux of the controversy between the parties, the other collateral matters dependent for the necessity of their consideration and decision upon final and unqualified disposition of the hub of the dispute. If a merely mechanical application of § 237 is to be avoided, it cannot be taken that the practical approach of the WOW line of decisions must be limited exclusively to cases where an accounting is ordered to follow delivery of property decreed at the same time. The reason of the exception, indeed of § 237 itself, is not so limited. Because the delivery and accounting cases are not the only ones presenting such problems, judgment must be given some play in other situations as well to decide whether the vices excluded by the policies underlying § 237 are present, as they may be or not according to the character and effects of the particular determination sought to be reviewed. 44 Finally, it hardly can be that merely the alternative character of the order per se deprives it of finality, regardless of whether any of the alternatives presents a substantial federal question. Because Republic is allowed to choose between shutting down its wells and carrying or purchasing the Peerless gas, it seems to be thought that the order lacks finality until that choice is made, even though when made either course would be clearly within the state's power to require. 45 The argument woud have more force if the difference between the alternatives were great enough to make it likely that contrary results might be reached on the different alternatives. But where as here the difference emphasized, e.g., is merely between the passage of title before and after the carriage, it is hard to see how there could be more difficulty with one alternative than with the other. See Part II; also Part IV. So minor a distinction hardly furnishes a substantial basis for contrariety of judicial opinion on due process questions. Nor is it suggested that allowing the choice between either of those two courses and shutting down presents greater difficulty. Given constitutionality of all alternatives, it no more transcends state power to permit the party affected to select the course least onerous than to require him to follow the one most burdensome. It is eually hard to see how giving the choice destroys the order's finality, unless again a wholly mechanical conception of that term as used in § 237 is to control. 46 The section's policy is against hypothetical, premature and piecemeal constitutional decision, not against a choice of alternatives presenting no such problem. Here the question is whether Oklahoma can offer Republic the choice of shutting down production or taking and paying for the Peerless gas. Either course will protect the latter's rights against drainage by Republic. Either standing alone in the order's terms would not affect finality. Neither, merely upon the premise that alternative character per se destroys finality, presents a doubtful question of constitutionality. And finally the alternative of shutting down, realistically considered, is more nearly sanction than alternative mode of compliance.19 47 In such circumstances to say that coupling the two courses alternatively deprives the order of finality seems to me to be giving to the terms of § 237 a mechanical application out of harmony with the section's policy, just as does refusing to decide the case before it is known whether a further order may be necessary for fixing the price of the Peerless gas. Such a view can only handicap administrative action either by forcing orders to specify a single course of compliance when alternatives may be much more desirable, or by delaying review and thus effective administrative action until one or perhaps all of the alternatives in turn are tried out first in election and then in review. A decision now would settle every substantial pending phase of the controversy. At the most but a minor consequential and separable aspect would remain for remotely possible further action in the state tribunals. It is to the interest of both parties, and the state authorities as well, that their rights be determined and the controversy be ended. And on the facts the question of jurisdiction is closely related to the merits. 48 In view of all these considerations, to deny the parties our judgment now is to make a fetish of technical finality without securing any of the substantial advantages for constitutional adjudication which § 237, in the light of its underlying policies, was designed to attain. Instead that section becomes an instrument of sheer delay for the performance of our function, for executing those of state agencies, and for settling parties' rights. The section has no such office. By declaring now that the state may follow either of two clearly permissible courses and allow those with whom it deals to choose between them, we would not speak hypothetically or prematurely or violate any other policy underlying § 237. II. 49 Beyond the matter of jurisdiction, there is in this case no such question concerning its exercise as arose in Rescue Army v. Municipal Court, 331 U.S. 549, 67 S.Ct. 1409, 91 L.Ed. 1666. The constitutional issues are not speculative, premature or presented abstractly en masse. The 'alternative character' of the state judgment does not prevent the federal questions from being sufficiently precise and concrete for purposes of decision here, although various ambiguities have been suggested. 50 Thus it is said that we cannot tell whether the order compels Republic to share its market or merely requires it to carry gas to a market which Peerless must obtain for itself. Cf. Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 57 S.Ct. 364, 81 L.Ed. 510. The order here is not subject to such an ambiguity. It in terms commands Republic to take Peerless gas and to pay for it20. 51 It is also suggested that we cannot tell whether Republic will have to purchase gas from Peerless or just transport the gas to market and account for the profits. But whether legal title passes at one end of the Republic line or at the other is, as we have noted, wholly immaterial as a matter of constitutional law. Cf. The Pipe Line Cases, (United States v. Ohio Ol Co.) 234 U.S. 548, 34 S.Ct. 956, 58 L.Ed. 1459. In either event under the order and judgment Republic must take Peerless gas into its system, must pay for it and, unless its market should expand suddenly far beyond present expectations, must therefore share its market with Peerless. 52 It is said further that we cannot be sure whether the commission intends to make Republic act as a common carrier. The only basis for this doubt is the fact that the commission's findings state that Republic is a common carrier and common purchaser. But the state supreme court upheld the order on the assumption that those findings were incorrect. The justification for requiring Republic to carry Peerless gas is based primarily on the fact of drainage caused by Republic's production. III. 53 It has been noted previously that the question on the merits is not unrelated to the issue of finality. To it, accordingly, attention is now directed. The real fight, as has been stated, is over the right of Republic to drain away the Peerless gas without paying for it. The question as cast in legal terms is whether the due process and equal protection clauses of the Fourteenth Amendment deny Oklahoma the power to give one private producer from a common pool the option to shut down production altogether or to purchase gas from another for the purpose of adjusting their correlative rights in the pool, when that is the only practical or feasible alternative consistent with production by both to protect the latter from drainage by the former. 54 Republic denies the state's power to do this. Its basic position is that it has a federal constitutional right to drain off all the gas in the field, unless other owners of producing rights can supply their own facilities for marketing their production, regardless of varying conditions in different competitive situations and regardless of all consequent practical considerations affecting feasibility of furnishing such facilities. 55 Republic has no such right. The Constitution did not impress upon the states in a rigid mold either the common-law feudal system of land tenures or any of the modified and variant forms of tenure prevailing in the states in 1789. Rather it left them free to devise and establish their own systems of property law adapted to their varying local conditions and to the peculiar needs and desires of their inhabitants. The original constitution placed no explicit limitation upon the powers of the states in this respect.21 Not until the Fourteenth Amendment was ratified, nearly eight decades later, was one introduced. 56 The Fourteenth Amendment was not designed to nullify state power to create institutions of property in accord with local needs and policies. Whether or not it was intended to secure substantive individual rights as well as procedural ones,22 it was not a strait jacket immobilizing state power to change or alter institutions of property in the public interest.23 Almost innumerable decisions have demonstrated this, even though the Amendment has been effective to create substantial limitations upon the methods by which the changes deemed necessary may be made. 57 The basic question here is really one of substantive due process. It relates primarily to whether Oklahoma can curtail the unqualified right of capture which appellant conceives it acquired by virtue of and as an unalterable incident to its acquisition of surface rights including the right to drill for gas. For, in denying that the state can enforce the only feasible method of limitation consistent with production by Peerless, Republic in effect is saying that the state cannot restrict its right to take all gas in the common reservoir, including all that can be drained from beneath Peerless' lease and the lands of other owners similarly situated. This is, for the particular circumstances, a denial of the state's power to protect correlative rights in the field or to regulate appellant's taking in the interest of others having equal rights proportionate to their surface holdings. For, though Republic concedes it is bound by Oklahoma's statutory requirement of pro rata production, that requirement becomes merely a time factor affecting the rate and length of the period of Republic's drainage, not the total quantity eventually to be taken, if Republic can defy the commission's order and thus leave Peerless in its present helpless condition. 58 The contention is bold and far reaching, more especially when account is taken of the nature of the industry. Natural gas in place is volatile and fugitive, once a single outlet is opened. When extracted it cannot be stored in quantity, but must be marketed ultimately at burner tips in the time necessary for conveyance to them from the well mouth. The competitive struggle for the industry's rewards is particularly intense in the initial stage of developing a field. By the industry's very nature large outlays of capital are required for successful continuing production and marketing. All those factors however tend toward monopoly once success has been achieved in a particular field. 59 These peculiar qualities, moreover, have been reflected in the legal rights relating to the ownership of gas in place, as well as its extraction. They have been adapted to its nature and to that of the competitive struggle regarding it. Only a specialist in this branch of the law, which varies from state to state, can undertake to say with any reliable degree of precision what rights may be in particular situations. These difficulties, intensified by the competitive struggle for the product and the inadequacy of common-law ideas to control it, have forced both the states and the federal government to adopt extensive regulatory measures in recent years. This has been necessary both to conserve the public interest in this rapidly depleting natural resource24 and to secure fair adjustment of private rights in the industry. Rather than being a sacred, untouchable enclave of the common law, the field by its very nature lends itself especially to governmental intervention for such purposes. In this respect it is hardly comparable to situations comprehending only conventional manufacturers and merchants of consumable goods. 60 In accordance with Oklahoma's law, appellant does not assert title to the gas in place.I t asserts only the right to capture what it can produce. But that right, unqualified, would include the right to take gas from beneath others' lands. So taken, it defies their rights to a proportionate share and the state's power to secure them, if for reasons rendering marketing through their own facilities unfeasible they cannot join in the unrestrained competitive draining. 61 So far as the federal Constitution is concerned, there is no such unrestricted fee simple in the right to drain gas from beneath an adjacent owner's land. It is far too late, if it ever was otherwise, to urge that the states are impotent to restrict this unfettered race or to put it upon terms of proportionate equality by whatever measures may be reasonably necessary to that end. Indeed our constitutional history is replete with instances where the states have altered and restricted schemes of property rights in response to the public interest and the states' local needs. In some cases this has gone to the extent of abolishing basic common-law conceptions entirely and substituting new ones indigenous to their areas and the problems they present. Perhaps the most extensive and obvious illustrations are to be found in the systems developed in our arid and mountainous western states for governing rights in the waters of flowing streams and mining rights in respect to precious metals.25 Others are not lacking.26 62 It hardly can be maintained that the creation and control of rights respecting the ownership, extraction and marketing of natural gas are less broadly subject to state control than those relating to waters for irrigation and other uses or to the extraction of precious metals in the regions where those matters have called into play the states' authority to act in the manner best suited to local conditions and the needs of their inhabitants. The similarities of the situations and the problems, for purposes of constitutionality in the exercise of those powers, are so obvious they do not need to be specified. 63 Historically, the states' freedom to exercise broad powers in defining and regulating rights of ownership and production of natural gas has been recognized almost as long and quite as completely as their similar freedoms to act in relation to water rights and mining rights. In a line of cases beginning a half century ago with Ohio Oil Co. v. Indiana, 177 U.S. 190, 20 S.Ct. 576, 44 L.Ed. 729, this Court has upheld various types of state regulatory schemes designed to prevent waste and to protect the 'coequal rights' of the several owners of a common source of supply.27 These cases clearly recognize that the state regulation may be justified on alternative grounds, either to prevent waste or to adjust private correlative rights.28 64 It is true, as appellant points out, that none of those cases presented the specific issue of whether the state may adjust correlative rights independently of a conservation program. But it is not true that this power is merely incidental to the fundamental right of the state to preserve its natural resources. In fact, if one power were incidental to the other, the Ohio Oil case would support the view that waste prevention is justifiable because it serves 'the purpose of protecting all the collective owners * * *.' 177 U.S. at page 210, 20 S.Ct. at page 584.29 Moreover, it is significant that the opinion in Bandini Petroleum Co. v. Superior Court specifically states that the California regulation is valid on its face, even if viewed as a measure designed purely for the protection of correlative rights. 284 U.S. 8, 22, 52 S.Ct. 103, 108.30 65 Oklahoma's power to regulate correlative rights in the Hugoton field therefore does not stem from her interest merely in the preservation of natural resources. It stems rather from the basic aim and authority of any government which seeks to protect the rights of its citizens and to secure a just accommodation of them when they clash.31 That authority is constantly exercised in our system in relation to other types of property.32 In view of this fact and of what has been said concerning conditions in this industry, it would be incongruous for us to hold that oil and gas law is the one phase of property law that cannot be modified except for conservation purposes. Especially in the light of its origin and development a laissez faire atmosphere appropriate for fostering intense competitive expansions, see Merrill, The Evolution of Oil and Gas Law, 13 Miss.L.J. 281, the states should be allowed certainly not less freedom to evolve new property rules to keep pace with changing industrial conditions than they possess in nearly every other branch of the law.33 Here as elsewhere, in considering the proper scope for state experimentation, it is important that we indulge every reasonable presumption in favor of the states' action. They should be free to improve their regulatory techniques as scientific knowledge advances, for here too experimentation is the lifeblood of progress. See Mr. Justice Brandeis dissenting in New State Ice Co. v. Liebmann, 285 U.S. 262, 280, 52 S.Ct. 371, 375, 76 L.Ed. 747. IV. 66 The remaining narrow issue is whether the most practical method of achieving a fair accommodation of the correlative rights of the parties is invalid because Republic is required to take and to pay for gas that it does not want—at least does not want if it must pay for it. 67 Appellant relies heavily on Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 57 S.Ct. 364, 81 L.Ed. 510, where this Court invalidated an order limiting respondent's production so severely that it would have had to purchase gas from unconnected wells in its vicinity in order to satisfy its commitments. Thus the necessary effect of that order was comparable to the effect of the order under review here. 68 But there is a crucial difference between the cases. In deciding the Thompson case the Court explicitly assumed that the order could be upheld if reasonably designed either to prevent waste or 'to prevent undue drainage of gas from the reserves of well owners lacking pipe line connections.'34 Because of a geological anomaly there was a general drainage in the gas field away from the connected wells toward the unconnected wells, 300 U.S. at pages 71—73, 57 S.Ct. at pages 371, 372, so that the producing wells, rather than draining gas away from the dormant wells, would only reduce their own loss by producing as much as possible. Therefore the limitation on their production could not be justified, since it was neither for the purpose of preventing waste nor a reasonable regulation of correlative rights. Instead of protecting one party from loss, it operated to aggravate h e effect of the drainage away from the owners of connected wells. They suffered, not only by an increased drainage loss, but also by the consequence that they were forced to share their facilities and market with the very parties who profited by their loss. The Court held that such an order requiring one company to share its market with another was unconstitutional inasmuch as it was not justified either as a conservation measure or as a reasonable adjustment of correlative rights. The latter justification is present in this case. 69 The fact that Republic is compelled either to purchase Peerless' gas or to carry it to market and account for the profits does not make the regulation unreasonable. If that were the sole cause for complaint, the state could take the more drastic step of requiring all the well owners to shut down completely until all were able to produce on a ratable basis or came to some agreement effective to make this possible. It is clearly within the state's power to require Republic to compensate Peerless for the gas drained from under the Peerless land. Patterson v. Stanolind Oil & Gas Co., 305 U.S. 376, 59 S.Ct. 259, 83 L.Ed. 231. Here, instead of requiring Republic to make a cash payment based on the estimated amount of drainage, the commission has selected what is unquestionably a more accurate method of adjusting the correlative rights. Even if it could be assumed that this method imposed a somewhat heavier burden on Republic than possible alternatives, it does not follow that the method selected by the commission is unconstitutional. For we have constantly recognized the propriety of allowing wide discretion to the administrative agencies who are best qualified to select the most reasonable solutions to the thorny problems that accompany regulation in this highly technical field. Railroad Commission of Texas v. Rowan & Nichols Oil Co., 310 U.S. 573, 60 S.Ct. 1021, 84 L.Ed. 1368. Keeping in mind the fact that property law is peculiarly a matter of local concern, the special difficulty of defining and regulating property rights in natural gas, the respect due to experts in this field, and the rather unusual facts this record presents, I cannot say that the state is without power to enter this order. 70 It is suggested that the order, since it includes the requirement of purchase and not merely of transportation and accounting for profits, becomes invalid because it shifts from Peerless to Republic the business risk incident to ownership and sale of the gas. Possibly this might furnish a more serious basis for objection in materially different circumstances. But, apart from what has already been said, in those now presented I conceive no substantially greater harm to be possible, from the order's operation, than depriving Republic of the right to drain gas from beneath Peerless' lease without liability to pay for the gas so drained. 71 This assumes that if the parties should be unable to agree upon terms the commission will fix them in a manner taking due account of prevailing market conditions relevant to the price to be paid, as well as reasonable compensation for the use of Republic's facilities. With those limitations properly applied, it is hard to see what great business risk will be shifted to Republic. For, as we have already noted, the commodity is one not subject to storage, must be sold as soon as it is transported to the point of consumption, and therefore cannot be subject to possible wide fluctuation in selling price between the times of purchase and sale by Republic. 72 The facts here, it seems to me, justify the commission's action. Whether others materially different may do so should be left to be considered when they arise. 73 I would affirm the judgment of the Supreme Court of Oklahoma. 1 L.1913, c. 198, §§ 1—3, Okl.Stat.1941, tit. 52, §§ 231—33: 'Section 1. All natural gas under the surface of any land in this state is hereby declared to be and is the property of the owners, or gas lessees, of the surface under which gas is located in its original state. 'Section 2. Any owner or oil and gas lessee, of the surface, having the right to drill for gas shall have the right to sink a well to the natural gas underneath the same and to take gas therefrom until the gas under such surface is exhausted. In case other parties, having the right to drill into the common reservoir of gas, drill a well or wells into the same, then the amount of gas each owner may take therefrom shall be proportionate to the natural flow of his well or wells to the natural flow of the well or wells of such other owners of the same common source of supply of gas, such natural flow to be determined by any standard measurement at the beginning of each calendar month; provided, that not more than twenty-five percent of the natural flow of any well shall be taken, unless for good cause shown, and upon notice and hearing the Corporation Commission may, by proper order, permit the taking of a greater amount. The drilling of a gas well or wells by any owner or lessee of the surface shall be regarded as reducing to possession his share of such gas as is shown by his well. 'Section 3. Any person, firm or corporation, taking gas from a gas field, except for purposes of developing a gas or oil field, and operating oil wells, and for the purpose of his own domestic use, shall take ratably from each owner of the gas in proportion to his interest in said gas, upon such terms as may be agreed upon between said owners and the party taking such, or in case they cannot agree at such a price and upon such terms as may be fixed by the Corporation Commission after notice and hearing; provided, that each owner shall be required to deliver his gas to a common point of delivery on or adjacent to the surface overlying such gas. * * *' See also L.1915, c. 197, §§ 4, 5, Okl.Stat.1941, tit. 52, §§ 239, 240: 'Section 4. That whenever the full production from any common source of supply of natural gas in this state is in excess of the market demands, then any person, firm or corporation, having the right to drill into and produce gas from any such common source of supply, may take therefrom only such proportion of the natural gas that may be marketed without waste, as the natural flow of the well or wells owned or controlled by any such person, firm or corporation bears to the total natural flow of such common source of supply having due regard to the acreage drained by each well, so as to prevent any such person, firm or corporation securing any unfair proportion of the gas therefrom; provided, that the Corporation Commission may by proper order, permit the taking of a greater amount whenever it shall deem such taking reasonable or equitable. The said commission is authorized and directed to prescribe rules and regulations for the determination of the natural flow of any such well or wells, and to regulate the taking of natural gas from any or all such common sources of supply within the state, so as to prevent waste, protect the interests of the public, and of all those having a right to produce therefrom, and to prevent unreasonable discrimination in favor of any one such common source of supply as against another. 'Section 5. That every person, firm or corporation, now or hereafter engaged in the business of purchasing and selling natural gas in this state, shall be a common purchaser thereof, and shall purchase all of the natural gas which may be offered for sale, and which may reasonably be reached by its trunk lines, or gathering lines without discrimination in favor of one producer as against another, or in favor of any one source of supply as against another save as authorized by the Corporation Commission after due notice and hearing; but if any such person, firm or corporation, shall be unable to purchase all the gas so offered, then it shall purchase natural gas from each producer ratably. It shall be unlawful for any such common purchaser to discriminate between like grades and pressures of natural gas, or in favor of its own production, or of production in which it may be directly or indirectly interested, either in whole or in part, but for the purpose of prorating the natural gas to be a rketed, such production shall be treated in like manner as that of any other producer or person, and shall be taken only in the ratable proportion that such production bears to the total production available for marketing. The Corporation Commission shall have authority to make regulations for the delivery, metering and equitable purchasing and taking of all such gas and shall have authority to relieve any such common purchaser, after due notice and hearing, from the duty of purchasing gas of an inferior quality or grade.' 2 In the Catlin case our decision was based on the general rule that condemnation orders prior to determination of just compensation are not appealable. The wartime statutes there involved were urged by the claimants as a reason for not applying the general rule. We rejected this contention. 3 This case is unlike those in which a rate hadb een fixed, subject to a continuing jurisdiction to modify it later. Cf. Market Street R. Co. v. Railroad Commission, 324 U.S. 548, 65 S.Ct. 770, 89 L.Ed. 1171; St. Louis, Iron Mountain & Southern R. Co. v. Southern Express Co., 108 U.S. 24, 2 S.Ct. 6, 27 L.Ed. 638. Here, no rates have been set, and their future establishment has been left open. 1 Republic has 92 wells in Kansas and 38 in Oklahoma. 2 The Oklahoma Supreme Court found it unnecessary to consider whether Republic was either a common carrier or a common purchaser of gas. 198 Okl. at page 353, 180 P.2d 1009. The term 'common purchaser' is explained in Okl.Stat., tit. 52, § 240. 3 Appellant concedes that the 'operation of the Republic wells is draining gas from under the dormant Peerless well.' The findings of the commission state: '(d) Republic * * * is taking and will continue to take more than its proportionate part of the natural gas in said field unless required to taker atably from said well of Peerless. * * * '(e) Republic * * * is draining gas from underneath said Section 14 into which said Peerless Oil and Gas Company's well has been drilled, and will continue to drain gas from underneath said Section 14 until all the gas thereunder has been drained and Peerless * * * will be prevented from taking its proportionate share of the natural gas in the field unless Republic * * * is required to take gas ratably from (Peerless).' 4 The Report of the commission states: 'It is evident from all the facts and circumstances in this case that if the Peerless Company is to be allowed to produce gas from its well, this gas must be by it transported fifteen to thirty miles, unless said gas is transported or disposed of by the Republic Natural Gas Company. 'It would be impractical from a financial standpoint to construct a pipeline to any city or other market outlet that would take sufficient gas to justify the production of this well; and it would be impossible to economically operate the well under present conditions existing in that field unless the gas is taken into the pipeline of the Republic Natural Gas Company.' 5 Okl.Stat., tit. 52, §§ 232, 233, 239, 240, 243. 6 The order required Republic '1. * * * to take gas ratably from (Peerless) and to make necessary connection as soon as applicant lays a line connecting said well with respondent's line, and to continue to do so until the further order of this Commission; provided that, applicant shall lay its line from its well to the lines of respondent at some point designated by the respondent, but in said Section 14 in which said well of Peerless * * * has been drilled; and said respondent is required to make said designation immediately and without unreasonable delay, and in event of failure of respondent so to do, respondent shall no longer be permitted to produce any of its wells located in the Hugoton Gas Field. (Emphasis added.) '2. The terms and conditions of such taking of natural gas by (Republic) from (Peerless) shall be determined and agreed upon by and between applicant and respondent; and in the event said parties are unable to agree, applicant and respondent are hereby granted the right to make further application to the Commission for an order fixing such terms and conditions; and the Commission retains jurisdiction hereof for said purpose.' 7 See note 6. The order's language leaves no room for the inference, which appears to be injected here, that the taking was not required to begin until the terms had been agreed upon or determined by further order. 8 Some of the considerations are enumerated in Radio Station WOW v. Johnson, 326 U.S. 120, 123, 124, 65 S.Ct. 1475, 1477, 1478, 89 L.Ed. 2092. 9 Under California procedure the state supreme court's unqualified order for reversal was 'effective to remand the case 'for a new trial and (place) the parties in the same position as if the case had never been tried." 331 U.S. at page 546, 67 S.Ct. at page 1430, and authorities cited. The effect was thus to leave all issues inconclusively determined pending further proceedings in the trial court. 10 The two prior decisions deemed decisive against mechanical determination of finality in such situations were Forgay v. Conrad, 6 How. 201, 12 L.Ed. 404, and Carondelet Canal & Navigation Co. v. Louisiana, 233 U.S. 362, 34 S.Ct. 627, 58 L.Ed. 1001, the former of which we noted had 'stood on our books for nearly a hundred years in an opinion carrying the authority, especially weighty in such matters, of Chief Justice Taney.' 326 U.S. 120, 125, 65 S.Ct. 1475. 11 See notes 6, 7 supra and text. 12 In the remote event that Republic should elect to shut down production, there would be no need for a further order or agreement of thep arties, and the presently erected obstacle to finality would be completely removed. 13 To permit Republic to continue drainage from beneath Peerless' land for the indefinite period required for sending the case back to the Oklahoma tribunals and then bringing it back here a second time will be to deprive Peerless of that gas unless the state law allows compensation for such continued taking from the date of the present order. It is at least highly doubtful that the state law allows such a remedy, even if the order is eventually held valid. On the other hand, if the order should be invalidated on the deferred review, Republic will have been put to further and unnecessary delay, uncertainty and expense in ascertaining its rights, merely to secure a determination which cannot possibly affect them. If this may not be irreparable injury, it certainly is not the policy of § 237. 14 In view of marketing conditions in this industry, no such problem of valuation or of reaching agreement upon it would be presented as, for instance, in the case of seeking to place a value upon real estate taken by condemnation for public use or valuation of property for rate-making purposes. The idea that determining the value of the gas taken here would present all the difficulties of valuing a railroad for rate-making purposes blows the matter up beyond all the practicalities of the situation. 15 See note 14. 16 Wheeling & Belmont Bridge Co. v. Wheeling Bridge Co., 138 U.S. 287, 11 S.Ct. 301, 34 L.Ed. 967. 17 The same was said to be true of Luxton v. North River Bridge Co., 147 U.S. 337, 13 S.Ct. 356, 37 L.Ed. 194. See id. 147 U.S. at page 341, 13 S.Ct. at page 358. 18 Moreover, under state practice review of the condemnation order by the state supreme court was by certiorari, not by appeal which lay only from the order fixing damages. As a matter of state law, therefore, the judgment on the condemnation order was interlocutory. See, however, as to this Catlin v. United States, 324 U.S. 229, 234, 65 S.Ct. 631, 634, 89 L.Ed. 911; Luxton v. North River Bridge Co., 147 U.S. 337, 13 S.Ct. 356, 37 L.Ed. 194. 19 Cf. Wabash & Erie Canal v. Beers, 1 Black 54, 17 L.Ed. 41; Milwaukee & Minnesota R. Co. v. Soutter, 2 Wall. 440, 17 L.Ed. 860. Control of production, of course, is the core of state conservation programs. In Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 52 S.Ct. 559, 76 L.Ed. 1062, 86 A.L.R. 403, proration orders limiting production of oil wells to as little as six per cent of capacity were sustained. See 286 U.S. at page 229, 52 S.Ct. at page 562. Cf. Walls v. Midland Carbon Co., 254 U.S. 300, 41 S.Ct. 118, 65 L.Ed. 276; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 369, Ann.Cas.1912C, 160. The power of a stt e to protect correlative rights hardly can be regarded as furnishing a less solid basis for control of production than the power to prevent waste. See note 29 and text infra. 20 In its report the commission concluded that Republic should be required to '* * * allow the Peerless gas to enter the Republic pipeline, and pay the Peerless Company for the gas.' The order itself in unqualified terms directs Republic 'to take gas ratably from (Peerless) * * * as soon as applicant lays a line connecting said well with respondent's line * * *.' See notes 6, 7. Since neither the commission's report nor the state supreme court's opinion suggests that the command was qualified by the condition that Peerless obtain its own market, we need not read such a condition into the order. The commission report states that 'Republic offers to transport the Peerless gas if market can be obtained by (Peerless) * * *.' 21 The nearest approximations perhaps were in the prohibitions against state legislation impairing the obligation of contracts and against ex post facto legislation before the latter was limited to criminal and penal consequences. Calder v. Bull, 3 Dall. 386, 1 L.Ed. 648. See Hale, The Supreme Court and the Contract Clause, 57 Harv.L.Rev. 512, 621, 852. 22 See Mr. Justice Black dissenting in McCart v. Indianapolis Water Co., 302 U.S. 419, 423, 58 S.Ct. 324, 325, 82 L.Ed. 336; Boudin, Truth and Fiction about the Fourteenth Amendment, 16 N.Y.U.L.Q.Rev. 19. 23 It is precisely in cases where the Amendment has been made thus effective, often by giving expansive scope to the idea of 'property,' that its interpretations have failed to withstand the test of time. Compare Ribnik v. McBride, 277 U.S. 350, 48 S.Ct. 545, 72 L.Ed. 913, 56 A.L.R.1 327, with Olsen v. Nebraska, 313 U.S. 236, 61 S.Ct. 862, 85 L.Ed. 1305, 133 A.L.R. 1500; Adair v. United States, 208 U.S. 161, 28 S.Ct. 277, 52 L.Ed. 436, 13 Ann.Cas. 764 and Coppage v. Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441, L.R.A.1915C, 960, with Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 187, 61 S.Ct. 845, 849, 85 L.Ed. 1271, 133 A.L.R. 1217; Lochner v. New York, 198 U.S. 45, 25 S.Ct. 539, 49 L.Ed. 937, 3 Ann.Cas. 1133, and Adkins v. Children's Hospital, 261 U.S. 525, 43 S.Ct. 394, 67 L.Ed. 785, 24 A.L.R. 1238, with West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703, 108 A.L.R. 1330. 24 Cf. Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333, dissenting opinion of Mr. Justice Jackson, 320 U.S. at page 628, 64 S.Ct. at page 300. 25 See Clark v. Nash, 198 U.S. 361, 25 S.Ct. 676, 49 L.Ed. 1085, 4 Ann.Cas. 1171; Fallbrook Irrigation District v. Bradley, 164 U.S. 112, 17 S.Ct. 56, 41 L.Ed. 369; Kansas v. Colorado, 206 U.S. 46, 93, 94, 27 S.Ct. 655, 665, 666, 51 L.Ed. 956; United States v. Rio Grande Dam & Irrigation Co., 174 U.S. 690, 702, 703, 19 S.Ct. 770, 774, 775, 43 L.Ed. 1136; Strickley v. Highland Boy Gold Mining Co., 200 U.S. 527, 26 S.Ct. 301, 50 L.Ed. 581, 4 Ann.Cas. 1174; Parley's Park Silver Mining Co. v. Kerr, 130 U.S. 256, 9 S.Ct. 511, 32 L.Ed. 906; Butte City Water Co. v. Baker, 196 U.S. 119, 25 S.Ct. 211, 49 L.Ed. 409; Kendall v. San Juan Silver Mining Co., 144 U.S. 658, 12 S.Ct. 779, 36 L.Ed. 583; Clason v. Matko, 223 U.S. 646, 32 S.Ct. 392, 56 L.Ed. 588. 26 Head v. Amoskeag Mfg. Co., 113 U.S. 9, 5 S.Ct. 441, 28 L.Ed. 889; Wurts v. Hoagland, 114 U.S. 606, 5 S.Ct. 1086, 29 L.Ed. 229; Bacon v. Walker, 204 U.S. 311, 27 S.Ct. 289, 51 L.Ed. 499; cf. Ferry v. Spokane, P. & S.R. Co., 258 U.S. 314, 42 S.Ct. 358, 66 L.Ed. 635, 20 A.L.R. 1326; Campbell v. California, 200 U.S. 87, 26 S.Ct. 182, 50 L.Ed. 382. 27 Ohio Oil Co. v. Indiana, 177 U.S. 190, 20 S.Ct. 576, 44 L.Ed. 729; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337 55 L.Ed. 369, Ann.Cas.1912C, 160; Walls v. Midland Carbon Co., 254 U.S. 300, 41 S.Ct. 118, 65 L.Ed. 276; Bandini Petroleum Co. v. Superior Court, 284 U.S. 8, 52 S.Ct. 103, 76 L.Ed. 136, 78 A.L.R. 826; Champlin Refining Co. v. Corporation Commission, 286 U.S. 210, 52 S.Ct. 559, 76 L.Ed. 1062, 86 A.L.R. 403; Hunter Co. v. McHugh, 320 U.S. 222, 64 S.Ct. 19, 88 L.Ed. 5. 28 See Hardwicke, The Rule of Capture, 13 Tex.L.Rev. 391, 414 422; Marshall and Meyers, Legal Planning of Petroleum Production, 41 Yale L.J. 33, 48—52; Ely, The Conservation of Oil, 51 Harv.L.Rev. 1209, 1222—1225; Ford, Controlling the Production of Oil, 30 Mich.L.Rev. 1170, 1181, 1192. 29 Independently of any statute, several states have granted equitable relief against waste in order to protect the correlative rights of common owners of a reservoir of gas or oil. Louisville Gas Co. v. Kentucky Heating Co., 117 Ky. 71, 77 S.W. 368, 70 L.R.A. 558; Manufacturers Gas & Oil Co. v. Indiana Natural Gas & Oil Co., 155 Ind. 461, 474, 475, 57 N.E. 912, 50 L.R.A. 768; Ross v. Damm, 278 Mich. 388, 270 N.W. 722; Higgins Oil & Fuel Co. v. Guaranty Oil Co., 145 La. 233, 82 So. 206, 5 A.L.R. 411; Atkinson v. Virginia Oil & Gas Co., 72 W.Va. 707, 79 S.E. 647, 48 L.R.A.,N.S., 167. 30 The Supreme Court of Texas has recently upheld administrative action designed solely to protect correlative rights. Corzelius v. Harrell, 143 Tex. 509, 186 S.W.2d 961. Note, 24 Tex.L.Rev. 97. 31 Oklahoma can prevent agents of Republic from going on Peerless' land by force of arms and there drilling a well and stealing gas. The state's power to prv ent larceny and trespass and to enjoin any use of property that creates a nuisance for a neighboring property owner also justifies the regulation of common property for the mutual advantage of its several owners. Head v. Amoskeag Mfg. Co., 113 U.S. 9, 5 S.Ct. 441, 28 L.Ed. 889; Bacon v. Walker, 204 U.S. 311, 27 S.Ct. 289, 51 L.Ed. 499. Under certain circumstances a state may compel one individual to surrender private property solely to enable another to exploit the potential resources of his private property. Thus in Clark v. Nash, 198 U.S. 361, 25 S.Ct. 676, 49 L.Ed. 1085, 4 Ann.Cas. 1171, the plaintiff's land could be made productive only by enlarging an irrigation ditch across defendant's land, and in Strickley v. Highland Boy Gold Mining Company, 200 U.S. 527, 26 S.Ct. 301, 50 L.Ed. 581, 4 Ann.Cas. 1174, the mining company could deliver its ore to market only by constructing an aerial bucket line across defendant's land. Here Peerless can exploit its property only if Republic is compelled to take its gas to market. Moreover, until Peerless is able to produce the gas under its land, this gas will continue to be withdrawn by Republic. In effect Republic is now exploiting Peerless' property. 32 E.g., Head v. Amoskeag Mfg. Co., 113 U.S. 9, 5 S.Ct. 441, 28 L.Ed. 889; Wurts v. Hoagland, 114 U.S. 606, 5 S.Ct. 1086, 29 L.Ed. 229; Fallbrook Irrigation District v. Bradley, 164 U.S. 112, 17 S.Ct. 56, 41 L.Ed. 369; Bacon v. Walker, 204 U.S. 311, 27 S.Ct. 289, 51 L.Ed. 499; Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531, 34 S.Ct. 359, 58 L.Ed. 713; Jackman v. Rosenbaum Co., 260 U.S. 22, 43 S.Ct. 9, 67 L.Ed. 107. 33 'It is submitted that through the judicial and legislative processes correlative right-duty relations against injury and non-compensated and preventable drainage do exist, but the difficulty of finding and proving the facts in a particular situation is such that the usual remedies of damages and injunction might not be practicable. It seems more advisable that legislatures enact statutes expressly declaring the existence of these correlative right-duty relations in landowners, apart from public rights against waste, and authorize an administrative agency, after a finding of facts, to promulgate rules and regulations for their protection and authorize the Commission or private owners to enforce such rules and regulations through actions in the courts.' Summers, Legal Rights against Drainage of Oil and Gas, 18 Tex.L.Rev. 27, 47. 34 300 U.S. at pages 76, 77, 57 S.Ct. at page 374. This assumption is repeated several times in the opinion. See 300 U.S. at pages 58, 67, 69 and 72, 73, 57 S.Ct. at pages 365, 370, 371, 372.
89
334 U.S. 131 68 S.Ct. 915 92 L.Ed. 1260 UNITED STATESv.PARAMOUNT PICTURES, Inc., et al. LOEW'S Inc., et al. v. UNITED STATES. PARAMOUNT PICTURES, Inc., et al. v. SAME. COLUMBIA PICTURES CORPORATION et al. v. SAME. UNITED ARTISTS CORPORATION v. SAME. UNIVERSAL PICTURES COMPANY, Inc., et al. v. SAME. AMERICAN THEATRES ASS'N, Inc., et al. v. UNITED STATES et al. ALLRED et al. v. SAME. Nos. 79 to 86. Argued Feb. 9, 10, 11, 1948. Decided May 3, 1948. Appeals from the District Court of the United States for the Southern District of New York. [Syllabus from pages 131-138 intentionally omitted] Messrs. Tom C. Clark, Atty. Gen., Robert L. Wright, of Washington, D.C., and John F. Sonnett, Asst. Atty. Gen., for the United States. Mr. Thurman Arnold, of Washington, D.C., for American Theatres Ass'n and others. Messrs. John G. Jackson, of New York City, and Robert T. Barton, of Richmond, Va., for W. C. Allred and others. Mr. John W. Davis, of New York City, for Loew's Inc. Mr. William J. Donovan, of Washington, D.C., for Radio-Keith-Orpheum Corporation and others. Mr. Joseph M. Proskauer, of New York City, for Warner Bros. Pictures, Inc., and others. Mr. James F. Byrnes, of Washington, D.C., for Twentieth Century-Fox and others. Mr. Whitney North Seymour, of New York City, for Paramount Pictures, Inc., and another. Mr. Louis D. Frohlich, of New York City, for Columbia Pictures Corporation and another. Mr. Thomas Turner Cooke, of New York City, for Universal Pictures Co. and others Mr. George A. Raftery, of New York City, for United Artists Corporation. [Argument of Counsel from Page 139 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court. 1 These cases are here on appeal1 from a judgment of a three-judge District Court2 holding that the defendants had violated § 1 and § 2 of the Sherman Act, 26 Stat. 209, as amended, 50 Stat. 693, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2, and granting an injunction and other relief. D.C., 66 F.Supp. 323; Id., D.C., 70 F.Supp. 53. 2 The suit was instituted by the United States under § 4 of the Sherman Act, 15 U.S.C.A. § 4, to prevent and restrain violations of it. The defendants fall into three groups: (1) Paramount Pictures, Inc., Loew's, Incorporated, Radio-Keith-Orpheum Corporation, Warner Bros. Pictures, Inc., Twentieth Century-Fox Film Corporation, which produce motion pictures, and their respective subsidiaries or affiliates which distribute and exhibit films. These are known as the five major defendants or exhibitor-defendants. (2) Columbia Pictures Corporation and Universal Corporation, which produce motion pictures, and their subsidiaries which distribute films. (3) United Artists Corporation, which is engaged only in the distribution of motion pictures. The five majors, through their subsidiaries or affiliates, own or control theatres; the other defendants do not. 3 The complaint charged that the producer defendants had attempted to monopolize and had monopolized the production of motion pictures. The District Court found to the contrary and that finding is not challenged here. The complaint charged that all the defendants, as distributors, had conspired to restrain and monopolize and had restrained and monopolized interstate trade in the distribution and exhibition of films by specific practices which we will shortly relate. It also charged that the five major defendants had engaged in a conspiracy to restrain and nonopolize, and had restrained and monopolized, interstate trade in the exhibition of motion pictures in most of the larger cities of the country. It charged that the vertical combination of producing, distributing, and exhibiting motion pictures by each of the five major defendants violated § 1 and § 2 of the Act. It charged that each distributor-defendant had entered into various contracts with exhibitors which unreasonably restrained trade. Issue was joined; and a trial was had.3 4 No film is sold to an exhibitor in the distribution of motion pictures. The right to exhibit under copyright is licensed. The District Court found that the defendants in the licenses they issued fixed minimum admission prices which the exhibitors agreed to charge, whether the rental of the film was a flat amount or a percentage of the receipts. It found that substantially uniform minimum prices had been established in the licenses of all defendans . Minimum prices were established in master agreements or franchises which were made between various defendants as distributors and various defendants as exhibitors and in joint operating agreements made by the five majors with each other and with independent theatre owners covering the operation of certain theatres.4 By these later contracts minimum admission prices were often fixed for dozens of theatres owned by a particular defendant in a given area of the United States. Minimum prices were fixed in licenses of each of the five major defendants. The other three defendants made the same requirement in licenses granted to the exhibitor-defendants. We do not stop to elaborate on these findings. They are adequately detailed by the District Court in its opinion. See 66 F.Supp. 334—339. 5 The District Court found that two price-fixing conspiracies existed—a horizontal one between all the defendants, a vertical one between each distributor-defendant and its licensees. The latter was based on express agreements and was plainly established. The former was inferred from the pattern of price-fixing disclosed in the record. We think there was adequate foundation for it too. It is not necessary to find an express agreement in order to find a conspiracy. It is enough that a concert of action is contemplated and that the defendants conformed to the arrangement. Interstate Circuit v. United States, 306 U.S. 208, 226, 227, 59 S.Ct. 467, 474, 83 L.Ed. 610; United States v. Masonite Corp., 316 U.S. 265, 275, 62 S.Ct. 1070, 1076, 86 L.Ed. 1461. That was shown here. 6 On this phase of the case the main attack is on the decree which enjoins the defendants and their affiliates from granting any license, except to their own theatres, in which minimum prices for admission to a theatre are fixed in any manner or by any means. The argument runs as follows: United States v. General Electric Co., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362, held that an owner of a patent could, without violating the Sherman Act, grant a license to manufacture and vend and could fix the price at which the licensee could sell the patented article. It is pointed out that defendants do not sell the films to exhibitors, but only license them and that the Copyright Act, 35 Stat. 1075, 1088, 17 U.S.C. §§ 1, 17 U.S.C.A. § 1, like the patent statutes, grants the owner exclusive rights.5 And it is argued that if the patentee can fix the price at which his licensee may sell the patented article, the owner of the copyright should be allowed the same privilege. It is maintained that such a privilege is essential to protect the value of the copyrighted films. 7 We start, of course, from the premise that so far as the Sherman Act is concerned, a price-fixing combination is illegal per se. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; United States v. Masonite Corporation, supra. We recently held in United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, that even patentees could not regiment an entire industry by licenses containing price-fixing agreements. What was said there is adequate to bar defendants, through their horizontal conspiracy, from fixing prices for the exhibition of films in the movie industry. Certainly the rights of the copyright owner are no greater than those of the patene e. 8 Nor can the result be different when we come to the vertical conspiracy between each distributor-defendant and his licensees. The District Court stated in its findings (70 F.Supp. 61): 'In agreeing to maintain a stipulated minimum admission price, each exhibitor thereby consents to the minimum price level at which it will compete against other licensees of the same distributor whether they exhibit on the same run or not. The total effect is that through the separate contracts between the distributor and its licensees a price structure is erected which regulates the licensees' ability to compete against one another in admission prices.' 9 That consequence seems to us to be incontestable. We stated in United States v. United States Gypsum Co., supra, at page 401 of 333 U.S., at page 545 of 68 S.Ct., that 'The rewards which flow to the patentee and his licensees from the suppression of competition through the regulation of an industry are not reasonably and normally adapted to secure pecuniary reward for the patentee's monopoly.' The same is true of the rewards of the copyright owners and their licensees in the present case. For here too the licenses are but a part of the general plan to suppress competition. The case where a distributor fixes admission prices to be charged by a single independent exhibitor, no other licensees or exhibitors being in contemplation, seems to be wholly academic, as the District Court pointed out. It is, therefore, plain that United States v. General Electric Co., supra, as applied in the patent cases, affords no haven to the defendants in this case. For a copyright may no more be used than a patent to deter competition between rivals in the exploitation of their licenses. See Interstate Circuit v. United States, supra, 306 U.S. at page 230, 59 S.Ct. at page 476, 83 L.Ed. 610. 10 (2) Clearances and Runs. 11 Clearances are designed to protect a particular run of a film against a subsequent run.6 The District Court found that all of the distributor-defendants used clearance provisions and that they were stated in several different ways or in combinations: in terms of a given period between designated runs; in terms of admission prices charged by competing theatres; in terms of a given period of clearance over specifically named theatres; in terms of so many days' clearance over specified areas or towns; or in terms of clearances as fixed by other distributors. 12 The Department of Justice maintained below that clearances are unlawful per se under the Sherman Act. But that is a question we need not consider, for the District Court ruled otherwise and that conclusion is not challenged here. In its view their justification was found in the assurance they give the exhibitor that the distributor will not license a competitor to show the film either at the same time or so soon thereafter that the exhibitor's expected income from the run will be greatly diminished. A clearance when used to protect that interest of the exhibitor was reasonable, in the view of the court, when not unduly extended as to area or duration. Thus the court concluded that although clearances might indirectly affect admission prices, they do not fix them and that they may be reasonable restraints of trade under the Sherman Act. 13 The District Court held that in determining whether a clearance is unreasonable, the following factors are relevant: 14 (1) The admission prices of the theatres involved, as set by the exhibitors; 15 (2) The character and location of the theatres iv olved, including size, type of entertainment, appointments, transit facilities, etc.; (3) The policy of operation of the theatres involved, such as the showing of double features, gift nights, give-aways, premiums, cut-rate tickets, lotteries, etc.; 16 (4) The rental terms and license fees paid by the theatres involved and the revenues derived by the distributor-defendant from such theatres; 17 (5) The extent to which the theatres involved compete with each other for patronage; 18 (6) The fact that a theatre involved is affiliated with a defendant-distributor or with an independent circuit of theatres should be disregarded; and 19 (7) There should be no clearance between theatres not in substantial competition. 20 It reviewed the evidence in light of these standards and concluded that many of the clearances granted by the defendants were unreasonable. We do not stop to retrace those steps. The evidence is ample to show, as the District Court plainly demonstrated, see 66 F.Supp. pages 343—346, that many clearances had no relation to the competitive factors which alone could justify them.7 The clearances which were in vogue had, indeed, acquired a fixed and uniform character and were made applicable to situations without regard to the special circumstances which are necessary to sustain them as reasonable restraints of trade. The evidence is ample to support the finding of the District Court that the defendants either participated in evolving this uniform system of clearances or acquiesced in it and so furthered its existence. That evidence, like the evidence on the price-fixing phase of the case, is therefore adequate to support the finding of a conspiracy to restrain trade by imposing unreasonable clearances. 21 The District Court enjoined defendants and their affiliates from agreeing with each other or with any exhibitors or distributors to maintain a system of clearances, or from granting any clearance between theatres not in substantial competition, or from granting or enforcing any clearance against theatres in substantial competition with the theatre receiving the license for exhibition in excess of what is reasonably necessary to protect the licensee in the run granted. In view of the findings this relief was plainly warranted. 22 Some of the defendants ask that this provision be construed (or, if necessary, modified) to allow licensors in granting clearances to take into consideration what is reasonably necessary for a fair return to the licensor. We reject that suggestion. If that were allowed, then the exhibitor-defendants would have an easy method of keeping alive at least some of the consequences of the effective conspiracy which they launched. For they could then justify clearances granted by other distributors in favor of their theatres in terms of the competitive requirements of those theatres, and at the same time justify the restrictions they impose upon independents in terms of the necessity of protecting their film rental as licensor. That is too potent a weapon to leave in the hands of those whose proclivity to unlawful conduct has been so marked. It plainly should not be allowed so long as the exhibitor-defendants own theatres. For in its baldest terms it is in the hands of the defendants no less than a power to restrict the competition of others in the way deeme most desirable by them. In the setting of this case the only measure of reasonableness of a clearance by Sherman Act standards is the special needs of the licensee for the competitive advantages it affords. 23 Whether the same restrictions would be applicable to a producer who had not been a party to such a conspiracy is a question we do not reach. 24 Objection is made to a further provision of this part of the decree stating that 'Whenever any clearance provision is attacked as not legal under the provisions of this decree, the burden shall be upon the distributor to sustain the legality thereof.' We think that provision was justified. Clearances have been used along with price fixing to suppress competition with the theatres of the exhibitor-defendants and with other favored exhibitors. The District Court could therefore have eliminated clearances completely for a substantial period of time, even though, as it thought, they were not illegal per se. For equity has the power to uproot all parts of an illegal scheme—the valid as well as the invalid—in order to rid the trade or commerce of all taint of the conspiracy. United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 724, 64 S.Ct. 805, 814, 88 L.Ed. 1024. The court certainly then could take the lesser step of making them prima facie invalid. But we do not rest on that alone. As we have said, the only justification for clearances in the setting of this case is in terms of the special needs of the licensee for the competitive advantages they afford. To place on the distributor the burden of showing their reasonableness is to place it on the one party in the best position to evaluate their competitive effects. Those who have shown such a marked proclivity for unlawful conduct are in no position to complain that they carry the burden of showing that their future clearances come within the law. Cf. United States v. Crescent Amusement Co., 323 U.S. 173, 188, 65 S.Ct. 254, 261, 89 L.Ed. 160. (3) Pooling Agreements; Joint Ownership. 25 The District Court found the exhibitor-defendants had agreements with each other and their affiliates by which theatres of two or more of them, normally competitive, were operated as a unit, or managed by a joint committee or by one of the exhibitors, the profits being shared according to prearranged percentages. Some of these agreements provided that the parties might not acquire other competitive theatres without first offering them for inclusion in the pool. The court concluded that the result of these agreements was to eliminate competition pro tanto both in exhibition and in distribution of features,8 since the parties would naturally direct the films to the theatres in whose earnings they were interested. 26 The District Court also found that the exhibitor-defendants had like agreements with certain independent exhibitors. Those alliances had, in its view, the effect of nullifying competition between the allied theatres and of making more effective the competition of the group against theatres not members of the pool. The court found that in some cases the operating agreements were achieved through leases of theatres, the rentals being measured by a percentage of profits earned by the theatres in the pool. The District Court required the dissolution of existing pooling agreements and enjoined any future arrangement of that character. 27 These provisions of the decree will stand. The practices were bald efforts to substitute monopoly for competition and to strengthen the hold of the exhibitor-defendants on the industry by alignment of competitors on their side. Clearer restraints of trade are difficult to imagine. 28 There was another type of business arrangement that the District Court found to have the same effect as the pooling agreements just mentioned. Many theatres are owned jointly by two or more exhibitor-defendants or by an exhibitord efendant and an independent.9 The result is, according to the District Court, that the theatres are operated 'collectively rather than competitively.' And where the joint owners are an exhibitor-defendant and an independent the effect is, according to the District Court, the elimination by the exhibitor-defendant of 'putative competition between itself and the other joint owner, who otherwise would be in a position to operate theatres independently.' The District Court found these joint ownerships of theatres to be unreasonable restraints of trade within the meaning of the Sherman Act. 29 The District Court ordered the exhibitor-defendants to disaffiliate by terminating their joint ownership of theatres; and it enjoined future acquisitions of such interests. One is authorized to buy out the other if it shows to the satisfaction of the District Court and that court first finds that such acquisition 'will not unduly restrain competition in the exhibition of feature motion pictures.' This dissolution and prohibition of joint ownership as between exhibitor-defendants was plainly warranted. To the extent that they have joint interests in the outlets for their films each in practical effect grants the other a priority for the exhibition of its films. For in this situation, as in the case where theatres are jointly managed, the natural gravitation of films is to the theatres in whose earnings the distributors have an interest. Joint ownership between exhibitor-defendants then becomes a device for strengthening their competitive position as exhibitors by forming an alliance as distributors. An express agreement to grant each other the preference would be a most effective weapon to stifle competition. A working arrangement or business device that has that necessary consequence gathers no immunity because of its subtlety. Each is a restraint of trade condemned by the Sherman Act. 30 The District Court also ordered disaffiliation in those instances where theatres were jointly owned by an exhibitor-defendant and an independent, and where the interest of the exhibitor-defendant was 'greater than 5% unless such interest shall be 95% or more,' an independent being defined for this part of the decree as 'any former, present or putative motion picture theatre operator which is not owned or controlled by the defendant holding the interest in question.' The exhibitor-defendants are authorized to acquire existing interests of the independents in these theatres if they establish, and if the District Court first finds that the acquisition 'will not unduly restrain competition in the exhibition of feature motion pictures.' All other acquisitions of such joint interests were enjoined. 31 This phase of the decree is strenuously attacked. We are asked to eliminate it for lack of findings to support it. The argument is that the findings show no more than the existence of joint ownership of theatres by exhibitor-defendants and independents. The statement by the District Court that the joint ownership eliminates 'putative competition' is said to be a mere conclusion without evidentiary support. For it is said that the facts of the record show that many of the instances of joint ownership with an independent interest are cases wholly devoid of any history of or relationship to restraints of trade or monopolistic practices. Some are said to be rather fortuio us results of bankruptcies; others are said to be the results of investments by outside interests who have no desire or capacity to operate theatres, and so on. 32 It is conceded that the District Court made no inquiry into the circumstances under which a particular interest had been acquired. It treated all relationships alike, insofar as the disaffiliation provision of the decree is concerned. In this we think it erred. 33 We have gone into the record far enough to be confident that at least some of these acquisitions by the exhibitor-defendants were the products of the unlawful practices which the defendants have inflicted on the industry. To the extent that these acquisitions were the fruits of monopolistic practices or restraints of trade, they should be divested. And no permission to buy out the other owner should be given a defendant. United States v. Crescent Amusement Co., supra, 323 U.S. at page 189, 65 S.Ct. at page 262, 89 L.Ed. 160; Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947. Moreover, even if lawfully acquired, they may have been utilized as part of the conspiracy to eliminate or suppress competition in furtherance of the ends of the conspiracy. In that event divestiture would likewise be justified. United States v. Crescent Amusement Co., supra, 323 U.S. at pages 189, 190, 65 S.Ct. at page 262, 89 L.Ed. 650. In that situation permission to acquire the interest of the independent would have the unlawful effect of permitting the defendants to complete their plan to eliminate him. 34 Furthermore, if the joint ownership is an alliance with one who is or would be an operator but for the join ownership, divorce should be decreed even though the affiliation was innocently acquired. For that joint ownership would afford opportunity to perpetuate the effects of the restraints of trade which the exhibitor-defendants have inflicted on the industry. 35 It seems, however, that some of the cases of joint ownership do not fall into any of the categories we have listed. Some apparently involve no more than innocent investments by those who are not actual or potential operators. If in such cases the acquisition was not improperly used in furtherance of the conspiracy, its retention by defendants would be justified absent a finding that no monopoly resulted. And in those instances permission might be given the defendants to acquire the interests of the independents on a showing by them and a finding by the court that neither monopoly nor unreasonable restraint of trade in the exhibition of films would result. In short, we see no reason to place a ban on this type of ownership, at least so long as theatre ownership by the five majors is not prohibited. The results of inquiry along the lines we have indicated must await further findings of the District Court on remand of the cause. 36 (4) Formula Deals, Master Agreements, and Franchises. 37 A formula deal is a licensing agreement with a circuit of theatres in which the license fee of a given feature is measured, for the theatres covered by the agreement, by a specified percentage of the feature's national gross. The District Court found that Paramount and RKO had made formula deals with independent and affiliated circuits. The circuit was allowed to allocate playing time and film rentals among the various theatres as it saw fit. The inclusion of theatres of a circuit into a single agreement gives no opportunity for other theatre owners to bid for the feature in their respective areas and, in the view of the District Court, is therefore an unreasonable restraint of trade. The District Court found some master agreements10 open to the same objection. Those are the master agreements that cover exhibition in two or more theatres in a particular circuit and allow the exhibitor to allocate the film rental paid among the theatres as it sees fit and to exhibit the features upon such playing time as it deems best, and leaves other terms to the discretion of the circuit. The i strict Court enjoined the making or further performance of any formula deal of the type described above. It also enjoined the making or further performance of any master agreement covering the exhibition of features in a number of theatres. 38 The findings of the District Court in these respects are supported by facts, its conclusion that formula deals and master agreements constitute restraint of trade is valid, and the relief is proper. The formula deals and master agreements are unlawful restraints of trade in two respects. In the first place, they eliminate the possiblity of bidding for films theatre by theatre. In that way they eliminate the opportunity for the small competitor to obtain the choice first runs, and put a premium on the size of the circuit. They are, therefore, devices for stifling competition and diverting the cream of the business to the large operators. In the second place, the pooling of the purchasing power of an entire circuit in bidding for films is a misuse of monopoly power insofar as it combines the theatres in closed towns with competitive situations. The reasons have been stated in United States v. Griffith, 334 U.s,. 100, 68 S.Ct. 941, and Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947, and need not be repeated here. It is hardly necessary to add that distributors who join in such arrangements by exhibitors are active participants in effectuating a restraint of trade and a monopolistic practice. See United States v. Crescent Amusement Co., supra, 323 U.S. at page 183, 65 S.Ct. at page 259, 89 L.Ed. 160. 39 The District Court also enjoined the making or further performance of any franchise. A franchise is a contract with an exhibitor which extends over a period of more than a motion picture season and covers the exhibition of features released by the distributor during the period of the agreement. The District Court held that a franchise constituted a restraint of trade because a period of more than one season was too long and the inclusion of all features was disadvantageous to competitors. At least that is the way we read its findings. 40 Universal and United Artists object to the outlawry of franchise agreements. Universal points out that the charge of illegality of franchises in these cases was restricted to franchises with theatres owned by the major defendants and to franchises with circuits or theatres in a circuit, a circuit being defined in the complaint as a group of more than five theatres controlled by the same person or a group of more than five theatres which franchises with circuits or theatres in a films. It seems, therefore, that the legality of franchises to other exhibitors (except as to block-booking, a practice to which we will later advert) was not in issue in the litigation. Moreover, the findings on franchises are clouded by the statement of the District Court in the opinion that franchises 'necessarily contravene the plan of licensing each picture, theatre by theatre, to the highest bidder.' As will be seen hereafter, we eliminate from the decree the provision for competitive bidding. But for its inclusion of competitive bidding the District Court might well have treated the problem of franchises differently. 41 We can see how if franchises were allowed to be used between the exhibitor-defendants each might be able to strengthen its strategic position in the exhibition field and continue the ill effects of the conspiracy which the decree is designed to dissipate. Franchise agreements may have been employed as devices to discriminate against some independents in favor of others. We know from the record that franchise agreements often contained discriminatory clauses operating in favor not only of theatres owned by the defendants but also of the large circuits. But we cannot say on this record that franchises are illegal per se when extended to any theatre or circuit no matter how small. The findings do not deal with the issue doubtlessly due o the fact that any system of franchises would necessarily conflict with the system of competitive bidding adopted by the District Court. Hence we set aside the findings on franchises so that the court may examine the problem in the light of the elimination from the decree of competitive bidding. 42 We do not take that course in the case of formula deals and master agreements, for the findings in these instances seem to stand on their own bottom and apparently have no necessary dependency on the provision for competitive bidding. 43 (5) Block-Booking. 44 Block-booking is the practice of licensing, or offering for license, one feature or group of features on condition that the exhibitor will also license another feature or group of features released by the distributors during a given period. The films are licensed in blocks before they are actually produced. All the defendants, except United Artists, have engaged in the practice. Block-booking prevents competitors from bidding for single features on their individual merits. The District Court (66 F.Supp. 349) held it illegal for that reason and for the reason that it 'adds to the monopoly of a single copyrighted picture that of another copyrighted picture which must be taken and exhibited in order to secure the first.' That enlargement of the monopoly of the copyright was condemned below in reliance on the principle which forbids the owner of a patent to condition its use on the purchase or use of patented or unpatented materials. See Ethyl Gasoline Corporation v. United States, 309 U.S. 436, 459, 60 S.Ct. 618, 626, 84 L.Ed. 852; Morton Salt Co. v. Suppiger Co., 314 U.S. 488, 491, 62 S.Ct. 402, 404, 86 L.Ed. 363; Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 665, 64 S.Ct. 268, 271, 88 L.Ed. 376. The court enjoined defendants from performing or entering into any license in which the right to exhibit one feature is conditioned upon the licensee's taking one or more other features.11 45 We approve that restriction. The copyright law, like the patent statutes, makes reward to the owner a secondary consideration. In Fox Film Corp. v. Doyal, 286 U.S. 123, 127, 52 S.Ct. 546, 547, 76 L.Ed. 1010, Chief Justice Hughes spoke as follows respecting the copyright monopoly granted by Congress 'The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors.' It is said that reward to the author or artist serves to induce release to the public of the products of his creative genius. But the reward does not serve its public purpose if it is not related to the quality of the copyright. Where a high quality film greatly desired is licensed only if an inferior one is taken, the latter borrows quality from the former and strengthens its monopoly by drawing on the other. The practice tends to equalize rather than differentiate the reward for the individual copyrights. Even where all the films included in the package are of equal quality, the requirements that all be taken if one is desired increases the market for some. Each stands not on its own footing but in whole or in part on the appeal which another film may have. As the District Court said, the result is to add to the monopoly of the copyright in violation of the principle of the patent cases involving tying clauses.12 46 It is argued that Transparent-Wrap Machine Corp. v. Stokes & Smith Co., 329 U.S. 637, 67 S.Ct. 610, 91 L.Ed. 563, points to a contrary result. That case held that the inclusion in a patent license of a condition requiring the licensee to assign improvement patents was not per se illegal. But that decision, confined to improvement patents, was greatly influenced by the federal statute governing assignments of patents. It therefore has no controlling significance here. 47 Columbia Pictures makes an earnest argument that enforcement of the restriction as to block-booking will be very disadvantageous to it and will greatly impair its ability to operate profitably. But the policy of the anti-trust laws is not qualified or conditioned by the convenience of those whose conduct is regulated. Nor can a vested interest, in a practice which contravenes the policy of the anti-trust laws, receive judicial sanction. 48 We do not suggest that films may not be sold in blocks or groups, when there is no requirement, express or implied, for the purchase of more than one film. All we hold to be illegal is a refusal to license one or more copyrights unless another copyright is accepted. 49 (6) Discrimination. 50 The District Court found that defendants had discriminated against small independent exhibitiors and in favor of large affiliated and unaffiliated circuits through various kinds of contract provisions. These included suspension of the terms of a contract if a circuit theatre remained closed for more than eight weeks with reinstatement without liability on reopening; allowing large privileges in the selection and elimination of films; allowing deductions in film rentals if double bills are played; granting moveovers13 and extended runs; granting road show privileges;14 allowing overage and underage;15 granting unlimited playing time; excluding foreign pictures and those of independent producers; and granting rights to question the classification of features for rental purposes. The District Court found that the competitive advantages of these provisions were so great that their inclusion in contracts witht he larger circuits and their exclusion from contracts with the small independents constituted an unreasonable discriminatory contract constituted a conspiracy discriminatory contract constituted a conspiracy between licensor and licensee. Hence the District Court deemed it unnecessary to decide whether the defendants had conspired among themselves to make these discriminations. No provision of the decree specifically enjoins these discriminatory practices because they were thought to be impossible under the system of competitive bidding adopted by the District Court. 51 These findings are amply supported by the evidence. We concur in the conclusion that these discriminatory practices are included among the restraints of trade which the Sherman Act condemns. See Interstate Circuit v. United States, supra, 306 U.S. at page 231, 59 S.Ct. at page 476, 83 L.Ed. 610; United States v. Crescent Amusement Co., supra, 323 U.S. at pages 182, 183, 65 S.Ct. at page 259, 89 L.Ed. 160. It will be for the District Court on remand of these cases to provide effective relief against their continuance, as our elimination of the provision for competitive bidding leaves this phase of the cases unguarded. 52 There is some suggestion on this as well as on other phases of the cases that large exhibitors with whom defendants dealt fathered the illegal practices and forced them onto the defendants. But as the District Court observed, that circumstance if true does not help the defendants. For acquiescence in an illegal scheme is as much a violation of the Sherman Act as the creation and promotion of one. 53 Second—Competitive Bidding. 54 The District Court concluded that the only way competition could be introduced into the existing system of fixed prices, clearances and runs was to require that films be licensed on a competitive bidding basis. Films are to be offered to all exhibitors in each competitive area.16 The license for the desired run is to be granted to the highest responsible bidder, unless the distributor rejects all offers. The licenses are to be offered and taken theatre by theatre and picture by picture. Licenses to show films in theatres, in which the licensor owns directly or indirectly an interest of ninety-five per cent or more, are excluded from the requirement for competitive bidding. 55 Paramount is the only one of the five majors who opposes the competitive bidding system. Columbia Pictures, Universal, and United Artists oppose it. The intervenors representing certain independents oppose it. And the Department of Justice, which apparently proposed the system originally, speaks strongly against it here. 56 At first blush there is much to commend the system of competitive bidding. The trade victims of this conspiracy have in large measure been the small independent operators. They are the ones that have felt most keenly the discriminatory practices and predatory activities in which defendants have freely indulged. They have been the victims of the massed purchasing power of the larger units in the industry. It is largely out of the ruins of the small operators that the large empires of exhb itors have been built. Thus it would appear to be a great boon to them to substitute open bidding for the private deals and favors on which the large operators have thrived. But after reflection we have concluded that competitive bidding involves the judiciary so deeply in the daily operation of this nation-wide business and promises such dubious benefits that it should not be undertaken. 57 Each film is to be licensed on a particular run to 'the highest responsible bidder, having a theatre of a size, location and equipment adequate to yield a reasonable return to the licensor.' The bid 'shall state what run such exhibitor desires and what he is willing to pay for such feature, which statement may specify a flat rental, or a percentage of gross receipts, or both, or any other form of rental, and shall also specify what clearance such exhibitor is willing to accept, the time and days when such exhibitor desires to exhibit it, and any other offers which such exhibitor may care to make.' We do not doubt that if a competitive bidding system is adopted all these provisions are necessary. For the licensing of films at auction is quite obviously a more complicated matter than the like sales for cash of tabacco, wheat, or other produce. Columbia puts these pertinent queries: 'No two exhibitors are likely to make the same bid as to dates, clearance, method of fixing rental, etc. May bids containing such diverse factors be readily compared? May a flat rental bid be compared with a percentage bid? May the value of any percentage bid be determined unless the admission price is fixed by the license?' 58 The question as to who is the highest bidder involves the use of standards incapable of precise definition because the bids being compared contain different ingredients. Determining who is the most responsible bidder likewise cannot be reduced to a formula. The distributor's judgment of the character and integrity of a particular exhibitor might result in acceptance of a lower that favoritism was shown would be well that favoritism was shown would be well nigh impossible, unless perhaps all the exhibitors in the country were given classifications of responsibility. If, indeed, the choice between bidders is not to be entrusted to the uncontrolled discretion of the distributors, some effort to standardize the factors involved in determining 'a reasonable return to the licensor' would seem necessary. 59 We mention these matters merely to indicate the character of the job of supervising such a competitive bidding system. It would involve the judiciary in the administration of intricate and detailed rules governing priority, period of clearance, length of run, competitive areas, reasonable return, and the like. The system would be apt to require as close a supervision as a continuous receivership, unless the defendants were to be entrusted with vast discretion. The judiciary is unsuited to affairs of business management; and control through the power of contempt is crude and clumsy and lacking in the flexibility necessary to make continuous and detailed supervision effective. Yet delegation of the management of the system to the discretion of those who had the genius to conceive the present conspiracy and to execute it with the subtlety which this record reveals, could be done only with the greatest reluctance. At least such choices should not be faced unless the need for the system is great and its benefits plain. 60 The system uproots business arrangements and established relationships with no apparent overall benefit to the small independent exhibitor. If each feature must go to the highest responsible bidder, those with the greatest purchasing power would seem to be in a favored position. Those with the longest purse—the exhibitor-defendants and the large circuits—would seem to stand in a preferred position. If in fact they were enabled through the competitive bidding system to take the cream of the business, eliminate the smaller independents, and thus increase thi r own strategic hold on the industry, they would have the cloak of the court's decree around them for protection. Hence the natural advantage which the larger and financially stronger exhibitors would seem to have in the bidding gives us pause. If a premium is placed on purchasing power, the court-created system may be a powerful factor towards increasing the concentration of economic power in the industry rather than cleansing the competitive system of unwholesome practices. For where the system in operation promises the advantage to the exhibitor who is in the strongest financial position, the injunction against discrimination17 is apt to hold an empty promise. In this connection it should be noted that even though the independents in a given competitive area do not want competitive bidding, the exhibitor-defendants can invoke the system. 61 Our doubts concerning the conpetitive bidding system are increased by the fact that defendants who own theatres are allowed to pre-empt their own features. They thus start with an inventory which all other exhibitors lack. The latter have no prospect of assured runs except what they get by competitive bidding. The proposed system does not offset in any way the advantages which the exhibitor-defendants have by way of theatre ownership. It would seem in fact to increase them. For the independents are deprived of the stability which flows from established business relationships. Under the proposed system they can get features only if they are the highest responsible bidders. They can no longer depend on their private sources of supply which their ingenuity has created. Those sources, built perhaps on private relationships and representing important items of good will, are banned, even though they are free of any taint of illegality. 62 The system was designed, as some of the defendants put it, to remedy the difficulty of any theatre to break into or change the existing system of runs and clearances. But we do not see how, in practical operation, the proposed system of competitive bidding is likely to open up to competition the markets which defendants' unlawful restraints have dominated. Rather real danger seems to us to lie in the opportunities the system affords the exhibitor-defendants and the other large operators to strengthen their hold in the industry. We are reluctant to alter decrees in these cases where there is agreement with the District Court on the nature of the violations. United States v. Crescent Amusement Co., supra, 323 U.S. at page 185, 65 S.Ct. at page 260, 89 L.Ed. 160; International Salt Co. v. United States, 332 U.S. 392, 400, 68 S.Ct. 12, 17. But the provisions for competitive bidding in these cases promise little in the way of relief against the real evils of the conspiracy. They implicate the judiciary heavily in the details of business management if supervision is to be effective. They vest powerful control in the exhibitor-defendants over their competitors if close supervision by the court is not undertaken. In light of these considerations we conclude that the competitive bidding provisions of the decree should be eliminated so that a more effective decree may be fashioned. 63 We have already indicated in preceding parts of this opinion that this alteration in the decree leaves a hiatus or two which will have to be filled on remand of the cases. We will indicate hereafter another phase of the problem which the District Court should also reconsider in view of this alteration in the decree. But out of an abundance of caution we add this additional word. The competitive bidding system was perhaps the central arch of the decree designed by the District Court. Its elimination may effect the cases in ways other than those which we expressly memtion. Hence on remand of the cases the freedom of the Disr ict Court to reconsider the adequacy of decree is not limited to those parts we have specifically indicated. 64 Third. Monopoly, Expansion of Theatre Holdings, Divestiture. 65 There is a suggestion that the hold the defendants have on the industry is so great that a problem under the First Amendment is raised. Cf. Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013. We have no doubt that moving pictures, like newspapers and radio, are included in the press whose freedom is guaranteed by the First Amendment. That issue would be focused here if we had any question concerning monopoly in the production of moving pictures. But monopoly in production was eliminated as an issue in these cases, as we have noted. The chief argument at the bar is phrased in terms of monopoly of exhibition, restraints on exhibition, and the like. Actually, the issue is even narrower than that. The main contest is over the cream of the exhibition business—that of the first-run theatres. By defining the issue so narrowly we do not intend to belittle its importance. It shows, however, tha the question here is not what the public will see or if the public will be permitted to see certain features. It is clear that under the existing system the public will be denied access to none. If the public cannot see the features on the first-run, it may do so on the second, third, fourth, or later run. The central problem presented by these cases is which exhibitors get the highly profitable first-run business. That problem has important aspects under the Sherman Act. But it bears only remotely, if at all, on any question of freedom of the press, save only as timeliness of release may be a factor of importance in specific situations. 66 The controversy over monopoly relates to monopoly in exhibition and more particularly monopoly in the first-run phase of the exhibition business. 67 The five majors in 1945 had interests in somewhat over 17 per cent of the theatres in the United States—3,137 out of 18,076.18 Those theatres paid 45 per cent of the total domestic film rental received by all eight defendants. 68 In the 92 cities of the country with populations over 100,000 at least 70 per cent of all the first-run theatres are affiliated with one or more of the five majors. In 4 of those cities the five majors have no theatres. In 38 of those cities there are no independent first-run theatres. In none of the remaining 50 cities did less than three of the distributor-defendants license their product on first run to theatres of the five majors. In 19 of the 50 cities less than three of the distributor-defendants licensed their product on first run to independent theatres. In a majority of the 50 cities the greater share of all of the features of defendants were licensed for first-run exhibition in the theatres of the five majors. 69 In about 60 per cent of the 92 cities having populations of over 100,000, independent theatres compete with those of the five majors in first-run exhibition. In about 91 per cent of the 92 cities there is competition between independent theatres and the theatres of the five majors or between theatres of the five majors themselves for first-run exhibition. In all of the 92 cities thr e is always competition in some run even where there is no competition in first runs. 70 In cities between 25,000 and 100,000 populations the five majors have interests in 577 of a total of 978 first-run theatres or about 60 per cent. In about 300 additional towns, mostly under 25,000, an operator affiliated with one of the five majors has all of the theatres in the town. 71 The District Court held that the five majors could not be treated collectively so as to establish claims of general monopolization in exhibition. It found that none of them was organized or had been maintained 'for the purpose of achieving a national monopoly' in exhibition. It found that the five majors by their present theatre holdings 'alone' (which aggregate a little more than one-sixth of all the theatres in the United States), 'do not and cannot collectively or individually have a monopoly of exhibition.' The District Court also found that where a single defendant owns all of the first-run theatres in a town, there is no sufficient proof that the acquisition was for the purpose of creating a monopoly. It found rather that such consequence resulted from the inertness of competitors, their lack of financial ability to build theatres comparable to those of the five majors, or the preference of the public for the best equipped theatres. And the percentage of features on the market which any of the five majors could play in its own theatres was found to be relatively small and in nowise to approximate a monopoly of film exhibition.19 72 Even in respect of the theatres jointly owned or jointly operated by the defendants with each other or with independents the District Court found no monopoly or attempt to monopolize. Those joint agreements or ownership were found only to be unreasonable restraints of trade. The District Court, indeed, found no monopoly on any phase of the cases, although it did find an attempt to monopolize in the fixing of prices, the granting of unreasonable clearances, block-booking and the other unlawful restraints of trade we have already discussed. The 'root of the difficulties,' according to the District Court, lay not in theatre ownership but in those unlawful practices. 73 The District Court did, however, enjoin the five majors from expanding their present theatre holdings in any manner.20 It refused to grant the request of the Department of Justice for total divestiture by the five majors of their theatre holdings. It found that total divestiture would be injurious to the five majors and damaging to the public. Its thought on the latter score was that the new set of theatre owners who would take the place of the five majors would be unlikely for some years to give the public as good service as those they supplanted 'in view of the latter's demonstrated experience and skill in operating what must be regarded as in general the largest and best equipped theatres.' Divestiture was, it thought, too harsh a remedy where there was available the alternative of competitive bidding. It accordingly concluded that divestiture was unnecessary 'at least until the efficiency of that system has been tried and found wanting.' 74 It is clear, so far as the five majors are concerned, that the aim of the conspiracy was exclusionary, i.e. it was designed to strengthen their hold on the exhibition field. In other words, the conspiracy had monopoly in exhibition for one of its goals, as the District Court held. Price, clearance, and run are interdependent. The clearance and run provisions of the licenses fixed the relative playing positions of all theatres in a certain area; the minimum price provisions were based on playing position the first-run theatres being required to charge the highest prices, the second-run theatres the next highest, and so on. As the District Court found, 'In effect, the distributor, by the fixing of minimum admission prices attempts to give the prior-run exhibitors as near a monopoly of the patronage as possible.' 75 It is, therefore, not enough in determining the need for divestiture to conclude with the District Court that none of the defendants was organized or has been maintained for the purpose of achieving a 'national monopoly,' nor that the five majors through their present theatre holdings 'alone' do not and cannot collectively or individually have a monopoly of exhibition. For when the starting point is a conspiracy to effect a monopoly through restraints of trade, it is relevant to determine what the results of the conspiracy were even if they fell short of monopoly. 76 An example will illustrate the problem. In the popular sense there is a monopoly if one person owns the only theatre in town. That usually does not, however, constitute a violation of the Sherman Act. But as we noted in United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, and see Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947, even such an ownership is vulnerable in a suit by the United States under the Sherman Act if the property was acquired, or its strategic position maintained, as a result of practices which constitute unreasonable restraints of trade. Otherwise, there would be reward from the conspiracy through retention of its fruits. Hence the problem of the District Court does not end with enjoining continuance of the unlawful restraints nor with dissolving the combination which launched the conspiracy. Its function includes undoing what the conspiracy achieved. As we have discussed in Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947, the requirement that the defendants restore what they unlawfully obtained is no more punishment than the familiar remedy of restitution. What findings would be warranted after such an inquiry in the present cases, we do not know. For the findings of the District Court do not cover this point beyond stating that monopoly was an objective of the several restraints of trade that stand condemned. 77 Moreover, the problem under the Sherman Act is not solved merely by measuring monopoly in terms of size or extent of holdings or by concluding that single ownerships were not obtained 'for the purpose of achieving a national monopoly.' It is the relationship of the unreasonable restraints of trade to the position of the defendants in the exhibition field (and more particularly in the first-run phase of that business) that is of first importance on the divestiture phase of these cases. That is the position we have taken in Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947, in dealing with a projection of the same conspiracy through certain large circuits. Parity of treatment of the unaffiliated and the affiliated circuits requires the same approach here. For the fruits of the conspiracy which are denied the independents must also be denied the five majors. In this connection there is a suggestion that one result of the conspiracy was a geographical division of territory among the five majors. We mention it not to intimate that it is true but only to indicate the appropriate extent of the n quiry concerning the effect of the conspiracy in theatre ownership by the five majors. 78 The findings of the District Court are deficient on that score and obscure on another. The District Court in its findings speaks of the absence of a 'purpose' on the part of any of the five majors to achieve a 'national monopoly' in the exhibition of motion pictures. First, there is no finding as to the presence or absence of monopoly on the part of the five majors in the first-run field for the entire country, in the first-run field in the 92 largest cities of the country, or in the first-run field in separate localities. Yet the first-run field, which constitutes the cream of the exhibition business, is the core of the present cases. Section 1 of the Sherman Act out-laws unreasonable restraints irrespective of the amount of trade or commerce involved (United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224, 225, n. 59, 60 S.Ct. 811, 844-846, 84 L.Ed. 1129), and § 2 condemns monopoly of 'any part' of trade or commerce.' Any part' is construed to mean an appreciable part of interstate or foreign trade or commerce. United States v. Yellow Cab Co., 332 U.S. 218, 225, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010. Second, we pointed out in United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, that 'specific intent' is not necessary to establish a 'purpose or intent' to create a monopoly but that the requisite 'purpose or intent' is present if monopoly results as a necessary consequence of what was done. The findings of the District Court on this phase of the cases are not clear, though we take them to mean by the absence of 'purpose' the absence of a specific intent. So construed they are inconclusive. In any event they are ambiguous and must be recast on remand of the cases. Third, monopoly power, whether lawfully or unlawfully acquired, may violate § 2 of the Sherman Act though it remains unexercised (United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941), for as we stated in American Tobacco Co. v. United States, 328 U.S. 781, 809, 811, 66 S.Ct. 1125, 1140, 90 L.Ed. 1575, the existence of power 'to exclude competition when it is desired to do so' is itself a violation of § 2, provided it is coupled with the purpose or intent to exercise that power. The District Court, being primarily concerned with the number and extent of the theatre holdings of defendants, did not address itself to this phase of the monopoly problem. Here also, parity of treatment as between independents and the five majors as theatre owners, who were tied into the same general conspiracy necessitates consideration of this question. 79 Exploration of these phases of the cases would not be necessary if, as the Department of Justice argues, vertical integration of producing, distributing and exhibiting motion pictures is illegal per se. But the majority of the Court does not take that view. In the opinion of the majority the legality of vertical integration under the Sherman Act turns on (1) the purpose or intent with which it was conceived, or (2) the power it creates and the attendant purpose or intent. First, it runs afoul of the Sherman Act if it was a calculated scheme to gain control over an appreciable segment of the market and to restrain or suppress competition, rather than an expansion to meet legitimate business needs. United States v. Reading Co., 253 U.S. 26, 57, 40 S.Ct. 425, 432, 64 L.Ed. 760; United States v. Lehigh Valley R. Co., 254 U.S. 255, 269, 270, 41 S.Ct. 104, 108, 109, 65 L.Ed. 253. Second, a vertically integrated enterprise, like other aggregations of business units (United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416), will constitute monopoly which, though unexercised, violates the Sherman Act provided a power to exclude competition is coupled with a purpose or intent to do so. As we pointed out in United States v. Griffith, 334 U.S. 107, n. 10, 68 S.Ct. 946, size is itself an earmark of monopoly power. For size carries with it an opportunity for abuse. And thef act that the power created by size was utilized in the past to crush or prevent competition is potent evidence that the requisite purpose or intent attends the presence of monopoly power. See United States v. Swift & Co., 286 U.S. 106, 116, 52 S.Ct. 460, 463, 76 L.Ed. 999; United States v. Aluminum Co. of America, supra, 148 F.2d at page 430. Likewise bearing on the question whether monopoly power is created by the vertical integration, is the nature of the market to be served (United States v. Aluminum Co. of America, supra, 148 F.2d at page 430), and the leverage on the market which the particular vertical integration creates or makes possible. 80 These matters were not considered by the District Court. For that reason, as well as the others we have mentioned, the findings on monopoly and divestiture which we have discussed in this part of the opinion will be set aside. There is an independent reason for doing that. As we have seen, the District Court considered competitive bidding as an alternative to divestiture in the sense that it concluded that further consideration of divestiture should not be had until competitive bidding had been tried and found wanting. Since we eliminate from the decree the provisions for competitive bidding, it is necessary to set aside the findings on divestiture so that a new start on this phase of the cases may be made on their remand. 81 It follows that the provision of the decree barring the five majors from further theatre expansion should likewise be eliminated. For it too is related to the monopoly question; and the District Court should be allowed to make an entirely fresh start on the whole of the problem. We in no way intimate, however, that the District Court erred in prohibiting further theatre expansion by the five majors. 82 The Department of Justice maintains that if total divestiture is denied, licensing of films among the five majors should be barred. As a permanent requirement it would seem to be only an indirect way of forcing divestiture. For the findings reveal that the theatres of the five majors could not operate their theatres full time on their own films.21 Whether that step would, in absence of competitive bidding, serve as a short range remedy in certain situations to dissipate the effects of the conspiracy (United States v. Univis Lens Co., 316 U.S. 241, 254, 62 S.Ct. 1088, 1095, 86 L.Ed. 1408; United States v. Bausch & Lomb Co., supra, 321 U.S. at page 724, 64 S.Ct. at page 814, 88 L.Ed. 1024; United States v. Crescent Amusement Co., supra, 323 U.S. at page 188, 65 S.Ct. at page 261, 89 L.Ed. 650) is a question for the District Court. Fourth. 83 The consent decree created an arbitration system which had, in the view of the District Court, proved useful in its operation. The court indeed thought that the arbitration system had dealt with the problems of clearances and runs 'with rare efficiency.' But it did not think it had the power to continue an arbitration system which would be binding on the parties, since the consent decree did not bind the defendants who had not consented to it and since the government, acting pursuant to the powers reserved under the consent decree, moved for trial of the issues charged in the complaint. The District Court recommended, however, that some such system be continued. But it included no such provision in its decree. 84 We agree that the government did not consent to a permanent system of arbitration under the consent decree and that the District Court has no power to force or require parties to submit to arbitration in lieu of the remedies afforded by Congress for enforcing the anti-trust laws. But the District Court has the power to authorize the maintenance of sc h a system by those parties who consent and to provide the rules and procedure under which it is to operate. The use of the system would not, of course, be mandatory. It would be merely an auxiliary enforcement procedure, barring no one from the use of other remedies the law affords for violations either of the Sherman Act or of the decree of the court. Whether such a system of arbitration should be inaugurated is for the discretion of the District Court. 85 Fifth—Intervention. 86 Certain associations of exhibitors and a number of independent exhibitors, appellant-intervenors in Nos. 85 and 86, were denied leave to intervene in the District Court. They appeal from those orders. They also filed original motions for leave to intervene in this Court. We postponed consideration of the original motions and of our jurisdiction to hear the appeals until a hearing on the merits of the cases. 87 Rule 24(a) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, which provides for intervention as of right, reads in part as follows: 'Upon timely application anyone shall be permitted to intervene in an action: * * * (2) when the representation of the applicant's interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action.' 88 The complaint of the intervenors was directed towards the system of competitive bidding. The Department of Justice is the representative of the public in these anti-trust suits. So far as the protection of the public interest in free competition is concerned, the interests of those intervenors was adequately represented. The intervenors, however, claim that the system of competitive bidding would have operated prejudicially to their rights. Cf. United States v. Terminal R. Ass'n of St. Louis, 236 U.S. 194, 199, 35 S.Ct. 408, 410, 59 L.Ed. 535. Their argument is that the plan of competitive bidding under the control of the defendants would be a concert of action that would be illegal but for the decree. If pursuant to the decree defendants acted under that plan, they would gain immunity from any liability under the anti-trust laws which otherwise they might have to the intervenors. Thus, it is argued, the decree would affect their legal rights and be binding on them. The representation of their interests by the Department of Justice on that score was said to be inadequate since that agency proposed the idea of competitive bidding in the District Court. 89 We need not consider the merits of that argument. Even if we assume that the intervenors are correct in their position, intervention should be denied here and the orders of the District Court denying leave to intervene must be affirmed. Now that the provisions for competitive bidding have been eliminated from the decree there is no basis for saying that the decree affects their legal rights. Whatever may have been the situation below, no other reason appears why at this stage their intervention is warranted. Any justification for making them parties has disappeared. 90 The judgment in these cases is affirmed in part and reversed in part, and the cases are remanded to the District Court for proceedings in conformity with this opinion. 91 So ordered. 92 Affirmed in part and reversed in part. 93 Mr. Justice JACKSON took no part in the consideration or decision of these cases. 94 Mr. Justice FRANKFURTER, dissenting in part. 95 'The framing of decrees should take place in the District rather than in Appellate Courts. They are invested with large discretion to model their judgments to fit the exigencies of the particular case.' On this guiding consideration, the Court earlier this Term sustained a Sherman Law decree, which was not the outcome of a long trial involving complicated and contested facts and their significance, but the formulation of a summary judgment on the bare bones of pleadings. International Salt Co. v. United States, 332 U.S. 392, 400, 401, 68 S.Ct. 12, 17, 18. The record in this case bespeaks more compelln g respect for the decree fashioned by the District Court of three judges to put an end to violations of the Sherman Law and to prevent the recurrence, than that which led this Court not to find abuse of discretion in the decree by a single district judge in the International Salt case. 96 This Court has both the authority and duty to consider whether a decree is well calculated to undo, as far as is possible, the result of transactions forbidden by the Sherman Law and to guard against their repetition. But it is not the function of this Court, and it would ill discharge it, to displace the district courts and write decrees de novo. We are, after all, an appellate tribunal even in Sherman Law cases. It could not be fairly claimed that this Court possesses greater experience, understanding and prophetic insight in relation to the movie industry, and is therefore better equipped to formulate a decree for the movie industry than was the District Court in this case, presided over as it was by one of the wisest of judges. 97 The terms of the decree in this litigation amount, in effect, to the formulation of a regime for the future conduct of the movie industry. The terms of such a regime, within the scope of judicial oversight, are not to be derived from precedents in the law reports, nor, for that matter, from any other available repository of knowledge. Inescapably the terms must be derived from an assessment of conflicting interests, not quantitatively measurable, and a prophecy regarding the workings of untried remedies for dealing with disclosed evils so as to advance most the comprehensive public interest. 98 The crucial legal question before us is not whether we would have drawn the decree as the District Court drew it, but whether, on the basis of what came before the District Court, we can say that in fashioning remedies it did not fairly respond to disclosed violations and therefore abused a discretion, the fair exercise of which we should respect and not treat as an abuse. Discretion means a choice of available remedies. As bearing upon this question, it is most relevant to consider whether the District Court showed a sympathetic or mere niggling awareness of the proper scope of the Sherman Law and the range of its condemnation. Adequate remedies are not likely to be fashioned by those who are not hostile to evils to be remedied. The District Court's opinion manifests a stout purpose on the part of that court to enforce its thoroughgoing uncerstanding of the requirements of the Sherman Law as elucidated by this Court. And so we have before us the decree of a district court thoroughly aware of the demands of the Sherman Law and manifestly determined to enforce it in all its rigors. 99 How did the District Court go about working out the terms of the decree some of which this Court now displaces? The case was before the lower court from October 8, 1945, to January 22, 1947. A vast body of the evidence which had to be considered below, and must be considered here in overturning the lower court's decree, consisted of documents. A mere enumeration of these documents, not printed in the record before us, required a pamphlet of 42 pages. It took 460 pages for a selection of exhibits deemed appropriate for printing by the Government. The printed record in this Court consists of 3,841 pages. It is on the basis of this vast mass of evidence that the District Court, on June 11, 1946, filed its careful opinion, approved here, as to the substantive issues. Thereafter, it heard argument for three days as to the terms of the judgment. The parties then submitted their proposals for findings of fact and conclusions of law by the District Court. After a long trial, an elaborate opinion on the merits, full discussion as to the terms of the decree, more than two months for the gestation of the decree, the terms were finally promulgated. 100 I cannot bring myself to conclude that the product of such a painstaking process of adjudication as to a decree appropriate fors uch a complicated sitation as this record discloses was an abuse of discretion, arrived at as it was after due absorption of all the light that could be shed upon remedies appropriate for the future. After all, as to such remedies there is no test, ultimately, except the wisdom of men judged by events. 101 Accordingly, I would affirm the decree except as to one paticular, that regarding an arbitration system for controversies that may arise under the decree. This raises a pure question of law and not a judgment based upon facts and their significance, as are those features of the decree which the Court sets aside. The District Court indicated that 'in view of its demonstrated usefulness' such an arbitration system was desirable to aid in the enforcement of the decree. The District Court, however, deemed itself powerless to continue an arbitration system without the consent of the parties. I do not find such want of power in the Distirct Court to select this means of enforcing the decree most effectively, with the least friction and by the most fruitful methods. A decree as detailed and as complicated as is necessary to fit a situation like the one before us is bound, even under the best of circumstances, to raise controversies involving conflicting claims as to facts and their meaning. A court could certainly appoint a master to deal with questions arising under the decree. I do not appreciate why a proved system of arbitration, appropriate as experience has found it to be appropriate for adjudicating numberless questions that arise under such a decree, is not to be treated in effect as a standing master for purposes of this decree. See Ex parte Peterson, 253 U.S. 300, 40 S.Ct. 543, 64 L.Ed. 919. I would therefore leave it to the discretion of the District Court to determine whether such a system is not available as an instrument of auxiliary enforcement. With this exception I would affirm the decree of the District Court. 1 Sec. 2 of the Expediting Act of February 11, 1903, 32 Stat. 823, as amended, 15 U.S.C. § 29, 15 U.S.C.A. § 29, and § 238 of the Judicial Code, as amended by the Act of February 13, 1925, 43 Stat. 936, 938, 28 U.S.C. § 345, 28 U.S.C.A. § 345. 2 The court was convened pursuant to the provisions of the Act of April 6, 1942, 56 Stat. 198, 199, 15 U.S.C. § 28, 15 U.S.C.A. § 28. 3 Before trial, negotiations for a settlement were undertaken. As a result, a consent decree against the five major defendants was entered November 20, 1940. The consent decree contained no admission of violation of law and adjudicated no issue of fact or law, except that the complaint stated a cause of action. The decree reserved to the United States the right at the end of a three-year trial period to seek the relief prayed for in the amended complaint. After the end of the three-year period the United States moved for trial against all the defendants. First. Restraint of Trade—(1) Price Fixing. 4 A master agreement is a licensing agreement or 'blanket deal' covering the exhibition of features in a number of theatres, usually comprising a circuit. A franchise is a licensing agreement, or series of licensing agreements, entered into as part of the same transaction, in effect for more than one motion picture season and covering the exhibition of features released by one distributor during the entire period of the agreement. An independent as used in these cases means a producer, distributor, or exhibitor, as the context requires, which is not a defendant in the action, or a subsidiary or affiliate of a defendant. 5 See note 12, infra. 6 A clearance is the period of time, usually stipulated in license contracts, which must elapse between runs of the same feature within a particular area or in specified theatres. Runs are successive exhibitions of a feature in a given area, first-run being the first exhibition in that area, second-run being the next subsequent, and so on, and include successive exhibitions in different theatres, even though such theatres may be under a common ownership or management. 7 Thus the District Court found: 'Some licenses granted clearance (to sell) to all theatres which the exhibitor party to the contract might thereafter own, lease, control, manage, or operate against all theatres in the immediate vicinity of the exhibitor's theatre thereafter erected or opened. The purpose of this type of clearance agreements was to fix the run and clearance status of any theatre thereafter opened not on the basis of its appointments, size, location, and other competitive features normally entering into such determination, but rather upon the sole basis of whether it were operated by the exhibitor party to the agreement.' 8 A feature is any motion picture, regardless of topic, the length of film of which is in excess of 4,000 feet. 9 Theatres jointly owned with independents: Paramount...................... 993 Warner.......................... 20 Fox............................. 66 RKO............................ 187 Loew's.......................... 21 Total........................ 1287 Theatres jointly owned by two defendants: Parmount-Fox....................... 6 Paramount-Loew's.................. 14 Paramount-Warner.................. 25 Paramount-RKO.................... 150 Loew's-RKO......................... 3 Loew's-Warner...................... 5 Fox-RKO............................ 1 Warner-RKO........................ 10 Total........................... 214 Of the 1287 jointly owned with independents, 209 would not be affected by the decree since one of the ownership interests is less than 5 per cent, an amount which the District Court treated as de minimis. 10 See note 4, supra. 11 Blind-selling is a practice whereby a distributor licenses a feature before the exhibitor is afforded an opportunity to view it. To remedy the problems created by that practice the District Court included the following provision in its decree: 'To the extent that any of the features have not been trade-shown prior to the granting of the license for more than a single feature, the licensee shall be given by the licensor the right to reject twenty per cent of such features not trade-shown prior to the granting of the license, such right of rejection to be exercised in the order of release within ten days after there has been an opportunity afforded to the licenssee to inspect the feature.' The court advanced the following as its reason for inclusion of this provision: 'Blind-selling does not appear to be as inherently restrictive of competition as block-booking, although it is capable of some abuse. By this practice a distributor could promise a picture of good quality or of a certain type which when produced might prove to be of poor quality or of another type—a competing distributor meanwhile being unable to market its product and in the end losing its outlets for future pictures. The evidence indicates that trade-shows, which are designated to prevent such blind-selling, are poorly attended by exhibitors. Accordingly, exhibitors who choose to obtain their films for exhibition in quantities, need to be protected against burdensome agreements by being given an option to reject a certain percentage of their blind-licensed pictures within a reasonable time after they shall have become available for inspection.' We approve this provision of the decree. 12 The exclusive right granted by the Copyright Act, 35 Stat. 1075, 17 U.S.C. § 1, 17 U.S.C.A. § 1, includes no such privilege. It provides, so far as material here, as follows: 'That any person entitled thereto, upon complying with the provisions of this Act, shall have the exclusive right: * * * '(d) To perform or represent the copyrighted work publicly if it be a drama or, if it be a dramatic work and not reproduced in copies for sale, to vend any manuscript or any record whatsoever thereof; to make or to procure the making of any transcription or record thereof by or from which, in whole or in part, it may in any manner or by any method be exhibited, performed, represented, produced, or reproduced; and to exhibit, perform, represent, produce, or reproduce it in any manner or by any method whatsoever;' 13 A moveover is the privilege given a licensee to move a picture from one theatre to another as a continuation of the run at the licensee's first theatre. 14 A road show is a public exhibition of a feature in a limited number of theatres, in advance of its general release, at admission prices higher than those customarily charged in first-run theatres in those areas. 15 Underage and overage refer to the practice of using excess film rental earned in one circuit theatre to fulfill a rental commitment defaulted by another. 16 Competitive bidding is required only in a 'competitive area' where it is 'desired by the exhibitors.' As the District Court said, 'the decree provides an opportunity to bid for any exhibitor in a competitive area who may desire to do so.' The details of the competitive bidding system will be found in 70 F.Supp. pages 73, 74. 17 The competitive bidding part of the decree provides: 'Each license shall be granted solely upon the merits and without discrimination in favor of affiliates, old customers or others.' 18 The theatres which each of the five majors owned independently of the others were: Paramount 1,395 or 7.72 per cent; Warner 501 or 2.77 per cent; Loew's 135 or .74 per cent; Fox 636 or 3.52 per cent; RKO 109 or .60 per cent. There were in addition 361 theatres or about 2 per cent in which two or more of the five majors had joint interests. These figures exclude connections through filmbuying, or management contracts or through corporations in which a defendant owns an indirect minority stock interest. There theatres are located in 922 towns in 48 States and the District of Columbia. For further description of the distribution of theatres see Bertrand, Evans, and Blanchard, The Motion Picture Industry—A Pattern of Control 15—16 (TNEC Monograph 43, 1941). 19 The number of feature films released during the 1943—44 season by the eleven largest distributors is as follows: Percentages of Total With With No. of Films "Westerns" "Westerns" included excluded Fox....... 33. 8.31 9.85 Loew's.... 33. 8.31 9.85 Paramount. 31. 7.81 9.25 RKO....... 38. 9.57 11.34 Warner.... 19. 4.79 5.67 Columbia.. 41. 10.32 12.24 United Artists. 16 4.04 4.78 Universal. 49. 12.34 14.63 Republic - 29 features 14.86 8.66 - 30 "Westerns" Monogram - 26 features 10.58 7.76 - 16 "Westerns" PRC - 20 features 9.07 5.97 - 16 "Westerns" ----- ------- ------- Totals.. 397. 100.00 100.00 335 without "Westerns" 20 excepted from this prohibition was the acquisition of interests in theatres jon tly owned, a matter we have discussed in a preceding portion of this opinion. 21 The District Court found, 'Except for a very limited number of theatres in the very largest cities, the 18,000 and more theatres in the United States exhibit the product of more than one distributor. Such theatres could not be operated on the product of only one distributor.'
78
334 U.S. 37 68 S.Ct. 822 92 L.Ed. 1196 FEDERAL TRADE COMMISSIONv.MORTON SALT CO. No. 464. Argued March 10, 1948. Decided May 3, 1948. [Syllabus from pages 37-39 intentionally omitted] Mr. Robert L. Stern, of Washington, D.C., for petitioner. Mr. Lloyd M. McBride, of Chicago, Ill., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The Federal Trade Commission, after a hearing, found that the respondent, which manufacturers and sells table salt in interstate commerce, had discriminated in price between different purchasers of like grades and qualities, and concluded that such discriminations were in violation of § 2 of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. § 13, 15 U.S.C.A. § 13.1 It accordingly issued a cease and desist order. 39 F.T.C. 35.2 Upon petition of the respondent the Circuit Court of Appeals, with one judge dissenting, set aside the Commission's findings and order, directed the Commission to dismiss its complaint against respondent, and denied a cross petition of the Commission for enforcement of its order. 7 Cir., 162 F.2d 949. The Court's judgment rested on its construction of the Act, its holding that crucial findings of the Commission were either not supported by evidence or were contrary to the evidence, and its conclusion that the Commission's order was too broad. Since questions of importance in the construction and administration of the Act were presented, we granted certiorari. 332 U.S. 850, 68 S.Ct. 355. Disposition of these questions requires only a brief narration of the facts. 2 Respondent manufacturers several different brands of table salt3 and sells them directly to (1) wholesalers or jobbers, who in turn resell to the retail trade, and (2) large retailers, including chain store retailers. Respondent sells its finest brand of table salt, known as Blue Label, on what it terms a standard quantity discount system available to all customers. Under this system the purchasers pay a delivered price and the cost to both wholesale and retail purchasers of this brand differs according to the quantities bought. These prices are as follows, after making allowance for rebates and discounts: 3 Only five coma nies have ever bought sufficient quantities of respondent's salt to obtain the $1.35 per case price. These companies could buy in such quantities because they operate large chains of retail stores in various parts of the country.4 As a result of this low price these five companies have been able to sell Blue Label salt at retail cheaper than wholesale purchasers from respondent could reasonably sell the same brand of salt to independently operated retail stores, many of whom competed with the local outlets of the five chain stores. 4 Respondent's table salts, other than Blue Label, are also sold under a quantity discount system differing slightly from that used in selling Blue Label. Sales of these other brands in less-than-carload lots are made at list price plus freight from plant to destination. Carload purchasers are granted approximately a 5 per cent discount; approximately a 10 per cent discount is granted to purchasers who buy as much as $50,000 worth of all brands of salt in any consecutive twelve-month period. Respondent's quantity discounts on Blue Label and on other table salts were enjoyed by certain wholesalers and retailers who competed with other wholesalers and retailers to whom these discounts were refused. 5 In addition to these standard quantity discounts, special allowances were granted certain favored customers who competed with other customers to whom they were denied.5 6 First. Respondent's basic contention, which it argues this case hinges upon, is that its 'standard quantity discounts, available to all on equal terms, as contrasted for example, to hidden or special rebates, allowances, prices or discounts, are not discriminatory, within the meaning of the Robinson-Patman Act.' Theoretically, these discounts are equally available to all, but functionally they are not. For as the record indicates (if reference to it on this point were necessary) no single independent retail grocery store, and probably no single wholesaler, bought as many as 50,000 cases or as much as $50,000 worth of table salt in one year. Furthermore, the record shows that, while certain purchasers were enjoying one or more of respondent's standard quantity discounts, some of their competitors made purchases in such small quantities that they could not qualify for any of respondent's discounts, even those based on carload shipments. The legislative history of the Robinson-Patman Act makes it abundantly clear that Congress considered it to be an evil that a large buyer could secure a competitive advantage over a small buyer solely because of the large buyer's quantity purchasing ability. The Robinson-Patman Act was passed to deprive a large buyer of such advantages except to the extent that a lower price could be justified by reason of a seller's diminished costs due to quantity manufacture, delivery or sale, or by reason of h e seller's good faith effort to meet a competitor's equally low price. 7 Section 2 of the original Clayton Act had included a proviso that nothing contained in it should prevent 'discrimination in price * * * on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation * * *.' That section has been construed as permitting quantity discounts, such as those here, without regard to the amount of the seller's actual savings in cost attributable to quantity sales or quantity deliveries. Goodyear Tire & Rubber Co. v. Federal Trade Comm., 6 Cir., 101 F.2d 620. The House Committee Report on the Robinson-Patman Act considered that the Clayton Act's proviso allowing quantity discounts so weakened § 2 'as to render it inadequate, if not almost a nullity.'6 The Committee considered the present Robinson-Patman amendment to § 2 'of great importance.' Its purpose was to limit 'the use of quantity price differentials to the sphere of actual cost differences. Otherwise,' the report continued, 'such differentials would become instruments of favor and privilege and weapons of competitive oppression.'7 The Senate Committee reporting the bill emphasized the same purpose,8 as did the Congressman in charge of the Conference Report when explaining it to the House just before final passage.9 And it was in furtherance of this avowed purpose-to protect competition from all price differentials except those based in full on cost savings-that § 2(a) of the amendment provided 'That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered.' 8 The foregoing references, without regard to others which could be mentioned, establish that respondent's standard quantity discounts are discriminatory within the meaning of the Act, and are prohibited by it whenever they have the defined effect on competition. See Federal Trade Comm. v. Staley Co., 324 U.S. 746, 751, 65 S.Ct. 971, 973, 89 L.Ed. 1338. 9 Second. The Government interprets the opinion of the Circuit Court of Appeals as having held that in order to establish 'discrimination in price' under the Act the burden rested on the Commission to prove that respondent's quantity discount differentials were not justified by its cost savings.10 Respondent does not so understand the Court of Appeals decision, and furthermore admits that no such burden rests on the Commission. We agree that it does not. First, the general rule of statutory construction that the burden of proving justification or exemption under a special exception to the prohibitions of a statute generally rests on one who claims its benefits,11 requires that respondent undertake this proof under the proviso of § 2(a). Secondly, § 2(b) of the Act specifically imposes the burden of showing justification upon one who is shown to have discriminated in prices. And the Senate committee report on the bill explained that the provisos of § 2(a) throw 'upon any who claims the benefit of those exceptions the burden of showing that their case falls within them.'12 We think that the language of the Act, and the legislative history just cited, show that Congress meant by using the words 'discrimination in price' in § 2 that in a case involving competitive injury between a seller's customers the Commission need only prove that a seller had charged one purchaser a higher price for like goods than he had charged one or more of the purchaser's competitors.13 This construction is consistent with the first sentence of § 2(a) in which it is made unlawful 'to discriminate in price between different purchasers of commodt ies of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce * * * and where the effect of such discrimination may be * * * to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *.' 10 Third. It is argued that the findings fail to show that respondent's discriminatory discounts had in fact caused injury to competition. There are specific findings that such injuries had resulted from respondent's discounts although the statute does not require the Commission to find that injury has actually resulted. The statute requires no more than that the effect of the prohibited price discriminations 'may be substantially to lessen competition * * * or to injure, destroy, or prevent competition.' After a careful consideration of this provision of the Robinson-Patman Act, we have said that 'the statute does not require that the discriminations must in fact have harmed competition, but only that there is a reasonable possibility that they 'may' have such an effect.' Corn Products Co. v. Federal Trade Comm., 324 U.S. 726, 742, 65 S.Ct. 961, 969, 89 L.Ed. 1320.14 Here the Commission found what would appear to be obvious, that the competitive opportunities of certain merchants were injured when they had to pay respondent substantially more for their goods than their competitors had to pay. The findings are adequate. 11 Fourth. It is urged that the evidence is inadequate to support the Commission's findings of injury to competition.15 As we have pointed out, however, the Commission is authorized by the Act to bar discriminatory prices upon the 'reasonable possibility' that different prices for like goods to competing purchasers may have the defined effect on competition.16 That respondent's quantity discounts did result in price differentials between competing u rchasers sufficient in amount to influence their resale price of salt was shown by evidence. This showing in itself is adequate to support the Commission's appropriate findings that the effect of such price discriminations 'may be substantially to lessen competition * * * and to injure, destroy and prevent competition.' 12 The adequacy of the evidence to support the Commission's findings of reasonably possible injury to competition from respondent's price differentials between competing carload and less-than-carload purchasers is singled out for special attacks here. It is suggested that in considering the adequacy of the evidence to show injury to competition respondent's carload discounts and its other quantity discounts should not be treated alike. The argument is that there is an obvious saving to a seller who delivers goods in carload lots. Assuming this to be true, that fact would not tend to disprove injury to the merchant compelled to pay the less-than-carload price. For a ten-cent carload price differential against a merchant would injure him competitively just as much as a ten-cent differential under any other name. However relevant the separate carload argument might be to the question of justifying a differential by cost savings, it has no relevancy in determining whether the differential works an injury to a competitor. Since Congress has not seen fit to give carload discounts any favored classification we cannot do so. Such discounts, like all others, can be justified by a seller who proves that the full amount of the discount is based on his actual savings in cost. The trouble with this phase of respondent's case is that it has thus far failed to make such proof. 13 It is also argued that respondent's less-than-carload sales are very small in comparison with the total volume of its business17 and for that reason we should reject the Commission's finding that the effect of the carload discrimination may substantially lessen competition and may injure competition between purchasers who are granted and those who are denied this discriminatory discount. To support this argument, reference is made to the fact that salt is a small item in most wholesale and retail businesses and in consumers' budgets. For several reasons we cannot accept this contention. 14 There are many articles in a grocery store that, considered separately, are comparatively small parts of a merchant's stock. Congress intended to protect a merchant from competitive injury attributable to discrimn atory prices on any or all goods sold in interstate commerce, whether the particular goods constituted a major or minor portion of his stock. Since a grocery store consists of many comparatively small articles, there is no possible way effectively to protect a grocer from discriminatory prices except by applying the prohibitions of the Act to each individual article in the store. 15 Furthermore, in enacting the Robinson-Patman Act Congress was especially concerned with protecting small businesses which were unable to buy in quantities, such as the merchants here who purchased in less-than-carload lots. To this end it undertook to strengthen this very phase of the old Clayton Act. The committee reports on the Robinson-Patman Act emphasized a belief that § 2 of the Clayton Act had 'been too restrictive in requiring a showing of general injury to competitive conditions * * *.' The new provision, here controlling, was intended to justify a finding of injury to competition by a showing of 'injury to the competitor victimized by the discrimination.'18 Since there was evidence sufficient to show that the less-than-carload purchasers might have been handicapped in competing with the more favored carload purchasers by the differential in price established by respondent, the Commission was justified in finding that competition might have thereby been substantially lessened or have been injured within the meaning of the Act. 16 Apprehension is expressed in this Court that enforcement of the Commission's order against respondent's continued violations of the Robinson-Patman Act might lead respondent to raise table salt prices to its carload purchasers. Such a conceivable, though, we think, highly improbable contingency, could afford us no reason for upsetting the Commission's findings and declining to direct compliance with a statute passed by Congress. 17 The Commission here went much further in receiving evidence than the statute requires. It heard testimony from many witnesses in various parts of the country to show that they had suffered actual financial losses on account of respondent's discriminatory prices. Experts were offered to prove the tendency of injury from such prices. The evidence covers about two thousand pages, largely devoted to this single issue-injury to competition. It would greatly handicap effective enforcement of the Act to require testimony to show that which we believe to be self-evident, namely, that there is a 'reasonable possibility' that competition may be adversely affected by a practice under which manufacturers and producers sell their goods to some customers substantially cheaper than they sell like goods to the competitors of these customers. This showing in itself is sufficient to justify our conclusion that the Commission's findings of injury to competition were adequately supported by evidence. 18 Fifth. The Circuit Court of Appeals held, and respondent here contends, that the order was too sweeping, that it required the respondent to 'conduct its business generally at its peril,' and that the Commission had exceeded its jurisdc tion in entering such an order.19 Reliance for this contention chiefly rests on National Labor Relations Board v. Express Publishing Co., 312 U.S. 426, 61 S.Ct. 693, 85 L.Ed. 930. That case held that the Labor Board could not broadly enjoin violations of all the provisions of the statute merely because a single violation of one of the Act's many provisions had been found. Id., at pages 435, 436 of 312 U.S., at pages 699, 700 of 61 S.Ct. But it also pointed out that the Labor Board, 'Having found the acts which constitute the unfair labor practice * * * is free to restrain the practice and other like or related unlawful acts.' It there pointed out that this Court had applied a similar rule to a Federal Trade Commission order in Federal Trade Comm. v. Beech Nut Co., 257 U.S. 441, 455, 42 S.Ct. 150, 155, 66 L.Ed. 307, 19 A.L.R. 882. In the latter case the Court not only approved restraint of the unlawful price-fixing practices found, but 'any other equivalent co-operative means of accomplishing the maintenance of prices fixed by the company.' See also May Dep't. Stores Co. v. Labor Board, 326 U.S. 376, 392, 393, 66 S.Ct. 203, 213, 90 L.Ed. 145. We think the Commission's order here, save for the provisos in (a) and (b) later considered, is specifically aimed at the pricing practices found unlawful, and therefore does not run counter to the holding in the Express Publishing Co. case. Certainly the order in its relation to the circumstances of this case is only designed 'to prevent violations, the threat of which in the future is indicated because of their similarity or relation to those unlawful acts which the Board (Commission) has found to have been committed by the * * * (respondent) in the past.' National Labor Relations Board v. Express Publishing Co., supra, 312 U.S. at pages 436, 437, 61 S.Ct. at page 700. 19 The specific restraints of paragraphs (a) and (b) of the order are identical, except that one applies to prices respondent charges wholesalers and the other to prices charged retailers. It is seen that the first part of these paragraphs, preceding the provisos, would absolutely bar respondent from selling its table salt, regardless of quantities, to some wholesalers and retailers at prices different from that which it charged competing wholesalers and retailers for the same grade of salt. The Commission had found that respondents had been continuously engaged in such discriminations through the use of discounts, rebates and allowances. It had further found that respondent had failed to show justification for these differences by reason of a corresponding difference in its costs. Thus the restraints imposed by the Commission upon respondent are concerned with the precise unlawful practices in which it was found to have engaged for a number of years. True, the Commission did not merely prohibit future discounts, rebates, and allowances in the exact mathematical percentages previously utilz ed by respondent. Had the order done no more than that, respondent could have continued substantially the same unlawful practices despite the order, by simply altering the discount percentages and the quantities of salt to which the percentages applied. Paragraphs (a) and (b) up to the language of the provisos are approved. 20 The provisos in (a) and (b) present a more difficult problem. They read: 'Provided, however, that this shall not prevent price differences of less than five cents per case which do not tend to lessen, injure or destroy competition among such wholesalers (retailers).' The first clause of the provisos, but for the second qualifying clause, would unequivocally permit respondent to maintain price differentials of less than five cents as between competing wholesalers and as between competing retailers.20 This clause would appear to benefit respondent, and no challenge to it, standing alone, is here raised. But respondent seriously objects to the second clause of the proviso which qualifies the permissive less-than-five-cent differentials provided in the first clause. That qualification permits such differentials only if they do 'not tend to lessen, injure, or destroy competition.' Respondent points out that where a differential tends in no way to injure competition, the Act permits it. 'The Commission,' so respondent urges, 'must either find and rule that a given differential injures competition, and then prohibit it, or it must leave that differential entirely alone.' Whether, and under what circumstances, if any, the Commission might prohibit differentials which do not of themselves tend to injure competition, we need not decide, for the Commission has not in either (a) or (b) taken action which forbids such noninjurious differentials. But other objections raised to the qualifying clauses require consideration. 21 One of the reasons for entrusting enforcement of this Act primarily to the Commission, a body of experts, was to authorize it to hear evidence as to given differential practices and to make findings concerning possible injury to competition. Such findings are to them the basis for cease and desist orders definitely restraining the particular discriminatory practices which may tend to injure competition without justification. The effective administration of the Act, insofar as the Act entrusts administration to the Commission, would be greatly impaired, if, without compelling reasons not here present, the Commission's cease and desist orders did no more than shift to the courts in subsequent contempt proceedings for their violation the very fact questions of injury to competition, etc., which the Act requires the Commission to determine as the basis for its order. The enforcement responsibility of the courts, once a Commission order has become final either by lapse of time or by court approval, 15 U.S.C. §§ 21, 45, 15 U.S.C.A. §§ 21, 45, is to adjudicate questions concerning the order's violation, not questions of fact which support that valid order. 22 Whether on this record the Commission was compelled to exempt certain differentials of less than five cents we do not decide. But once the Commission exempted the differentials in question from its order, we are constrained to hold that as to those differentials, it could not then shift to the courts a responsibility in enforcement proceedings of trying issues of possible injury to competitio, issues which Congress has primarily entrusted to the Commission. 23 This leaves for consideration the objection to paragraph (c) of the order which reads: 'By selling such products to any retailer at prices lower than prices charged wholesalers whose customers compete with such retailer.' The only criticism here urged to (c) is that it bars respondent from selling to a retailer at a price lower than that charged a wholesaler whose customers compete with the retailer. Section 2(a) of the Act specifically authorizes the Commission to bar discriminatory prices which tend to lessen or injure competition with 'any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them.' This provision plainly supports paragraph (c) of the order. 24 We sustain the Commission's order with the exception of the provisos in paragraphs (a) and (b) previously set out. Since the qualifying clauses constitute an important limitation to the provisos, we think the Commission should have an opportunity to reconsider the entire provisos in light of our rejection of the qualifying clauses, and to refashion these provisos as may be deemed necessary. This the Commission may do upon the present evidence and findings or it may hear other evidence and make other findings on this phase of the case, should it conclude to do so. See Federal Trade Commission v. Royal Milling Co. et al., 288 U.S. 212, 218, 53 S.Ct. 335, 337, 77 L.Ed. 706. 25 The judgment of the Circuit Court of Appeals is reversed and the proceedings are remanded to that court to be disposed of in conformity with this opinion. 26 Reversed. 27 Mr. Justice JACKSON, with whom Mr. Justice FRANKFURTER joins, dissenting in part. 28 While I agree with much of the Court's opinion, I cannot accept its most significant feature, which is a new interpretation of the Robinson-Patman Act that will sanction prohibition of any discounts 'if there is a reasonable possibility that they 'may' have the effect' to wit: to lessen, injure, destroy or prevent competition. (Emphasis supplied.) I think the law as written by the Congress and as always interpreted by this Court requires that the record show a reasonable probability of that effect. The difference, as every lawyer knows, is not unimportant and in many cases would be decisive. 29 The law rarely authorizes judgments on proof of mere possibilities. After careful consideration this Court has, at least three times and as late as 1945, refused to interpret these laws as doing so. In 1922, in Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, at page 356, 42 S.Ct. 360, 362, 66 L.Ed. 653, a unanimous Court, construing like language in § 3 of the Clayton Act, said: 'But we do not think that the purpose in using the word 'may' was to prohibit the mere possibility of the consequences described. It was intended to prevent such agreements as would under the circumstances disclosed probably lessen competition, or create an actual tendency to monopoly.' 30 In 1930, in International Shoe Company v. Federal Trade Commission, 280 U.S. 291, at page 298, 50 S.Ct. 89, at page 91, 74 L.Ed. 431, the Court said with respect to identical language in § 7 of the Clayton Act, 15 U.S.C.A. § 18: '* * * the act deals only with such acquisitions as probably will result in lessening competition to a substantial degree, Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 357, 42 S.Ct. 360, (362,) 66 L.Ed. 653 * * *.' And Mr. Justice Stone wrote for the dissenting justices (280 U.S. at page 306, 50 S.Ct. at page 94): 'Nor am I able to say that the McElwain Company * * * was then in such financial straits as to preclude the reasonable inference by the Commission that its business * * * would probably continue to compete with that of petitioner. See Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 356, 357, 42 S.Ct. 360, (362,) 66 L.Ed. 653.' 31 With these interpretations on our books the Robinson-Patman Act was passed. 32 When the latter Act came before this Court in 1945, this same question was carefully considered and Chief Justice Stone, with the concurrence of all but two members of the Court and with no disagreement noted on this point, wrote: 'It is to be observed that § 2(a) does not require a finding that the discriminations in price have in fact had an adverse effect on competition. The statute is designed to reach such discriminations 'in their incipiency,' before the harm to competition is effected. It is enough that they 'may' have the prescribed effect. Cf. Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 356-357, 42 S.Ct. 360, 362, 66 L.Ed. 653. But as was held in the Standard Fashion case, supra, with respect to the like provisions of § 3 of the Clayton Act, * * * prohibiting tying clause agreements, the effect of which 'may be substantially to lessen competition,' the use of the word 'may' was not to prohibit discriminations having 'the mere possibility' of those consequences, but to reach those which would probably have the defined effect on competition.' Corn Products Refining Company v. Federal Trade Commission, 324 U.S. 726, 738, 65 S.Ct. 961, 967, 89 L.Ed. 1320. 33 It is true that later (324 U.S. at page 742, 65 S.Ct. at page 969) the opinion uses the language as to possibility of injury now quoted in part1 by the Court as the holding of that case. But the phrase appears in such form and context and is so irreconcilable with the earlier careful and complete statement, set out above, that the inconsistency must appear to a fair reader as one of those inadvertencies into which the most careful judges sometimes fall. It is the only authority for making a thrice-rejected rule of interpretation a prevailing one. I know of no other instance in which this Court has ever held that administrative orders applying drastic regulation of business practices may hand on so slender a thread of inference. 34 The Court uses overtones of hostility to all quantity discounts, which I do not find in the Act, but they are translated into a rule which is fatal to any discount the Commission sees fit to attack. To say it is the law that the Commission may strike down any discount 'upon the reasonable possibility that different prices for like goods to competing purchasers may substantially injure competition,' coupled with the almost absolute subservience of judicial judgment to administrative experience, cf. Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194, 67 S.Ct. 1575, means that judicial review is a word of promise to the ear to be broken to the hope. The law of this case, in a nutshell, is that no quantity discount is valid if the Commission chooses to say it is not. That is not the law which Congress enacted and which this Court has uniformly stated until today. 35 The Robinson-Patman Act itself, insofar as it relates to quantity discounts, seems to me, on its face and in light of its history, to strive for two results, both of which should be kept in mind when interpreting it. 36 On the one hand, it recognizes that the quantity discount may be utilized arbitrarily and without justification in savings effected by quantity sales, to give a discriminatory advantage to large buyers over small ones. This evil it would prohibit. On the other hand, it recognizes that a business practice so old and general is not without some basis in reason, that much that we call our standard of living is due to the wide availability of low-priced goods made possible by mass production and quantity distribution, and hence that whatever economies result from quantity transactions may, and indeed should, be passed down the line to the consumer. I think the Court's disposition of this case pretty much sanctions an obliteration of the difference between discounts which the Act would foster and those it would condemn. 37 It will illustrate my point to discuss only two of the discounts involved-two which the Commission and the Court lump together and treat exactly alike, but which to me require under the facts of this case quite different inferences as to their effect on competition. 38 In addition to a general ten-cent per case carload lot discount, there is what we may call a quota discount, by which customers who purchase 5,000 or more cases in a twelve-month period get a further rebate of 10 cents per case, while those who purchase 50,000 or more cases in such periods get an additional 5 cents per case. The application of this schedule to distribution of the table salt involved is substantially illustrated by one of the Company's exhibits, from which we find: 39 It thus appears that out of approximately 4,000 customers only 54 receive either of these two quota discounts in practice, and the larger one is available to only four or five major chain store organizations. The quota discounts allowed a customer are not related to any apparent difference in handling costs but are based solely on the volume of his purchases, which in turn depends largely on the volume of his sales, and these in turn are surely influenced by his lowered costs which he can reflect in his retail prices. 40 I agree that these facts warrant a prima facie inference of discrimination and sustain a finding of discrimination unless the Company, which best knows why and how these discounts are arrived at and which possesses all the data as to costs, comes forward with a justification. I agree, too, that the results of this system on respondent's customer list is enough to warrant the inference that the effects 'may be substantially to lessen competition or tend to create a monopoly.' 41 Even applying the stricter test of probability, I think the inference of adverse effect on competition is warranted by the facts as to the quota discounts. It is not merely probable but I think it is almost inevitable that the further ten-cent or fifteen-cent per case differential in net price of salt between the large number of small merchants and the small number of very large merchants, accelerates the trend of the former towards extinction and of the latter towards monopoly. 42 However, a very different problem is presented by the differential of 10 cents per case when delivered in carload lots. This carload price applies to various small purchasers who pool their orders to make a carload shipment and to all who pick up their orders, no matter how small, at the company warehouses which are maintained in ten cities. The evidence is that less than 1/10 of 1% of the respondent's total salt business fail to get the benefit of this carload-lot discount. 43 It does not seem to me that one can fairly draw the inference that competition probably is affected by the carload-lot discount. Indeed, the discount is so small in proportion to price, salt is so small an item in wholesale or retail business and in the consumer's budget that I should think it farfetched even to find it reasonably possible that competition would be substantially affected. Hence, the discount, whether more or less than the exact savings in handling, would not fall under condemnation of the statute. The incidence of this discount on customers is not arbitrarily determined by the volume of their business but depends upon an obvious difference in handling and delivery costs. 44 The Commission has forbidden respondent to continue this carload-lot differential. The Commission has no power to prescribe prices, so that it can order only that the differential be eliminated. Unless competitive conditions make it impossible, the respondent's self-interest would dictate that it abolish the discount and maintain the higher base price, rather than make the discount universally applicable. The result would be to raise the price of salt 10 cents per case to 99.9% of respondent's customers because 1/10 of 1% were not in a position to accept carload shipments. This is a quite different effect than the elimination of the quota discount. 45 It seems to me that a discount which gives a lowered cost to so large a proportion of respondent's customers and is withheld only from those whose conditions of delivery obviously impose greater handling costs, does not permit the same inferences of effect on competition as the quota discounts which reduce costs to the few only and that on a basis which ultimately is their size. 46 The two types of discount involved here seem to me to fall under different purposes of the Act and to require different conclusions of fact as to effect on competition. Accordingly, I should sustain the court below insofar as it sets aside the cease and desist order as to carload-lot discounts. 1 Section 2(a) provides in part 'It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them * * *.' 2 The original findings and order were modified by the Commission on its own motion. The controversy here deals only with the findings and order as modified. 3 Respondent also produces and sells other kinds of salt, but the trade practices here involved only relate to table salt. 4 These chain stores are American Stores Company, National Tea Company, Kroger Grocery Co., Safeway Stores, Inc., and Great Atlantic & Pacific Tea Company. 5 One such customer, a wholesaler, received a special discount of 7 1/2 cents per case on purchases of carload lots of Blue Label Salt. Respondent sold to this wholesaler at $1.42 1/2 per case, although competing wholesalers were required to pay $1.50 per case on carload lots. The Circuit Court of Appeals held that findings of the Commission on these special allowances were supported by substantial evidence, that they were not maintained to meet lower prices of respondent's competitors, and that the allowances were discriminatory. It nevertheless set the findings aside on the ground that the Commission's finding of injury to competition from the discriminations engaged in by respondent was too general and had little evidence to support it. We think the finding and supporting evidence of injury to competition on account of these special allowances are similar to the finding and evidence with reference to the quantity discount system and need not be separately treated. 6 H.Rep.No.2287, 74th Cong., 2d Sess. 7. 7 Id. at 9. 8 Sen.Rep.No.1502, 74th Cong., 2d Sess. 4-6. 9 80 Cong.Rec. 9417. 10 See 42 Ill.L.Rev. 556-561; 15 U. of Chi.L.Rev. 384-391; 60 Harv.L.Rev. 1167-1169. 11 Javierre v. Central Altagracia, 217 U.S. 502, 507, 508, 30 S.Ct. 598, 599, 54 L.Ed. 859 and cases cited. 12 Sen.Rep.No.1502, 74th Cong., 2d Sess. 3. See also 80 Cong.Rec. 3599, 8241, 9418. 13 See Moss v. Federal Trade Comm., 2 Cir., 148 F.2d 378, 379, holding that proof of a price differential in itself constituted 'discrimination in price,' where the competitive injury in question was between sellers. See also Federal Trade Comm. v. Cement Institute et al., 333 U.S. 683, 68 S.Ct. 793. 14 This language is to be read also in the light of the following statement in the same case, discussing the meaning of § 2(a), as contained in the Robinson-Patman Act, in relation to § 3 of the Clayton Act, 15 U.S.C.A. § 14: 'It is to be observed that § 2(a) does not require a finding that the discriminations in price have in fact had an adverse effect on competition. The statute is designed to reach such discriminations 'in their incipiency,' before the harm to competition is effected. It is enough that they 'may' have the prescribed effect. Cf. Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 356-357, 42 S.Ct. 360, 362, 66 L.Ed. 653. But as was held in the Standard Fashion case, supra, with respect to the like provisions of § 3 of the Clayton Act * * * prohibiting tying clause agreements, the effect of which 'may be no substantially lessen competition,' the use of the word 'may' was not to prohibit discriminations having 'the mere possibility' of those consequences, but to reach those which would probably have the defined effect on competition.' 324 U.S. at page 738, 65 S.Ct. at page 967; see also United States v. Lexington Mill Co., 232 U.S. 399, 411, 34 S.Ct. 337, 340, 58 L.Ed. 658, L.R.A.1915B, 774. The Committee Reports and Congressional debate on this provision of the Robinson-Patman Act indicate that it was intended to have a broader scope than the corresponding provision of the old Clayton Act. See note 18 infra. 15 After discussing all of respondent's discriminations, the Commission stated: 'The Commission finds that the effect of the discriminations in price, including discounts, rebates, and allowances, generally and specifically described herein may be substantially to lessen competition in the line of commerce in which the purchaser receiving the benefit of said discriminatory price is engaged and to injure, destroy, and prevent competition between those purchasers receiving the benefit of said discriminatory prices, discounts, rebates, and allowances and those to whom they are denied.' 16 The statute outlaws any discrimination the effect of which 'may be substantially to lessen competition * * * or to injure * * * competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: * * *.' 17 Respondent introduced testimony and exhibits intended to show that only one-tenth of one per cent of its sales were made at less-than-carload prices. It appears that this figure relates only to a single one-year period and was obtained by lumping together statistics on respondent's sales of table salt along with those on sales of its other products, such as salt tablets, coarse rock salt, and salt soda. Since this proceeding is concerned only with discounts on table salts, these figures are of dubious value. Furthermore, they are limited to sales in respondent's Chicago area, whereas respondent carried on a nation-wide business. 18 In explaining this clause of the proposed Robinson-Patman Act, the Senate Judiciary Committee said: 'This clause represents a recommended addition to the bill as referred to your committee. It tends to exclude from the bill otherwise harmless violations of its letter, but accomplishes a substantial broadening of a similar clause now contained in section 2 of the Clayton Act. The latter has in practice been too restrictive, in requiring a showing of general injury to competitive conditions in the line of commerce concerned; whereas the more immediately important concern is in injury to the competitor victimized by the discrimination. Only through such injuries, in fact, can the larger general injury result, and to catch the weed in the seed will keep it from coming to flower.' S.Rep. No.1502, 74th Cong., 2d Sess. 4. See also H.Rep.No.2287, 74th Cong., 2d Sess. 8; 80 Cong.Rec. 9417. 19 The prohibiting paragraphs of the order were: '(a) By selling such products to some wholesalers thereof at prices different from the prices charged other wholesalers who in fact compete in the sale and distribution of such products; provided, however, that this shall not prevent price differences of less than five cents per case which do not tend to lessen, injure, or destroy competition among such wholesalers. '(b) By selling such products to some retailers thereof at prices different from the prices charged other retailers who in fact compete in the sale and distribution of such products; provided, however, that this shall not prevent price differences of less than five cents per case which do not tend to lessen, injure, or destroy competition among such retailers. '(c) By selling such products to any retailer at prices lower than prices charged wholesalers whose customers compete with such retailer. 'For the purpose of comparison, the term 'price' as used in this order takes into account discounts, rebates, allowances, and other terms and conditions of sale.' 20 The only finding of the Commission specifically relating to five-cent differentials was: 'Salt is a staple commodity with a medium turnover and is generally sold by wholesalers to their retail customers on a lower margin of profit than that received on other commodities. Consequently, the price at which the wholesaler offers his table salt is usually controlling, and a difference of five cents per case may result in the loss of a sale to a customer, not only of the salt involved but of other commodities as well, the order for which might be placed with the salt purchase.' 1 The full text of the later reference, quoted in part by the Court, is: 'As we have said, the statute does not require that the discriminations must in fact have harmed competition, but only that there is a reasonable possibility that they 'may' have such an effect. We think that it was permissible for the Commission to infer that these discriminatory allowances were a substantial threat to competition.' It seems obvious that the Court's 'as we have said,' refers to the earlier statement that the test is 'probability' which is quoted in full above, particularly in the absence of any other citation or reference.
78
334 U.S. 219 68 S.Ct. 996 92 L.Ed. 1328 MANDEVILLE ISLAND FARMS, Inc., et al.v.AMERICAN CRYSTAL SUGAR CO. No. 75. Argued Nov. 19, 1947. Decided May 10, 1948. Rehearing Denied June 1, 1948. [Syllabus from pages 219-221 intentionally omitted] Mr. Stanley M. Arndt, of Los Angeles, Cal., for petitioners. Mr. Pierce Works, of Los Angeles, Cal., for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 The action is for treble damages incurred by virtue of alleged violation of the Sherman Act, §§ 1 and 2. 26 Stat. 209, 38 Stat. 731, 15 U.S.C. §§ 1, 2, 7, 15, 15 U.S.C.A. §§ 1, 2, 7, 15. The case comes here on certiorari, 331 U.S. 800, 67 S.Ct. 1519, 91 L.Ed. 1824, from affirmance by the Circuit Court of Appeals, 9 Cir., 159 F.2d 71, of a judgment of the District Court, 64 F.Supp. 265. That judgment dismissed the amended complaint as insufficient to state a cause of action arising under the Act. In this posture of the case, the legal issues are to be determined upon the allegations of the amended complaint.1 2 The main question is whether, in the circumstances pleaded, California sugar refiners who sell sugar in interstate commerce may agree among themselves to pay a uniform price for sugar beets grown in California without incurring liability to the local beet growers under the Act. Narrowly the question is whether the refiners' agreement together with the allegations made concerning its effects shows a conspiracy to monopolize and to restrain interstate trade and commerce or one thus affecting only purely local trade and commerce. 3 The material facts pleaded, which stand admitted as if they had been proved for the purposes of this proceeding, may be summarized as follows: Pt itioners' farms are located in northern California, within the area lying north of the thirty-sixth parallel. The only practical market available to beet growers in that area was sale to one of three refiners.2 Respondent was one of these. Each season growers contract with one of the refiners to grow beets and to sell their entire crops to the refiner under standard form contracts drawn by it. Since prior to 1939 petitioners have thus contracted with respondent. 4 The refiners control the supply of sugar beet seed. Both by virtue of this fact and by the terms of the contracts, the farmers are required to buy seed from the refiner. The seed can be planted only on land specifically covered by the contract. Any excess must be returned to the refiner in good order at the end of the planting season. 5 The standard contract gives the refiner the right to supervise the planting, cultivation, irrigation and harvesting of the beets, including the right to ascertain quality during growing and harvesting seasons by sampling and polarizing. Before delivering beets to the company, the farmers must make preliminary preparations for processing them into raw sugar.3 The refiner has the option to reject beets if the contract conditions are not complied with and if the beets are not suitable in its judgment for the manufacture of sugar. 6 Prior to 1939 the contract fixed the grower's price by a formula combining two variables, a percentage of the refiner's net returns per hundred pounds from sales of sugar and the sugar content of the individual grower's beets determined according to the refiner's test.4 7 Sometime before the 1939 season the three refiners entered into an agreement to pay uniform prices for sugar beets. The mechanics of the price-fixing arrangement were simple. The refiners adopted identical form contracts and began to compute beet prices on the basis of the average net returns of all three rather than the separate returns of the purchasing refiner. Inevitably all would pay the same price for beets of the same quality. 8 Since the refiners controlled the seed supply and the only practical market for beets grown in northern California, when the new contracts were offered to the farmers, they had the choice of either signing or abandoning sugar beet farming. Petiioners accordingly contracted with respondent under this plan during the 1939, 1940 and 1941 seasons. The plan was discontinued after the 1941 season. Because beet prices were determined for the three seasons with reference to the combined returns of the three refiners, the prices received by petitioners for those seasons were lower than if respondent, the most efficient of the three, had based its price on its separate returns. 9 The foregoing allegations set forth the essential features of the contractual arrangements between the refiners and the growers and of the agreement among the refiners themselves. Other allegations were made to complete the showing of violation and injury. They relate specifically to the peculiarly integrated character of the industry, effects of the arrangements upon interstate commerce, and the relation between the violations charged and the injuries suffered by petitioners. 10 With reference to the industry in general, it was stated that sugar beets were grown during the seasons 1938 to 1942 on large acreages not only in northern California but also in Utah, Colorado, Michigan, Idaho, Illinois and other states. The crops so grown, when harvested, were not 'sold in central markets as were potatoes, onions, corn, grain, fruit and barries, but were produced by growers under contract with manufacturers or processors and immediately upon being harvested were delivered to these manufacturers and taken to their beet sugar refineries where the sugar beets were manufactured by an elaborate process into raw sugar by the said manufacturers, who thereafter sold the resulting sugar in interstate commerce.' Then follow the allegations summarized above in note 2 concerning the bulky and semiperishable nature of sugar beets, the impossibility of transporting them over long distances or of storing them cheaply or safely, their rapid deterioration when ripe, and the necessity for prompt harvesting and marketing. These allegations must be taken as intended and effective to put the agreements complained of in the general setting of the industry's unique structure and special mode of operation. 11 The specific allegation is added that the sugar manufactured by respondent and the other northern California refiners from beets grown in the region 'was, during all of said period (1938 to 1942), sold in interstate commerce throughout the United States.' 12 By way of legal as well as ultimate factual conclusions the amended complaint charged that respondent had unlawfully conspired with the other northern California refiners to 'monopolize and restrain trade and commerce5 among the several states and to unlawfully fix prices to be paid the growers * * * all in violation of the anti-trust laws * * *'; and that each refiner no longer competed against the others as to the price to be paid the growers, but paid the same price on the agreed uniform basis of average net returns. 13 There were further charges that prior to 1939 the northern California refiners had 'competed in interstate commerce with each other as to the performance, ability and efficiency of their manufacturing, sales and executive departments and each strove to increase sales return and decrease expenses,' with the result that for 1938 respondent secured substantially greater 'net gross receipts of sales of sugar' than the other refiners. These in turn were reflected in the payment of 29 1/2 to 52 1/2 cents per ton more to petitioners and other growers dealing with respondent than was paid by the other refiners to their growers. 14 However, for the seasons 1939, 1940 and 1941, under the new uniform contracts and prices, 'there was no longer any such competition * * *.' Instead it was alleged upon information and belief that, as a result of the alleged conspiracy, respondent did not conduct its interstate operations as carefully and efficiently as previously or 'as it would have had said conspiracy not existed.' In consequec e, respondent received less in sales returns for raw sugar and incurred greater expenses than if competition had been free, and petitioners 'did not receive the reasonable value of their sugar beets.' 15 Further charges were that as 'a direct, expected and planned result of said conspiracy, the free and natural flow of commerce in interstate trade was intentionally hindered and obstructed,' so that instead of the refiners 'producing and selling raw sugar in interstate commerce * * * in competition with each other * * * they became illegally associated in a common plan wherein they pooled their receipts and expenses and frustrated the free enterprise system * * *'; all incentive to efficiency, economy and individual enterprise disappeared; and the refiners operated, 'in so far as the growers were concerned,' as if they were one corporation owning and controlling all factories in the area, but with three conpletely separated overheads and with none of the efficiency that consolidation into one corporation might bring.6 16 We are not concerned presently with the allegations relating to the injuries and amounts of damages inflicted upon petitioners,7 except to say that they are sufficient to present those questions for support by proof, if the allegations made to show a cause of action arising under the statute are sufficient for that purpose. 17 In our judgment the amended complaint states a cause of action arising under the Sherman Act, §§ 1 and 2, and the complaint was improperly dismissed. 18 Broadly petitioners regard the entire sequence of growing the beets, refining them into sugar and distributing it, under the arrangements set forth, as a chain of events so integrated and taking place in interstate commerce or in such close and intimate connection with it that, for purposes of applying the Sherman Act, the complete sequence is an entirety and no part of it can be segregated from the remainder so as to put it beyond the statute's grasp. 19 Respondent, on the contrary, broadly severs the phase or phases of growing and selling beets from the later ones of refining them and of marketing the sugar. The initial growing process together with sale of the beets, and it would seem also the intermediate stage of refining, are taken to be 'purely local,' since all occurred entirely within California; therefore were wholly intrastate events; and consequently were beyond the Sherman Act's reach. 20 Connected with this severance is the assertion that the complaint alleges no monopolistic or restrictive effects upon interstate commerce, but only such effects in the intrastate phases of the industry. 21 Much stress is laid upon the so-called interruption of the sequence at the refining stage. Prior to the interruption only beets are involved, afterward only sugar. Since the two commodities are different and all that affects the beets takes place in California, including the restraints allegd upon their sale, the trade and commerce in beets is wholly distinct from that in sugar and is entirely local, as are therefore the restraint and monopolization of that trade. Admittedly once the beets are converted into sugar and the sugar starts on its interstate journey to the tables of the nation, interstate commerce becomes involved. But only then is it affected, and nothing occurring before the journey begins or at any rate before the beets become sugar substantially affects or, for purposes of the statute's application, has relevance to that commerce. 22 Thus sugar together with its interstate sale and transportation is absolutely divorced from sugar beets, their production, sale and delivery to the refiner. Manufacture breaks the relationship and with it all consequences growing out of the restraints for the interstate processes and the purposes of the statute. In other words, since the restraints precede the interstate marketing of the sugar and immediately affect only the local marketing of the beets, they have no restrictive effect upon the trade and commerce in sugar. 23 This very nearly denies that sugar beets contain sugar. It certainly denies that the price of beets and restrictions upon it have any substantial relation in fact or in legal significance for the statute's purposes to the price of sugar sold interstate, when the restrictions take place within the confines of a single state and before the interstate marketing process begins. II 24 The broad form of respondent's argument cannot be accepted. It is a reversion to conceptions formerly held but no longer effective to restrict either Congress' power, Wickard v. Filburn, 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122, or the scope of the Sherman Act's coverage. The artificial and mechanical separation of 'production' and 'manufacturing' from 'commerce,' without regard to their economic continuity, the effects of the former two upon the latter, and the varying methods by which the several processes are organized, related and carried on in different industries or indeed within a single industry, no longer suffices to put either production or manufacturing and refining processes beyond reach of Congress' authority or of the statute. 25 It is true that the first decision under the Sherman Act applied those mechanical distinctions with substantially nullifying effects for coverage both of the power and of the Act. United States v. E. C. Knight Co., 156 U.S. 1, 15 S.Ct. 249, 39 L.Ed. 325. Like this one, that case involved the refining and interstate distribution of sugar. But because the refining was done wholly within a single state, the case was held to be one involving 'primarily' only 'production' or 'manufacturing,' although the vast part of the sugar produced was sold and shipped interstate,8 and this was the main end of the enterprise. The interstate distributing phase however, was regarded as being only 'incidentially,' 'indirectly,' or 'remotely' involved; and to be 'incidental,' 'indirect,' or 'remote' was to be, under the prevailing climate, beyond Congress' power to regulate, and hence outside the scope of the Sherman Act. See Wickard v. Filburn, supra, at page 119 et seq. of 317 U.S., 66 S.Ct. 82, 87 L.Ed. 122. 26 Th Knight decision made the statute a dead letter for more than a decade and, had its full force remained unmodified, the Act today would be a weak instrument, as would also the power of Congress, to reach evils in all the vast operations of our gigantic national industrial system antecedent to interstate sale and transportation of manufactured products. Indeed, it and succeeding decisions, embracing the same artificially drawn lines, produced a series of consequences for the exercise of national power over industry conducted on a national scale which the evolving nature of our industrialism foredoomed to reversal.9 27 We do not stop to review again in detail the familiar story of the progression of decision to that end, perhaps not told elsewhere more succinctly or pertinently than in Wickard v. Filburn, supra.10 Suffice it to say that after coming back to life again in the Northern Securities case, 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679, for matters of transportation, the Sherman Act received a second rebirth in 1911 with the decisions in Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734, and United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663. Cf. United States v. South-Eastern Underwriters Ass'n., 322 U.S. 533, 553 et seq., 64 S.Ct. 1162, 1173, 88 L.Ed. 1440. 28 Not thereafter could it be foretold with assurance that application of the labels of 'production' and 'manufacture,' 'incidental' and 'indirect,' would throw protective covering over those processes against the Act's consequences. Very soon also came the Shreveport Rate Cases, 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341, again in the field of transportation, but inevitably to add force and scope to the Standard Oil and American Tobacco rulings that manufacturing companies lay within the reach of the power and of the statute, deriving no immunity for their conduct violative of the prohibitions merely from the fact of engaging in that character of activity. 29 With extension of the Shreveport influence to general application,11 it was necessary no longer to search for some sharp point or line where interstate commerce ends and intrastate commerce begins, in order to decide whether Congress' commands were effective. For the essence of the affectation doctrine was that the exact location of this line made no difference, if the forbidden effects flowed across it to the injury of interstate commerce or to the hindrance or defeat of congressional policy regarding it. 30 The formulation of the Shreveport doctrine was a great turning point in the construction of the commerce clause, comparable in this respect to the landmark of Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996. For, while the latter gave play for state power to work in the field of commerce the former broke bonds confining Congress' power and made it an effective instrument for fulfilling its purpose. The Shreveport doctrine cut Congress loose from the haltering labels of 'production' and 'manufacturing' and gave it rein to reach those processes when they were used to defy its purposes regarding interstate trade and commerce. In doing so the decision substituted judgment as to practical impeding effects upon that commerce for rubrics concerning its boundaries as the basic criterion of effective congressional action. 31 The transition, however, was neither smooth nor immediately complete, particularly for applying the Sherman Act. The old ideas persisted in specific applications as late as the 1930's. But after the historic decisions of 1911, and even more following the Shreveport decision, a constantly growing number of others rejected the ides that production and manufacturing are 'purely local' and hence beyond the Act's compass, simply because those phases of a combination restraining or monopolizing trade were carried on within the confines of a single state or, of course, of several states.12 The struggle for supremacy between the conflicting approaches was long continued. But more and more until the climax came in the late 1930', this Court refused to decide those issues of power and coverage merely by asking whether the restraints or monopolistic practices, shown to have the forbidden effects on commerce, took place in a phase or phases of the total economic process which, apart from other phases and from the outlawed effects, occurred only in intrastate activities.13 32 In view of this evolution, the inquiry whether the restraint occurs in one phase or another, interstate or intrastate, of the total economic process is now merely a preliminary step, except for those situations in which no aspect of or substantial effect upon interstate commerce can be found in the sum of the facts presented.14 For, given a restraint of the type forbidden by the Act, though arising in the course of intrastate or local activities, and a showing of actual or threatened effect upon interstate commerce, the vital question becomes whether the effect is sufficiently substantial and adverse to Congress' paramount policy declared in the Act's terms to constitute a forbidden consequence. If so, the restraint must fall, and the injuries it inflicts upon others become remediable under the Act's prescribed methods, including the treble damage provision. 33 The Shreveport doctrine did not contemplate that restraints or burdens become or remain immune merely because they take place as events prior to the point in time when interstate commerce begins. Exactly the contrary is comprehended, for it is the effect upon that commerce, not the moment when its cause arises, which the doctrine was fashioned to reach. 34 Obviously therefore the criteria respondent would have us follow furnish no basis for reaching the result it seeks. Only by returning to the Knight approach, and severing the intrastate events relating to the beets, including the price restraints, from the later events relating to the sugar, including its interstate sale, could we conclude there were no forbidden restraints or practices touching interstate commerce here. At this late day we are not willing to take that long backwards tep. III. 35 We turn then to consider the questions posed upon the amended complaint that are relevant under the presently controlling criteria. These are whether the allegations disclose a restraint and monopolistic practices of the types outlawed by the Sherman Act; whether, if so, those acts are shown to produce the forbidden effects upon commerce; and whether the effects create injury for which recovery of treble damages by the petitioners is authorized. 36 It is clear that the agreement is the sort of combination condemned by the Act,15 even though the price-fixing was by purchasers,16 and the persons specially injured under the treble damage claim are sellers, not customers or consumers.17 And even if it is assumed that the final aim of the conspiracy was control of the local sugar beet market, it does not follow that it is outside the scope of the Sherman Act. For monopolization of local business, when achieved by restraining interstate commerce, is condemned by the Act. Stevens Co. v. Foster & Kleiser, 311 U.S. 255, 261, 61 S.Ct. 210, 213, 85 L.Ed. 173. And a conspiracy with the ultimate object of fixing local retail prices is within the Act, if the means adopted for its accomplishment reach beyond the boundaries of one state. United States v. Frankfort Distilleries, 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951. 37 The statute does not confine its protection to consumers, or to purchasers, or to competitors, or to sellers. Nor does it immunize the outlawed acts because they are done by any of these. Cf. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575. The Act is comprehensive in its terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated. Cf. United States v. South-Fastern Underwriters Ass'n, supra, at page 553 of 322 U.S., page 1173 of 64 S.Ct., 88 L.Ed. 1440. 38 Nor is the amount of the nation's sugar industry which the California refiners control relevant, so long as control is exercised effectively in the area concerned, Indiana Farmer's Guide v. Prairie Farmer, 293 U.S. 268, 279, 55 S.Ct. 182, 185, 79 L.Ed. 356, United States v. Yellow Cab Co., 332 U.S. 218, 225, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010, the conspiracy being shown to affect interstate commerce adversely to Congress' policy. Congress' power to keep the interstate market free of goods produced under conditions inimical to the general welfare, United States v. Darby, 312 U.S. 100, 115, 61 S.Ct. 451, 457, 85 L.Ed. 609, 132 A.L.R. 1430, may be exercised in individual cases without showing any specific effect upon interstate commerce, United States v. Walsh, 331 U.S. 432, 437, 438, 67 S.Ct. 1283, 1286, 91 L.Ed. 1585; it is enough that the individual activity when multiplied into a general practice is subject to federal control, Wickard v. Filburn, supra, or that it contains a threat to the interstate economy that requires preventive regulation. Consolidated Edison Co. v. Labor Board, 305 U.S. 197, 221, 222, 59 S.Ct. 206, 213, 83 L.Ed. 126. 39 Moreover, as we said in the Frankfort Distilleries case, '* * * there is an obvious distinction to be drawn between a course of conduct wholly within a state and conduct which is an inseparable element of a larger program dependent for t § success upon activity which affects commerce between the states.' 324 U.S. 293, 297, 65 S.Ct. 661, 663, 89 L.Ed. 951. That statement is as true of the situation now presented as of the one then before us, although instead of restraining trade in order to control a local market petitioners control a local market in which they purchase. For this is not a case involving only 'a course of conduct wholly within a state'; it is rather one involving 'conduct which is an inseparable element of a larger program dependent for its success upon activity which affects commerce between the states,' and in such a case it is not material that the source of the forbidden effects upon that commerce arises in one phase or another of that program. 40 In view of all this, it is difficult to understand respondent's argument that the complaint does not allege that the conspiracy had any effect on interstate commerce, except on the basis of the discarded criteria discussed in Part II above. The contention ignores specific allegations which we have set forth. But apart from that fact it rests only on a single grounding, which in the circumstances of this case is little, if any, more than a different phrasing of the criteria supplanted by the Shreveport approach. 41 This is that the change undergone in the manufacturing stage when the beets are converted into sugar makes the case different, for the Sherman Act's objects, than it would be if the identical commodity were concerned from the planting stage through the phase of interstate distribution, e.g., if the commodity were wheat, as was true in Wickard v. Filburn, supra, or raisins purchased by packers from growers and shipped interstate after packing, cf. Parker v. Brown, 317 U.S. 341, 350, 63 S.Ct. 307, 313, 87 L.Ed. 315. 42 We do not stop to consider specific and varied situations in which a change of form amounting to one in the essential character of the commodity takes place by manufacturing or processing intermediate the stages of producing and disposing of the raw material intrastate and later interstate distribution of the finished product; or the effects, if any, of such a change in particular situations unlike the one now presented.18 For mere change in the form of the commodity or even complete change in essential quality by intermediate refining, processing or manufacturing does not defeat application of the statute to practices occurring either during those processes or before they begin, when they have the effects forbidden by the Act.19 Again, as we have said, the vital thing is the effect on commerce, not the precise point at which the restraint occurs or begins to take effect in a scheme as closely knit as this in all phases of the industry. Hence in this case the mere fact that the price fixing related directly to the beets did not sever or render insubstantial its effect subsequently in the sale of sugar. 43 Indeed that severance would not necessarily take place if the manufacturing stage had produced a much greater change in commodities than was effected here. But under the facts characterizing this industry's operation and the tightening of controls in this producing area by the new agreements and understandings, there can be no question that their restrictive consequences were projected substantially into the interstate distribution of the sugar, as the amended complaint repeatedly alleges. Indeed they permeated the entire structure of the industry in all its phases, intrastate and interstate. 44 We deal here, as petitioners say, with an industry tightly interwoven from sae of the seed through all the intermediate stages to and including interstate sale and distribution of the sugar. In the middle of all these processes and dominating all of them stand the refiners. They control the supply and price of seed, the quantity sold and the volume of land planted, the processes of cultivation and harvesting, the quantity of beets purchased and rejected, the refining, and the distribution of sugar both interstate and local. 45 Some of these controls have been built up by taking advantage of the opportunities afforded by the industry's unique character, both natural and in its general pattern and habits of organization;20 others by utilizing the key positions these advantages give the refiners to put contractual restraints upon the growers by their separate actions;21 and still greater ones by the refiners' ability, by virtue of their central and dominating place thus achieved, to agree among themselves upon further restrictions. 46 Even without the uniform price provision and with full competition among the three refiners, their position is a dominating one. The growers' only competitive outlet is the one which exists when the refiners compete among themselves. There is no other market. The farmers' only alternative to dealing with one of the three refiners is to stop growing beets. They can neither plant nor sell except at the refiners' pleasure and on their terms. The refiners thus effectively control the quantity of beets grown, harvested and marketed, and consequently of sugar sold from the area in interstate commerce, even when they compete with each other. They dominate the entire industry. And their dominant position, together with the obstacles created by the necessity for large capital investment and the time required to make it productive, makes outlet through new competition practically impossible. Upon the allegations, it is absolutely so for any single growing season. A tighter or more all-inclusive monopolistic position hardly can be conceived. 47 When therefore the refiners cease entirely to compete with each other in all stages of the industry prior to marketing the sugar, the last vestige of local competition is removed and with it the only competitive opportunity for the grower to market his product. Moreover it is inconceivable that the monopoly so created will have no effects for the lessening of competition in the later interstate phases of the overall activity or that the effects in those phases will have no repercussions upon the prior ones, including the price received by the growers. 48 There were indeed two distinct effects flowing from the agreement for paying uniform growers' prices, one immediately upon the price received by the grower rendering it devoid of all competitive influence in amount; the other, the nee ssary and inevitable effect of that agreement, in the setting of the industry as a whole, to reduce competition in the interstate distribution of sugar. 49 The idea that stabilization of prices paid for the only raw material consumed in an industry has no influence toward reducing competition in the distribution of the finished product, in an integrated industry such as this, is impossible to accept. By their agreement the combination of refiners acquired not only a monopoly of the raw material but also and thereby control of the quantity of sugar manufactured, sold and shipped interstate from the northern California producing area. In substance and roughly, if not precisely, they allocated among themselves the market for California beets substantially upon the basis of quotas competitively established among them at the time the uniform price arrangement was agreed upon. It is hardly likely that any refiner would have entered into an agreement with its only competitors, the effect of which would have been to drive away its growers, or therefore that many of the latter would have good reason to shift their dealings within the closed circle. Thus control of quantity in the interstate market was enhanced. 50 This effect was further magnified by the fact that the widely scattered location of sugar beet growing regions and their different accessibilities to market22 give the refiners of each region certainly some advantage over growers and refiners in other regions, and undoubtedly large ones over those most distant from the segment of the interstate market served by reason of being nearest to hand. 51 Finally, the interdependence and inextricable relationship between the interstate and the intrastate effects of the combination and monopoly are shown perhaps most clearly by the provision of the uniform price agreement which ties in the price paid for beets with the price received for sugar. The percentage factor of interstate receipts from sugar which the grower's contract specifies shall enter his price for beets makes that price dependent upon the price of sugar sold interstate. The uniform agreement's effect, when added to this, is to deprive the grower of the advantage of the individual efficiency of the refiner with which he deals, in this case the most efficient of the three, and of the price that refiner receives. It is also to reflect in the grower's price the consequences of the combination's effects for reducing competition among the refiners in the interstate distribution of sugar. 52 In sum, the restraint and its monopolistic effects were reflected throughout each stage of the industry, permeating its entire structure. This was the necessary and inevitable effect of the agreement among the refiners to pay uniform prices for beets, in the circumstances of this case. Those monopolistic effects not only deprived the beet growers of any competitive opportunity for disposing of their crops by the immediate operation of the uniform price provision; they also tended to increase control over the quantity of sugar sold interstate; and finally by the tie-in provision they interlaced those interstate effects with the price paid for the beets. 53 These restrictive and monopolistic effects, resulting necessarily from the practices allegedly intended to produce them, fall squarely within the Sherman Act's prohibitions, creating the very injuries they were designed to prevent, both to the public and to private individuals. 54 It does not matter, contrary to respondent's view, that the growers contracting with the other two refiners may have been benefited, rather than harmed, by the combination's effects, even if that result is assumed to have followed. It is enough that these petitioners have suffered the injuries for which the statutory remedy is afforded. For the test of the legality and immunity of such a combination, in view of the statute's policy, is not that some others than the members of the combination have profited by it operation. It is rather whether the statute's policy has been violated in a manner to produce the general consequences it forbids for the public and the special consequences for particular individuals essential to the recovery of treble damages. Both types of injury are present in this case, for in addition to the restraints put upon the public interest in the interstate sale of sugar, enhancing the refiner's controls, there are special injuries affecting the petitioners resulting from those effects as well as from the immediate operation of the uniform price arrangement itself. 55 The fact that that arrangement is the source of both effects cannot be taken to mean that neither is outlawed by the statute, in view of their interdependence and the completely unified and comprehensive nature of the scheme as respects its interstate and intrastate phases. The policy of the Act is competition. It cannot be flouted, as has been done here, by artificial nomenclatural severance of the plan's forbidden effects, any more than by such a segmentation of the integrated industry into legally unrelated phases. Nor can the severance be made in such a case merely by virtue of the fact that a refining or manufacturing process constitutes an intermediate stage in the whole. 56 To compare an industry so completely interlocked in all its stages, by all-inclusive contract as well as by industrial structure and organization, with one like producing, processing, and marketing fruits, vegetables, corn, or other products, susceptible of various uses and under conditions affording varied outlets for market, both local and interstate, in the raw or refined state, in which neither such a contractual nor such industrial integration exists, is to ignore the facts of industrial life. So is it also to make conclusive comparisons with other industries in which the manufacturing process requires and has available a greater variety of raw materials for making the finished product, and involves a longer and more extensive process of change, than does extracting the sugar content of beets to make raw sugar. 57 We deal with the facts before us. With respect to others which may be significantly different, for purposes of violating the statute's terms and policy, we await another day.23 IV. 58 Little more remains to be said concerning the amended complaint. The allegations comprehend all that we have set forth. We do not stop to restate them, leaving their substance at this point for reference to the summary made at the beginning of this opinion. 59 Respondent has presented its argument as if the amended complaint omitted all reference to restraint or effects upon interstate trade in sugar and confined these allegations to the trade in beets. It is true that at the hearing which followed filing of the amended complaint, petitioners at one point, apparently in response to some intimation from the court, eliminated the words 'sugar and sugar beets' from one of the allegations that the refiners had conspired to 'monopolize and restrain trade and commerce among the several states * * *.'24 60 Respondent takes this elision as effective to constitute an express disavowal by petitioners of any charge of restraint of trade in sugar, the only interstate commodity. The amendment did not eliminate or affect numerous other allegations which in effect repeated the charge in various forms and with reference to various specific effects upon interstate as well as local phases of the commerce. Some of these explicitly specified trade or commerce in sugar,25 others designated the trade affected as interstate, which on the facts could mean only sugar. Moreover, petitioners deny the disavowal, both in intent and in effect. They say the elision was insubstantial, since in the clause from which it was made the allegation of conspiracy to monopolize and restrain interstate commerce remained, and the only interstate trade was in sugar. We think the amendment, for whatever reason made, was not effective to constitute a disavowal, disclaimer or waiver. 61 The allegations are comprehensive and, for the greater part specific, concerning both the restraints and their effects. They clearly state a cause of action under the Sherman Act. 62 The judgment of the Circuit Court of Appeals is reversed, and the cause is remanded to the District Court for further proceedings in conformity with this opinion. 63 Reversed and remanded. 64 Mr. Justice JACKSON with whom Mr. Justice FRANKFURTER joins, dissenting. 65 It appears to me that the Court's opinion is based on assumptions of fact which the petitioner disclaimed in the court below. These assumptions are permissible inferences from the amended complaint only if we disregard the way in which the amendments came about. 66 On hearing, the trial judge apparently considered that a cause of action would be stated only if the complaint alleged that the growing contracts affected the price of sugar in interstate commerce. But the contracts accompanying the pleadings indicated that the effects ran in the other direction. The market price of interstate sugar was the base on which the price of beets was to be figured. The latter price was derived from the income which respondent and others rc eived from sugar sold in the open market over the period of a year. The trial judge therefore suggested that the references to restraint of trade in sugar in interstate commerce created an ambiguity in the complaint. Accordingly, the plaintiff, at the suggestion of the court and for the specific purpose of this appeal, filed an amended complaint which completely eliminated the charge that the agreements complained of affected the price of sugar in interstate commerce, and eliminated the two other counts 'to enable the Court herein to pass upon the sufficiency of the first count and, further, to make possible a speedy and inexpensive review by appeal if the Court held that the first count was insufficient.'1 The District Court then held that since no beets whatever moved in interstate commerce and since there was no charge in the amended complaint that the cost or quality of the product which did move in interstate commerce was in any way affected, no cause of action was stated. The appeal was taken and the Circuit Court of Appeals affirmed. 67 This Court, however, decides the case as though the original complaint as it related to sugar had not only remained unchanged but had been proved by evidence. Despite the deletion from the complaint of the allegation concerning the price of sugar, the Court assumes, without allegation or evidence, that the price of sugar is affected and on that basis builds its thesis that the Sherman Act has been violated. I think in fairness to the litigants and the District Court, the petitioner's case should be disposed of here on the same basis on which it was pleaded to the courts below. 68 On the proceedings in the courts below, I would affirm the judgment of the District Court. 1 The original complaint contained three counts, the first alleging violations of the Sherman Act and the second and third charging breach of contracts made in 1940 and 1941 respectively. In order to expedite decision and review upon the Sherman Act contention, by stipulation the amended complaint was filed setting forth, with an amendment to be noted, see note 5, only the allegations of the Sherman Act count. The stipulation provided for following this course without prejudice to further assertion by petitioners of rights under the two contract counts within a specified period following final determination of the Sherman Act issues. 2 It was alleged that the beets, when harvested, are 'bulky and semi-perishable and incapable of being transported over long distances or of being stored cheaply or safely for any extended period * * * when ripe, deteriorated rapidly if kept in the ground and not harvested, and it was necessary to harvest them promptly when matured.' There were also allegations that initial outlay, annual upkeep and operating expenses, and time required for erecting and equipping a refinery, were so great that no competition from any new refinery could be expected short of two years at best; that the three refiners had a monopoly in the area of the supply of seeds and of refining; and that no grower in the region could sell beets at a profit except to one of the three refiners. 3 These include cutting off the beet tops, trimming the crowns in a specified way, and removing all foreign substances likely to interfere with factory work. 4 Net returns from sugar sales were measured by gross sales price less selling expenses directly applicable to sugar. Monthly settlements were made for beets delivered during the preceding month on the estimated net returns of the refiner. But final settlement had to be deferred until the end of the season when net returns could be accurately determined. 5 At this point the words 'in sugar and sugar beets' appeared in the original complaint. They were stricken from the amended complaint by petitioner's counsel prior to dismissal of that complaint. Cf. note 1. This change however did not affect numerous other allegations remaining in the amended complaint concerning the combination's restrictive and monopolistic effects upon interstate trade in sugar. See note 6 and text; also note 24 and text Part IV infra. 6 Paragraph XIX of the amended complaint summarized petitioners' conclusions as follows: 'By reason of the foregoing acts of the defendant and its said conspirators, interstate commerce in sugar was illegally restrained, competition therein was not only substantially lessened but was destroyed, the price of sugar beets was illegally fixed, and an illegal monopoly was established, all in violation of the anti-trust laws of the United States to the damage of plaintiffs as aforesaid.' (Emphasis added.) Cf. notes 5 and 24. 7 It is not clear whether damages were to be measured by the difference between the prices actually paid and those that would have been paid if based on respondent's separate returns, or by the difference between the prices paid and the prices set by the Secretary of Agriculture, pursuant to the Sugar Act of 1937, 50 Stat. 910, 7 U.S.C. § 1131(d), 7 U.S.C.A. § 1131(d); see 5 Fed.Reg. 5231. But that is an issue that need not concern us now. Petitioner Mandeville Island Farms prayed judgment for $315,043.80; petitioner Zuckerman for $112,192.14. 8 It has been previously noted here that the Court applied these labels as a heritage from prior decisions under the commerce clause, dealing not as the Knight case with an act or acts of Congress, but with the validity of state statutes, Wickard v. Filburn, 317 U.S. 111, 121, 63 S.Ct. 82, 87, 87 L.Ed. 122; United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 543—545, 64 S.Ct. 1162, 1168, 1169, 88 L.Ed. 1440, an approach reflecting Marshall's idea of the mutual exclusiveness of state and national power in this area and ignoring the later evolution of different conceptions in Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996. See Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 412—427, 66 S.Ct. 1142, 1145, 1153, 90 L.Ed. 1342, 164 A.L.R. 476. 9 Compare, e.g., United States v. E.C. Knight Co., 156 U.S. 1, 15 S.Ct. 249, 39 L.Ed. 325, with Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734, and United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663; Hammer v. Dagenhart, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R. 649, Ann.Cas.1918E, 724, with United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 657, 85 L.Ed. 609, 132 A.L.R. 1430; Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160, with Sunshine Coal Co. v. Adkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263; United States v. Chicago, etc., R. Co., 282 U.S. 311, 51 S.Ct. 159, 75 L.Ed. 359, and Railroad Retirement Board v. Alton R. Co., 295 U.S. 330, 55 S.Ct. 758, 79 L.Ed. 1468, with United States v. Lowden, 308 U.S. 225, 60 S.Ct. 248, 84 L.Ed. 208; Hopkins v. United States, 171 U.S. 578, 19 S.Ct. 40, 43 L.Ed. 290, with Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229; Employers' Liability Cases, 207 U.S. 463, 498, 28 S.Ct. 141, 145, 52 L.Ed. 297, with Virginian R. Co. v. Federation, 300 U.S. 515, 557, 57 S.Ct. 592, 604, 81 L.Ed. 789, and Weiss v. United States, 308 U.S. 321, 60 S.Ct. 269, 84 L.Ed. 298; New York Life Insurance Co. v. Deer Lodge County, 231 U.S. 495, 34 S.Ct. 167, 58 L.Ed. 338, and authorities cited, with United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, and Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342, 164 A.L.R. 476. 10 See particularly the discussion in 317 U.S. at pages 119, 120, 63 S.Ct. at page 86, 87 L.Ed. 122. See also Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342, 164 A.L.R. 476; United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440; Labor Board v. Jones & Laughlin, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352; United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430; United States v. Wrightwood Dairy Co., 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726; Stern, The Commerce Clause and the National Economy, 1933—1946, 59 Harv.L.Rev. 645, 883. The Filburn case dealt with the second Agricultural Adjustment Act and the power of Congress to enact it. But, referring to the first Interstate Commerce Act, 49 U.S.C.A. § 1 et seq., and the Sherman Act, the Court in the Filburn case pages 121, 122 of 317 U.S., page 87 of 63 S.Ct., 87 L.Ed. 122, said that those statutes 'ushered in new phases of adjudication' requiring a different approach to interpretation of the commercec lause, although 'when it first dealt with this new legislation, the Court adhered to its earlier pronouncements, and allowed but little scope to the power of Congress.' For the latter statement the Knight case was cited as the principal example. 11 The doctrine encompassed fundamentally not merely an expanding factor in federal power over transportation. It was rather an integer in the sum of power over commerce, of which authority over transportation was but a part. The 'affectation' approach was actually a revival of Marshall's 'necessary and proper' doctrine, cf. Wickard v. Filburn, 317 U.S. 111, 120, 122, 63 S.Ct. 82, 86, 87, 87 L.Ed. 122, but unqualified by his idea of mutual exclusiveness, see note 8. Once applied to transportation and the Interstate Commerce Acts, it was inevitable that the approach would be extended to the productive and industrial phases of the national economy and the statutes regulating them, including the Sherman Act. Time and events were disclosing ever more clearly the impact of their effects upon interstate trade and commerce. And this was posing the same necessity for regulation as in the field of transportation, in order to protect and preserve the national commerce and carry out Congress' policy regarding it. 12 United States v. Reading Co., 253 U.S. 26, 40 S.Ct. 425, 64 L.Ed. 760; United States v. Keystone Watch Case Co., D.C., 218 F. 502; Pennsylvania Sugar Refining Co. v. American Sugar Refining Co., 2 Cir., 166 F. 254; United States v. E. I. Du Pont de Nemours & Co., C.C., 188 F. 127. See Mr. Justice Holmes dissenting in Hammer v. Dagenhart, 247 U.S. 251, 279, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R. 649, Ann.Cas.1918E, 724. 13 Montague & Co. v. Lowry, 193 U.S. 38, 24 S.Ct. 307, 48 L.Ed. 608; Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518; United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 68 L.Ed. 308; Federal Trade Commission v. Pacific Paper Ass'n, 273 U.S. 52, 47 S.Ct. 255, 71 L.Ed. 534; Stevens Co. v. Foster & Kleiser Co., 311 U.S. 255, 61 S.Ct. 210, 85 L.Ed. 173; Bigelow v. RKO Radio Pictures, 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652. 14 In United States v. Frankfort Distilleries, 324 U.S. 293, 297, 65 S.Ct. 661, 663, 89 L.Ed. 951, we said: 'It is true that this Court has on occasion determined that local conduct could be insulated from the operation of the Anti-Trust laws on the basis of the purely local aims of a combination, insofar as those aims were not motivated by the purpose of restraining commerce, and where the means used to achieve the purpose did not directly touch upon interstate commerce.' The decisions cited were Industrial Association of San Francisco v. United States, 268 U.S. 64, 45 S.Ct. 403, 69 L.Ed. 849; Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062; United Leather Workers v. Herkert & Meisel Trunk Co., 265 U.S. 457, 44 S.Ct. 623, 68 L.Ed. 1104, 33 A.L.R. 566; cf. Local 167 of International Brotherhood of Teamsters v. United States, 291 U.S. 293, 297, 54 S.Ct. 396, 398, 78 L.Ed. 804, and United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788. 15 United States v. Frankfort Distilleries, 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951, and authorities cited. 16 Cf. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129; American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575; United States v. Patten, 226 U.S. 525, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325; Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518. Each case involved outlawed practices by persons who were both purchasers and sellers, and forbidden effects upon sellers as well as purchasers and consumers. 17 See note 16. 18 Compare Arkadelphia Milling Co. v. St. Louis Southwestern R. Co., 249 U.S. 134, 39 S.Ct. 237, 63 L.Ed. 517, with Cloverleaf Butter Co. v. Patterson, 315 U.S. 148, 62 S.Ct. 491, 86 L.Ed. 754. 19 Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518; American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1225, 90 L.Ed. 1575; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416. 20 The natural factors include the peculiar nature of the corp in its limitation to a single primary and commercially profitable use, the necessity for immediate and nearby marketing to follow directly upon harvesting, and the well-known fact that sugar beets are grown only in widely scattered regions specially adapted to the crop in soil, climate and availability of water in large quantities during the growing season. 21 Resulting in large part from the natural limitations stated in note 20 and the fact that extracting the sugar content from the beets is an elaborate and technical process, is the further important fact that the processing cannot be done by the growers individually or even in small cooperative groups, but requires specialized and large scale business organization, equipment and investment. All these factors and perhaps others combine to make the refining stage of the industry a specialized manufacturing one to be carried on separately from growing, to establish the refiners' key place in the entire industry, and thus to leave the growers completely at the refiners' mercy for the profitable production of beets except as the latter may compete among themselves. 22 See note 20. 23 It is suggested that Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, is inconsistent with our conclusion here. The Court there held first that the Sherman Act did not apply because the program was sponsored by the State of California. Contrary to the present suggestion, the opinion assumes that the relation between the intrastate and the interstate commerce in raisins was sufficient to justify federal regulation, if the state-sponsored program of prorating had been 'organized and made effective solely by virtue of a contract, combination or conspiracy of private persons, individual or corporate.' 317 U.S. at page 350, 63 S.Ct. at page 313, 87 L.Ed. 315. The case therefore contains no suggestion, on the facts or on the law, contrary to the result now reached. 24 See note 5. By way of explaining the deletion, the record contains only the statement of the stipulation, cf. note 1 that the amended complaint eliminated 'what the Court considered an ambiguity in the (original) complaint.' With no further support from the record, it has been assumed that the ambiguity so elided was the reference to restraint of interstate trade in sugar and hence the petitioners in making it stated themselves out of court. Apart from the fact that the elision did not affect numerous other like allegations, see note 6 and text, the deletion included the specifications of both 'sugar and sugar beets.' From this the literal inference, if any of the sort could be made, would be that the elision was intended to withdraw all charges of monopoly or restraint of trade, whether in sugar or in beets, and thus to concede there was no case under the Sherman Act, a conclusion obviously at war with the remaining allegations of restraint of trade in both sugar and sugar beets. But, if any difference between the two could be assumed as having been intended, it is much more likely that the supposed ambiguity deleted arose from the reference to interstate trade in beets, since the allegation as a whole referred only to 'interstate trade and commerce' and on the facts pleaded the only trade in beets was intrastate (considered apart, as respondent would do, from its relation to and effects upon the trade in sugar). In any event the case is to be decided upon the sum of the allegations of the amended complaint, not upon conjecture as to why a particular and, we think, immaterial amendment of one allegation was made. Indeed the entire allegation could have been elided without affecting the substance or validity of the remainder of the amended complaint to state a cause of action under the Sherman Act. There was more than enough without it. 25 E.g., in the allegation quoted in note 6, as well as others set forth in the text preceding that note. 1 The full text of the Stipulation and Order which was executed by counsel for both parties, and by the District Judge, is as follows: 'Whereas, in oral argument on November 13, 1945, on the motion of defendant to dismiss, etc., Hon. Ben Harrison, the United States District Judge before whom said matter was argued, stated from the bench to counsel herein that he felt that the first cause of action, if supplemented by copies of the contracts attached to the defendant's motion to dismiss, would not state facts sufficient to constitute a cause of action, and suggested that it would be a tremendous saving of time and expense if the complaint were amended (a) by setting forth copies of the agreements involved in the first count, (b) by eliminating what the Court considered an ambiguity in the complaint, and (c) by the parties entering into a stipulation to eliminate from the pleadings, for the purpose of the appeal only and without prejudice to the rights of the plaintiffs, the second and third causes of action, so as to enable the Court herein to pass upon the sufficiency of the first count on its merits and, further, to make possible a speedy and inexpensive review by appeal if the Court held that the first count was insufficient; 'Now, Wherefore, the parties stipulate, without plaintiffs' waiving their rights under the second and third counts and without prejudice to any of plaintiffs' rights thereunder, as follows, to-wit: '1. Plaintiffs will file an amended complaint herein, attaching copies of the forms of contract in use in 1938, 1939, 1940 and 1941, and omitting the second and third counts. '2. Said omission of the said second and third counts shall be without prejudice to any of the rights of the plaintiffs as to any cause or causes of action included or includible therein by amendment, and shall not be a retraxit or a dismissal with prejudice. '3. Defendant herein waives, for the period of time hereinafter set forth, any and all statutes of limitations now or hereafter applicable to the second or third causes of action or any matters therein set forth or includible therein by amendment, and waives the defense of laches as to the second and third causes of action or any matters therein set forth or includible therein by amendment. '4. Plaintiffs may, at any time prior to six months after the decision on appeal as to the sufficiency of the first count has become final, either amend the amended complaint herein by realleging said second and third counts or any portion of either, or, at any time during said period, file a separate action or actions setting forth said second and third counts or any portion of either, all with the same force and effect as if said second and third counts were continuously included herein as second and third counts from the date of the commencement of this action. '5. The waiver of the statute of limitations and of the defense of laches herein set forth, n d the stipulation permitting the amendment of the amended complaint or the filing of a separate action or actions hereinabove set forth, shall continue until six months after the determination on appeal as to the sufficiency of the first count has become final.'
78
334 U.S. 210 68 S.Ct. 992 2 L.Ed. 1322 WOODSv.HILLS. No. 437. Argued Jan. 14, 1948. Decided May 10, 1948. As Amended on Denial of Rehearing June 21, 1948. Answer to Certified Question Conformed to July 8, 1948. Mr. John R. Benney, of Washington, D.C., for Philip B. Fleming, Temporary Controls Administrator. Mr. George D. Rathbun, of Manhattan, Kan., for W. H. Hills, pro hac vice, by Special Leave of Court. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 In this case, the Court of Appeals for the Tenth Circuit has certified questions of law concerning which it asks instructions for the proper decision of the cause pending in that court. Judicial Code, § 239, 28 U.S.C. § 346, 28 U.S.C.A. § 346. 2 The certificate states that this is an action brought by the Administrator for treble damages and for an injunction under § 205 of the Emergency Price Control Act1 and under the Rent Regulation for Housing.2 Hills, the defendant below, remodeled apartments located in a Defense Rental Area, subject to the Rent Regulations, and duly registered them. Thereafter, on December 17, 1943, the maximum rents were reduced by the Area Rent Director pursuant to § 5(c) of the Regulation; and on March 7, 1945, the Rent Director issued an order further reducing the maximum rents. 3 On trial in the District Court without a jury, the parties stipulated that the only issue was the validity of the second order. The District Court entered judgment for the defendant on October 29, 1946, holding that the burden was on the Administrator to establish the validity of the second order and that he had failed to introduce proof establishing its validity. 4 At the time the District Court entered its judgment, exclusive jurisdiction to pass on the validity of a regulation or order issued by the Administrator was vested in the Emergency Court of Appeals and in this Court upon review of judgments and orders of the Emergency Court. § 204(d), 50 U.S.C.A.Appendix, § 924(d). However, the appeal by the Administrator from the judgment of the District Court was not submitted in the Circuit Court of Appeals until September 10, 1947, and the Emergency Price Control Act expired by its terms on June 30, 1947. § 1(b), 50 U.S.C.A.Appendix, § 901(b). The questions certified are as follows: 5 '(1) On remand, will the District Court of the United States for the District of Kansas, First Division, have jurisdiction to determine the validity of the second rent order and should we direct the District Court to pass on the validity of such rent order? 6 '(2) If the first question is answered in the negative, does the Emergency Court of Appeals still have jurisdiction to determine the validity of the second rent order? 7 '(3) If the second question is answered in the affirmative, and this court remands the cause with directions to enter judgment as prayed for against Hills, may Hills, under Sec. 204(e) of the Emergency Price Control Act of 1942, as amended (50 U.S.C.A.App., Sec. 924(e)), apply to the District Court for leave to file in the Emergency Court of Appeals a complaint against the Administrator, setting forth objections to the validity of the second rent order, and, upon proper petition and showing, obtain the relief provided for in Sec. 204(e), and should we so direct on remand?' 8 There can be no doubt that the exclusive jurisdiction conferred on the Emergency Court of Appeals by § 204(d)3 precluded the District Court in 1946 from determining the validity of the individual rent order even though the defense to the action brought there was based on the alleged invalidity of the order.4 9 The Emergency Price Control Act was to terminate on June 30, 1947. Section 1(b), which fixed that date, expressly provides that 'as to offenses committed, or rights or liabilities incurred, prior to such termination date, the provisions of this Act and such regulations, orders, price schedules, and requirements shall be treated as still remaining in force for the purpose of sustaining any proper suit, action, or prosecution with respect to any such right, liability, or offense.' Since the offense complained of in the case at bar occurred before the termination date, § 1(b) would apply and the Emergency Court of Appeals would still have exclusive jurisdiction to pass on the validity of the second rent order, if additional prerequisites set forth in § 204(e)(1) of the statute were satisfied.5 10 Jurisdiction of the Emergency Court of Appeals over any complaint arises, pursuant to § 204(e)(1), when the court in which a civil or criminal enforcement proceeding is pending has granted the defendant leave to file in the Emergency Court of Appeals a complaint setting forth objections to the validity of any provision which the defendant is alleged to have violated, and the defendant has duly filed such a complaint. Prior to a 1947 amendment, § 204(e)(1) provided that 'Within thirty days after arraignment, or such additional time as the court may allow for good cause shown, in any criminal proceeding, and within five days after judgment in any civil or criminal proceeding, brought pursuant to section 205 of this Act or section 37 of the Criminal Code, involving alleged violation of any provision of any regulation of order issued under section 2 or of any price schedule effective in accordance with the provisions of section 206, the defendant may apply to the court in which the proceeding is pending for leave to file in the Emergency Court of Appeals a complaint against the Administrator setting forth objections to the validity of any provision which the defendant is alleged to have violated or conspired to violate. The court in which the proceeding is pending shall grant such leave with respect to any objection which it finds is made in good faith and with respect to which it finds there is reasonable and substantial excuse for the defendant's failure to present such objection in a protest filed in accordance with section 203(a).6 Upon the filing of a complaint pursuant to and within thirty days from the granting of such leave, the Emergency Court of Appeals shall have jurisdiction to enjoin or set aside in whole or in part the provision of the regulation, order, or price schedule complained of or to dismiss the complaint. * * *' 11 However, the Supplemental Appropriation Act, 1948, approved July 30, 1947, amended § 204(e) by striking out the first sentence of the foregoing provision and substituting the following: 'Within sixty days after the date of enactment of this amendment, or within sixty days after arraignment in any criminal proceedings and within sixty days after commencement of any civil proceedings brought pursuant to section 205 of this Act or section 37 of the Criminal Code, involving alleged violation of any provision of any regulation or order issued under section 2 or alleged violation of any price schedule effective in accordance with the provisions of section 206 with respect to which responsibility was transferred to the Department of Commerce by Executive Order 9841,7 the defendant may apply to the court in which the proceeding is pending for leave to file in the Emergency Court of Appeals a complaint against the Administrator setting forth objections to the validity of any provision which the defendant is alleged to have violated or conspired to violate.' 12 Since responsibility for functions with respect to rent control was transferred by Executive Order 9841 to the Housing Expediter rather than to the Department of Commerce, the necessary effect of the foregoing amendment is to eliminate entirely the statutory right the defendant in the present case previously had to apply to the District Court for leave to file a complaint in the Emergency Court of Appeals. As a corollary, the latter court can no longer acquire jurisdiction pursuant to § 204(e) over any complaint which defendant may desire to file with it to contest the validity of the second rent order. 13 We may now consider what effect the 1947 amendment, thus viewed, has upon the 'exclusive jurisdiction' provision in § 204(d), which was preserved by the saving cause of § 1(b). If elimination of the complaint procedure of § 204(e) as a remedy for those seeking to challenge rent orders meant the elimination of all provision for review by the Emergency Court of Appeals, it might be argued that preservation of the ban imposed by s 204(d) on district court adjudication of the validity of rent orders would be a denial of due process to a defendant charged with a violation of an order. 14 However, the 1947 amendment left unimpaired the provision in § 203(a) for review of rent orders by filing protests with the Administrator (i.e., the Housing Expediter, as transferee of the Administrator's rent control functions). A denial of such a protest may be reviewed in the Emergency Court of Appeals by filing a complaint pursuant to § 204(a). Prior to an amendment added by the Stabilization Extension Act of 1944, protests could be filed under § 203(a) only within a period of sixty days after the issuance of the regulation or order sought to be challenged. Under the 1944 amendment, which is preserved unchanged for rent orders, this period was extended so that protests can be filed 'At any time after the issuance' of the regulation or order, although the 1947 amendment expressly takes cognizance of the right of the United States or any officer thereof to dismiss any protest under § 203 on the ground of laches.8 15 Thus, it appears that the Emergency Court of Appeals may still be able to acquire jurisdiction to review rent orders, issued under the Price Control Act, by means of the protest and complaint procedure of §§ 203(a) and 204(a). Accordingly, the exclusive jurisdiction provision in § 204(d) is not a meaningless anomaly so far as review of rent control order is concerned, and it remains as substantial a barrier to review of the second rent order by the District Court as it was held to be in Yakus v. United States, 1944, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834. There this Court ruled that defendants could not attack the validity of price regulations in a prosecution in a District Court even though the Emergency Price Control Act as then drawn made no provision for review by the complaint procedure later set up under § 204(e) (and now abandoned so far as rent orders are concerned). The only judicial review then available required as a preliminary the filing of a protest to the Administrator under § 203(a) within sixty days after the promulgation of the order or regulation. That statutory review procedure, whose constitutionality was upheld in the Yakus case, is still preserved to defendants charged with violations of rent orders issued under the Emergency Price Control Act of 1942.9 If anything, the judicial review still available to such defendants is even broader than the procedure sustained in the Yakus case, since the sixty-day limitation on the filing of protests no longer applies to rent orders. 16 In view of the foregoing, we answer question (1) in the negative. In answer to question (2), the Emergency Court of Appeals no longer has jurisdiction pursuant to § 204(e) to determine the validity of the second rent order. 1 As amended, 50 U.S.C.A.Appendix §§ 901, 925. 2 As amended, 8 F.R. 7322. 3 '* * * The Emergency Court of Appeals, and the Supreme Court upon review of judgments and orders of the Emergency Court of Appeals, shall have exclusive jurisdiction to determine the validity of any regulation or order is ued under section 2, of any price schedule effective in accordance with the provisions of section 206, and of any provision of any such regulation, order, or price schedule. Except as provided in this section, no court, Federal, State, or Territorial, shall have jurisdiction or power to consider the validity of any such regulation, order, or price schedule, or to stay, restrain, enjoin, or set aside, in whole or in part, any provisions of this Act authorizing the issuance of such regulations or orders, or making effective any such price schedule, or any provision of any such regulation, order, or price schedule, or to restrain or enjoin the enforcement of any such provision.' 4 See Bowles v. Willingham, 1944, 321 U.S. 503, 510, 511, 521, 64 S.Ct. 641, 645, 650, 88 L.Ed. 892; Yakus v. United States, 1944, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834. 5 Cf. 150 East 47th Street Corporation v. Porter, Em.App.1946, 156 F.2d 541. Moreover, the terms of a 1947 amendment, discussed infra, 68 S.Ct. 995, 996, clearly show congressional recognition that this exclusive jurisdiction continued after the termination date. 6 Section 203(a) provides inter alia for the filing of protests to rent orders issued by the Administrator at any time after issuance. The denial by the Administrator of such a protest is reviewable by a complaint filed in the Emergency o urt of Appeals pursuant to § 204(a). 7 50 U.S.C.A.Appendix, § 601 note, 12 F.R. 2645. 8 '* * * Nothing herein shall be construed as in any way affecting the right of the United States or any officer thereof to dismiss any protest under section 203 of the Emergency Price Control Act of 1942, as amended, or defend against any complaint under section 204(e) of such Act on the ground of laches.' Section 101, 50 U.S.C.A.Appendix, § 923 note. 9 Of course the District Court can withhold judgment so that it may give effect to any determination by the Housing Expediter or the Emergency Court of Appeals that might result from the defendant's pursuit of this remedy.
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334 U.S. 249 68 S.Ct. 1031 92 L.Ed. 1347 KENNEDY et al.v.SILAS MASON CO. No. 590. Argued April 20, 1948. Decided May 17, 1948. Mr. Leonard Lloyd Lockard, of Shreveport, La., for petitioners. [Argument of Counsel from page 250 intentionally omitted] Messrs. William L. Marbury, of Baltimore, Md., and Charles D. Egan, of Shreveport, La., for respondents. Mr. Justice JACKSON delivered the opinion of the Court. 1 This case involves questions as to the application of the overtime provisions of the Fair Labor Standards Act1 to certain persons who worked in a government-owned plant in which respondent produced munitions under a cost-plus-fixed-fee contract with the War Department. It involves such subsidiary issues as whether the plaintiffs were employees of the Government or of the private contractor, whether munitions produced for shipment across state lines in war use are produced for 'commerce'2 and whether they are 'goods'3 within the meaning of the Act. Substantial claims of petitioners may be denied or large sums added to the cost of the war by the answers to these questions, and many cases other than this will be controlled by its decision. 2 The manner in which the case has thus far developed raises the question whether as a matter of good judicial administration this Court should attempt to decide these far-reaching issues on this record. 3 No one questions that, taking its allegations at their face value, the complaint in this case states a cause of action under the Fair Labor Standards Act. Summary judm ent has gone against the plaintiffs because, by affidavit and exhibits, the allegations have been found unsustainable. The defendant filed a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c,4 'on the ground that the defendant is entitled to judgment as a matter of law.' The motion, so far as the Fair Labor Standards Act was concerned, was based on an affidavit 'which states facts showing that as a matter of law neither complainants nor defendant were covered' by the Act in that neither 'were engaged in commerce or in the production of goods for commerce.' Made part of the affidavit by reference were defendant's construction and operation contract with the Government and some 22 supplements or change orders covering nearly 200 pages of the record. The complainants then filed a supplemental complaint which added by reference all regulations and interpretative bulletins of the Department of Labor and Administrator of the Fair Labor Standards Act clarifying and explaining it. And, as against defendant's affidavit and exhibits the plaintiffs, as recited in the District Court's opinion, offered by reference affidavits of three former employees of the contractor showing the customs of payment and operation as bearing on the issue of whether they were government employees of those of the private contractor. The affidavits do not appear in the record, but parts deemed relevant are set out in the court's opinion. 4 On this basis the District Court first denied summary judgment. 68 F.Supp. 576. It was of the view that the plaintiffs, whatever the forms of the transaction, were in reality employed by the Government and, hence, the Fair Labor Standards Act by its own terms did not cover them. But it held that they were covered by § 4(b) of the Act of July 2, 1940,5 and were entitled to recover overtime under it. 5 On rehearing, the court concluded, however, that no remedy under this latter Act was available to them in this action as it was not pleaded. Accordingly, it granted summary judgment against them. D.C., 70 F.Supp. 929. The Circuit Court of Appeals, Fifth Circuit, sitting en banc affirmed. 164 F.2d 1016. It held that the plaintiffs were in substance employees of the United States, that munitions were not a part of commerce within the meaning of the Act, and that in any event munitions were not 'goods' within the meaning of the Act. One judge, concurring, did not pass on the question whether petitioners were employees of the Government but held only that munitions were produced for war, not for commerce. One judge dissented on the ground that the whole system 'was designed and operated so that the United States should not be the employer' and considered that munitions produced for transportation to a place outside of the State were produced for commerce and those engaged therein were subject to the Act. The case is here on cerriorari, 333 U.S. 841, 68 S.Ct. 664. 6 The Silas Mason Company, in a sense, is no more than a nominal defendant, for it is entitled to reimbursement from the Government. The Government, the ultimate party in interest, appears through the Department of Justice in support of the statutory basis for the claims against itself. But it advises us that 'The Department of the Army is of the view that respondent's position has merit for the reasons set forth in the brief filed by respondent. The Army is concerned with the great cost to which the Government will be subjected if the numerous suits akin to this are lost, or even if it must bear the cost of defending them. Furthermore, the Army believest hat the classes of employees involved in these cases were well paid, that they accepted their compensation without complaint or expectation of receiving more until this litigation was commenced sometime after the termination of their employment, and that accordingly there is little equity in the employees' present position.' 7 Three Acts of Congress require consideration. The plaintiffs and the Government say the Fair Labor Standards Act is controlling. The defendant, the Department of the Army, which handled the transaction, and the District Court consider that the Act of July 2, 1940, controls the liability. But the trial court held it cannot be the basis of adjudication of plaintiffs' claims because no such issue was pleaded and that holding has become the law of the case since there has been no appeal. The plaintiffs pleaded their cause of action also under the Walsh-Healey Public Contracts Act,6 but it was held unavailable to them below and their petition for certiorari to this Court raises no question as to that Act and acquiesces in dropping it from our consideration. 8 On the question as to who was the employer, on which this case was decided below, the complaint makes a clear, factual and simple allegation. It says that these plaintiffs were employed by the corporate defendant itself. This allegation has been overborne by interpreting the terms of the contracts between that alleged employer and a third party, that is, the Government, which terms may or may not have been known to the employees. There is substantial controversy as to the way those two parties, the Government and defendant in actual practice, construed their contracts, both sides of the controversy being based on events of which we are asked to take judicial notice or to spell out from contracts without the tests which trial affords. The plaintiffs in turn seek to counteract whatever inferences may be drawn from the defendant's version of dealings between defendant and the Government by contrary inferences from dealings between employees and the defendant. But they do not prove plaintiffs' own dealings, which are not in the record, but offer affidavits which relate specifically to 'laborers and mechanics' while plaintiffs were inspectors and foremen, a difference that may be material. Insofar as the allegations of the complaint are impeached by the course of dealing between defendant and the Government, they are not supported by any course of dealing to which these plaintiffs were parties. What they were paid and on what basis, whether they have already been paid for overtime on the theory that one of the other Acts applies, we do not know. 9 Defendant's present position, which, for all we know, may or may not be shared by the Department of the Army, is that we do not need to settle the question as to whether defendant or the Government was the actual employer, that the effect of the war-time legislation was to set up a wholly new system of war production, which was neither private enterprise nor government operation, but an amalgamation of the two, which also prescribed a complete system of labor relation by statute which supercedes and precludes operation of the Fair Labor Standards Act. But this broad contention seems not to have been submitted to either court below, is not consistent with the theoretical basis of their decisions and appears fully presented for the first time in the reply brief in this Court. 10 The short of the matter is that we have an extremely important question, probably affecting all cost-plus-fixed-fee war contractors and many of their employees immediately, and ultimately affecting by a vast sum the cost of fighting the war. No conclusion in such a case should prudently be rested on an indefinite factual foundation. The case, which counsel have described as a constantly expanding one, comes to us almost in the status in which it should come to a trial court. In addition to the welter of new contentions and statutory provisions we must pick our way among over a score of technical contracts, each amending some earlier one, without full background knowledge of the dealings of the parties. The hearing of contentions as to disputed facts, the sorting of documents to select relevant provisions, ascertain their ultimate form and meaning in the case, the practical construction put on them by the parties and reduction of the mass of conflicting contentions as to fact and inference from facts, is a task primarily for a court of one judge, not for a court of nine. 11 We do not hold that in the form the controversy took in the District Court that tribunal lacked power or justification for applying the summary judgment procedure. But summary procedures, however salutary where issues are clear-cut and simple,7 present a treacherous record for deciding issues of far-flung import, on which this Court should draw inferences with caution from complicated courses of legislation, contracting and practice. 12 We consider it the part of good judicial administration to withhold decision of the ultimate questions involved in this case until this or another record shall present a more solid basis of findings based on litigation or on a comprehensive statement of agreed facts. While we might be able, on the present record, to reach a conclusion that would decide the case, it might well be found later to be lacking in the thoroughness that should precede judgment of this importance and which it is the purpose of the judicial process to provide. 13 Without intimating any conclusion on the merits, we vacate the judgments below and remand the case to the District Court for reconsideration and amplification of the record in the light of this opinion and of present contentions. 14 Judgments vacated. 15 Mr. Justice BLACK thinks the judgment should be reversed. 16 Mr. Justice DOUGLAS concurs in the result. 1 Act of June 25, 1938, c. 676, 52 Stat. 1060, 29 U.S.C. § 201, et seq., 29 U.S.C.A. § 201 et seq. 2 The Act defines commerce as follows: 'Commerce' means trade, commerce, transportation, transmission or communication among the several States or from any State to any place outside thereof. 3 The Act defines goods as follows: 'Goods' means goods (including ships and marine equipment) wares, products, commodities merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof. 4 Rule 56 provides that the trial court may award summary judgment after motion, notice and hearing, provided the pleadings, depositions, admissions and affidavits on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. 5 Act of July 2, 1940, c. 508, 54 Stat. 712, 5 U.S.C.A. § 189a. 6 Act of June 30, 1936, 49 Stat. 2036, 41 U.S.C. § 35, 41 U.S.C.A. § 35. 7 Rule 56 requires that summary judgment shall be rendered if 'there is no genuine issue as to any material fact * * *.' See note 4.
67
334 U.S. 266 68 S.Ct. 1049 92 L.Ed. 1356 PRICEv.JOHNSTON. No. 111. Argued Dec. 11, 1947. Decided May 24, 1948. [Syllabus from pages 266-268 intentionally omitted] Mr. Joseph L. Rauh, Jr., of Washington, D.C., for petitioner. Mr. Frederick Bernays Wiener, of Washington, D.C., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 The writ of habeas corpus has played a great role in the history of human freedom. It has been the judicial method of lifting undue restraints upon personal liberty. But in recent years the increased use of this writ, especially in federal courts, has created many procedural problems which are not easy of solution. This case involves some of those problems. Because of the importance of the writ and the necessity that it not lose its effectiveness in a procedural morass, we have deemed it wise to deal with this case at length and to set forth fully and explicitly the answers to the matters at issue. 2 In 1938, petitioner was convicted in a federal district court in Michigan under a four-count indictment charging violations of the federal bank robbery statute.1 He was sentenced to imprisonment for 65 years and was committed to the United States Penitentiary at Alcatraz, California. His efforts to prosecute an appeal from his conviction proved futile.2 3 Since his confinement at Alcatraz, petitioner has made four separate applications for writs of habeas corpus in the United States District Court for the Northern District of California. The instant proceeding involves the fourth of these applications. Inasmuch as the problems in this case can best be understood in light of the issues raised in the earlier proceedings, it becomes necessary to examine the various applications in some detail. 4 1. The first application was prepared and filed in 1940 by petitioner, who is not a lawyer. He sought release mainly on the grounds that certain evidence used against him at the trial had been obtained in violation of the Fourth Amendment and that the trial judge had improperly refused to disqualify himself upon the filing of an affidavit of prejudice. It is important to note that this application did not allege that the conviction resulted from the prosecution's knowing use of false testimony. The District Court issued an order to show cause, a return was made, and the petitioner then filed a traverse in the form of a 'Motion to overrule Respondent's return and issue writ.' This motion likewise failed to aver the knowing use of false testimony. But it did call the court's attention to 'two different statements' made at the trial by the prosecution's chief witness, Fred T. Donner, and to the 'methods * * * used to obtain' this change in testimony.3 There was no indication given as to what those 'methods' were. Donner's testimony at the trial was attached as an exhibit, testimony which revealed that Donner had gone to the office of the District Attorney and talked to him and his assistant during the interval between the allegedly conflicting statements.4 5 The District Court then appointed counsel for petitioner at his request. Several months later, when the matter came on for determination, the court entered an order denying the application for a writ of habeas corpus and dismissing the petition. No hearing was held, the order being entered solely on the basis of the pleadings. And no findings of fact or conclusions of law were made. Nor was an opinion written. Petitioner thereafter proceeded pro se. Among his various legal maneuvers, he moved for a rehearing. He stated, as grounds for the motion, that the court erred in refusing to allow him to appear and testify personally before entering the order and that the court-appointed attorney 'blocked your petitioner from filing an amended petition to include additional points so that they could be reviewed on appeal.' This motion was denied. 6 Petitioner prepared his own appeal to the Circuit Court of Appeals. Among the points upon which he stated he intended to rely was the claim that he had been denied 'a fair and impartial trial' by Donner's change in testimony after talking with the District Attorney. But the Circuit Court of Appeals, in affirming the District Court's disposition of the habeas corpus petition, made no reference to this point; its opinion was devoted exclusively to the matters raised in the original petition. Price v. Johnston, 9 Cir., 125 F.2d 806. 7 Included in the numerous claims in his attempt to secure a writ of certiorari in this Court was the reiteration that Donner's change in testimony deprived him of a fair and impartial trial. According to his written argument, 'if this was not perjured it was base contradictory evidence for after this witness had completed all his evidence he was then taken into the private chambers of the United States Attorney * * * and there was instructed as to what to say, for he came from said office and was recalled to the stand at this second setting he rebutted all his prior testimony. This must be either classed as a conspiracy forcing a witness to change his testimony either of which surely would not be giving the appellant the fair and impartial trial to which he is entitled.' The Government's memorandum in opposition dealt with this contention in a footnote. It was there said that petitioner's claim 'is refuted by the excerpt from the transcript of the proceedings at the trial introduced as part of petitioner's pleadings * * * The witness did not rebut his prior testimony but merely supplemented it with a few more details and he affirmatively stated that his discussion with the prosecutor did not assist him in his subsequent testimony.' This Court denied the petition for a writ of certiorari. Price v. Johnston, 316 U.S. 677, 62 S.Ct. 1106, 86 L.Ed. 1750, rehearing denied 316 U.S. 712, 62 S.Ct. 1289, 86 L.Ed. 1777. 8 2. In 1942, several months after the foregoing action by this Court, petitioner prepared and filed in the District Court a second petition for a writ of habeas corpus. In this petition he sought release on the same grounds set forth in his first petition as well as on two principal additional grounds. The two new claims were that petitioner's counsel had been absent from the courtroom during an important part of the trial and that petitioner had not had counsel at the preliminary hearing before the United States Commissioner. The petition, as amended, contained no allegation that false testimony had been knowingly used at the trial; nor did it refer in any way to Donner's allegedly inconsistent testimony. Moreover, no mention of such matters was made by petitioner in his testimony at the hearing on the writ of habeas corpus.5 9 The District Court, at the close of the hearing, discharged the writ. Its findings of fact and conclusions of law were subsequently entered and were silent as to any question relating to the knowing use of false testimony. The District Court's action was affirmed on appeal, the opinion of the Circuit Court of Appeals being devoted to the matters decided by the District Court. Price v. Johnston, 9 Cir., 144 F.2d 260. This Court then denied a petition for certiorari, a petition which presented no issues differing from those raised in the lower courts. Price v. Johnston, 323 U.S. 789, 65 S.Ct. 312, 89 L.Ed. 629, rehearing denied 323 U.S. 819, 65 S.Ct. 558, 89 L.Ed. 650. 10 3. Petitioner's third petition for a writ of habeas corpus was denied by the District Court on August 22, 1945. This denial was based on the ground that the issues raised were known to petitioner when he filed the earlier petitions, making the third petition an abusive use of the writ of habeas corpus. Price v. Johnston, D.C., 61 F.Supp. 995, 996.6 Leave to appeal was denied. It is not evident, however, what the issues were that petitioner did raise in this proceeding. 11 4. On January 2, 1946, petitioner filed his fourth application for a writ of habeas corpus. He alleged that he had been denied a fair and impartial trial in that, on the trial for bank robbery, the jury was confused by the presentation of evidence to show perjury before a notary public, that the court was not justified in imposing a general sentence on the four counts of the indictment, and that the fourth count did not allege an offense. After an order to show cause was issued, petitioner amended his petition to allege 'That the government knowingly employed false testimony on the trial, to obtain the conviction.' 12 The respondent warden, through the United States Attorney, thereupon filed his return to the order to show cause. This return did not deny the allegation that the Government knowingly employed false testimony at the trial. Nor did it question the sufficiency of the allegation or the absence of supporting facts. It simply incorporated by reference the entire record in the three prior habeas corpus proceedings and asked that the fourth petition be denied on the basis of the District Court's opinion denying the third application.7 Petitioner's traverse stated that the earlier petitions did not contain some of the points presented in the fourth petition. It repeated the allegations in the original petition, though it merely incorporated by reference the allegation of the amended petition that the prosecutor knowingly used false testimony. 13 The District Court denied the fourth petition without a hearing and without opinion. It is difficult to discover from such action the precise basis of the District Court's dismissal of the allegation in question. But because of the nature of the warden's return, we suspect that the court thought that the matter was known to petitioner at the time of filing the first petition and should have been urged at that time. There is nothing whatever to indicate that the dismissal stemmed from the court's belief that the allegation was insufficient on its face or that it was obviously without merit. 14 On appeal, a panel of the Ninth Circuit Court of Appeals ordered up the original files in petitioner's three previous applications and directed that petitioner be brought before the court for the argument of his appeal. After the argument, the submission of the cause was set aside and the case was assigned for hearing before the court en banc. Petitioner then moved the court en banc for an order directing his appearance for the reargument. This motion was denied on January 6, 1947. in its written opinion, a majority of the court held that circuit courts of appeals are without power to order the production of a prisoner for the argument of his appeal in person. One judge expressed the view that the court had such power, but concurred in the denial of the motion as a matter of discretion. Two judges dissented, stating that there was power to grant the requested relief; but they did not reach the question of the propriety of exercising that power in this case. 9 Cir., 159 F.2d 234. 15 The appeal was then considered on the merits on briefs filed by petitioner and respondent8 and on oral argument by an Assistant United States Attorney. Petitioner was unrepresented at the oral argument. On May 5, 1947, the order of the District Court denying the fourth petition without a hearing was affirmed, two judges dissenting in separate opinions. 9 Cir., 161 F.2d 705, 706. 16 The majority opinion of the Circuit Court of Appeals pointed out that, by amending his fourth petition to allege 'That the government knowingly employed false testimony on the trial, to obtain conviction,' petitioner had interposed a wholly new ground for discharge. But the specific circumstances of this claim had not been developed in the District Court. The opinion accordingly treated the allegation as though it had incorporated petitioner's explanatory statement in his appellate brief that the United States Attorney, in the course of the trial, 'did take the one and only witness, Donner, that testified that there had been a crime committed, from the witness stand after he had testified that he could not see any guns or pistols during the robbery, to the district attorney's office, and talked about the evidence and put the witness Donner back on the witness stand to testify that he did see the pistols, and described them, when he could not do so at first.' 17 So construing the allegation, the court then said: 'The records in these several proceedings disclose that throughout his trial appellant was represented by counsel of his own choosing. And since he was himself present at al times he could hardly have been unaware of the described incident or of its implications, nor does he make any such claim. On the face of his showing it is apparent he knew as much about the misconduct at the time it is said to have occurred as he knows now. Yet no reason or excuse is attempted to be advanced for his failure to set it up in one or the other of his prior petitions.' 161 F.2d at pages 706, 707. And it was further stated that 'Where there have been repeated petitions with an apparent husbanding of grounds the onus may properly be cast on the applicant of satisfying the court that an abusive use is not being made of the writ.' Id., 161 F.2d at page 707. Since petitioner had given no valid excuse for failing to present earlier the allegation in question, the conclusion was reached that the District Court did not abuse its discretion in denying the fourth petition without a hearing. Reference was made in this respect to Salinger v. Loisel, 265 U.S. 224, 44 S.Ct. 519, 68 L.Ed. 989, and Wong Doo v. United States, 265 U.S. 239, 44 S.Ct. 524, 68 L.Ed. 999. 18 We issued a writ of certiorari to review the important issues thus raised in the two opinions of the Circuit Court of Appeals. And on petitioner's motion, we appointed a member of the bar of this Court to serve as his counsel before us. I. 19 We hold that power is resident in a circuit court of appeals to command that a prisoner be brought before it so that he may argue his own appeal in a case involving his life or liberty. That power, which may be exercised at the sound discretion of the court, grows out of the portion of § 262 of the Judicial Code, 28 U.S.C. § 377, 28 U.S.C.A. § 377, which provides that 'The Supreme Court, the circuit courts of appeals, and the district courts shall have power to issue all writs not specifically provided for by statute, which may be necessary for the exercise of their respective jurisdictions, and agreeable to the usages and principles of law.' 20 An order requiring the presence of a prisoner before a circuit court of appeals to argue his own appeal is one in the nature of a writ of habeas corpus. As such, it clearly falls within the scope of § 262. Basic to the power of a circuit court of appeals to issue a writ of habeas corpus under that section, of course, is the pendency of a proceeding of an appellate nature to which the contemplated writ is auxiliary. Whitney v. Dick, 202 U.S. 132, 26 S.Ct. 584, 50 L.Ed. 963. The writ cannot be issued by that court as an independent and original proceeding; it can only issue where it may be necessary to the complete exercise of an appellate jurisdiction already existing. Since the occasion for demanding the presence of a prisoner at an oral argument would arise only where there was an appeal already pending before the court, a writ compelling his presence satisfies this basic requirement of § 262. 21 Moreover, a writ of habeas corpus of this nature cna on occasion be 'necessary' for the exercise of appellate jurisdiction so as to be authorized by § 262. We have refused to interpret that section to mean that a circuit court of appeals can issue a habeas corpus writ only if 'necessary' in the sense that the court could not otherwise physically discharge its appellate duties. Adams v. United States ex rel. McCann, 317 U.S. 269, 273, 63 S.Ct. 236, 239, 87 L.Ed. 268, 143 A.L.R. 435. Rather, § 262 has been read so that the writ may be issued where its use is calculated, in the sound judgment of the circuit court of appeals, to achieve the ends of justice entrusted to it. In other words, the writ is available in those exceptional cases 'where, because of special circumstances, its use as an aid to an appeal over which the court has jurisdiction may fairly be said to be reasonably necessary in the interest of justice.' Id., 317 U.S. at page 274, 63 S.Ct. at page 239, 87 L.Ed. 268, 143 A.L.R. 435. 22 Exceptional situations may arise where a circuit court of appeals might fairly conclude that oral argument by prisoner in person is 'reasonably necessary in the interest of justice.' True, an appeal can always be submitted on written briefs. But oral argument, while not indispensable, is frequently if not usually desired by the parties. And there are occasions when a court deems it essential that oral argument be had; indeed, a court order or request to that effect may be necessary where the parties have previously indicated a willingness to forego the privilege. In such situations where oral argument is slated to take place, fairness and orderly appellate procedure demand that both parties be accorded an equal opportunity to participate in the argument either through counsel or in person. The difficulty, of course, arises when one of the parties is a prisoner who has no lawyer and who desires that none be appointed to represent him, being of the belief that the case is of such a nature that only he himself can adequately discuss the facts and issues. Since ordinarily the court cannot designate counsel for the prisoner without his consent, an arrangement that is made for his presence and participation at the oral argument can be said to be 'reasonably necessary in the interest of justice.' Otherwise the court loses the benefits of listening to his contentions, hearing only the arguments of government counsel. Conceivably, the prisoner's case might be unduly prejudiced by such a one-sided debate. That the argument orally advanced by the prisoner may in fact be less than enlightening to the court does not detract from the fairness or the justness of giving him the opportunity to appear and argue. Thus if a circuit court of appeals is satisfied in other respects that the prisoner should be produced at the argument, a writ designed to effectuate that production is plainly 'necessary' within the contemplation of § 262. 23 It remains to be seen whether a writ of habeas corpus for the purpose under consideration is 'agreeable to the usages and principles of law,' as that phrase is used in § 262. At common law there were several variants of the writ of habeas corpus. See 3 Blackstone's Commentaries 129—132; Ex parte Bollman, 4 Cranch 75, 97, 98, 2 L.Ed. 554.9 None of them, however, seems to have been devised for the particular purpose of producing a prisoner to argue his own appeal. Nor does it appear that the courts of England have used or developed the habeas corpus writ for this purpose.10 24 However, we do not conceive that a circuit court of appeals, in issuing a writ of habeas corpus under § 262 of the Judicial Code, is necessarily confined to the precise forms of that writ in vogue at the common law or in the English judicial system. Section 262 says that the writ must be agreeable to the usages and principles of 'law,' a term which is unlimited by the common law or the English law. And since 'law' is not a static concept, but expands and develops as new problems arise, we do not believe that the forms of the habeas corpus writ authorized by § 262 are only those recognized in this country in 1789, when the original Judiciary Act containing the substance of this section came into existence. In short, we do not read § 262 as an ossification of the practice and procedure of more than a century and a half ago. Rather it is a legislatively approved source of procedural instruments designed to achieve 'the rational ends of law.' Adams v. United States ex rel. McCann, supra, 317 U.S. at page 273, 63 S.Ct. at page 239, 87 L.Ed. 268, 143 A.L.R. 435. 25 We accordingly look to the usages and principles which have attached themselves to the writ of habeas corpus down through the years to the present time. The historic and great usage of the writ, regardless of its particular form, is to produce the body of a person before a court for whatever purpose might be essential to the proper disposition of a cause. The most important result of such usage has been to afford a swift and imperative remedy in all cases of illegal restraint upon personal liberty. With that usage, a writ for the purpose under consideration is entirely agreeable and consistent. To order the production of a prisoner before an appellate court to argue his own appeal in a case in which he alleges that he is illegally imprisoned is to perform an act which is intimately and necessarily related to the presentation of the merits of the prisoner's complaint, a presentation which is essential if relief from the allegedly illegal imprisonment is to be secured. Such production, as we have seen, may in some circumstances be essential to the proper disposition of the case of appeal. Where that is the case, a writ in the nature of habeas corpus to achieve that production is agreeable to the usages of law. 26 Moreover, the principle has developed that the writ of habeas corpus should be left sufficiently elastic so that a court may, in the exercise of its proper jurisdiction, deal effectively with any and all forms of illegal restraint. The rigidity which is appropriate to ordinary jurisdictional doctrines has not been applied to this writ. The fluidity of the writ is especially desirable in the setting of a statute where Congress has given circuit courts of appeals the power to issue the writ in aid of their appellate jurisdiction wherever 'reasonably necessary in the interest of justice.' The ordinary forms and purposes of the writ may often have little relation to the necessities of the appellate jurisdiction of those courts. Justice may on occasion require the us of a variation or a modification of an established writ. It thus becomes essential not to limit appellate courts to the ordinary forms and purposes of legal process. Congress has said as much by the very breadth of its language in § 262. It follows that we should not write in limitations which Congress did not see fit to make. 27 Formulation of the limitations of § 262 which do exist must await the necessities of appellate jurisdiction in particular cases. It is enough for the present to note that where those necessities are such as to require the presence of a prisoner to argue his own appeal, the issuance of a writ of habeas corpus for that purpose is 'agreeable to the usages and principles of law' so as to be sanctioned by § 262. Only in that way can we give substance in this case to our previous statement that 'dry formalism should not sterilize procedural resources which Congress has made available to the federal courts.' Adams v. United States ex rel. McCann, supra, 317 U.S. at page 274, 63 S.Ct. at page 239, 87 L.Ed. 268, 143 A.L.R. 435. 28 We therefore conclude that circuit courts of appeals do have the power under § 262 of the Judicial Code to issue an order in the nature of a writ of habeas corpus commanding that a prisoner be brought to the courtroom to argue his own appeal. That power has heretofore been assumed. Schwab v. Berggren, 143 U.S. 442, 449, 12 S.Ct. 525, 527, 36 L.Ed. 218; and see Goldsmith v. Sanford, 4 Cir., 132 F.2d 126, 127; Donnelly v. State, 26 N.J.L. 463, 472, affirmed 26 N.J.L. 601. We now translate that assumption into an explicit holding. 29 In so deciding, however, we emphasize that the power of a circuit court of appeals to issue such a writ is discretionary. And this discretion is to be exercised with the best interests of both the prisoner and the government in mind. If it is apparent that the request of the prisoner to argue personally reflects something more than a mere desire to be freed temporarily from the confines of the prison,11 that he is capable of conducting an intelligent and responsible argument, and that his presence in the courtroom may be secured without undue inconvenience or danger, the court would be justified in issuing the writ. But if any of those factors were found to be negative, the court might well decline to order the prisoner to be produced. Section 262, in other words, does not justify an indiscriminate opening of the prison gates to allow all those who so desire to argue their own appeals. 30 The discretionary nature of the power in question grows out of the fact that a prisoner has no absolute right to argue his own appeal or even to be present at the proceedings in an appellate court. Schwab v. Berggren, supra. The absence of that right is in sharp contrast to his constitutional prerogative of being present in person at each significant stage of a felony prosecution,12 see Hopt v. Utah, 110 U.S. 574, 4 S.Ct. 202, 28 L.Ed. 262, and Snyder v. Massachusetts, 291 U.S. 97, 54 S.Ct. 330, 78 L.Ed. 674, 90 A.L.R. 575, and to his recognized privilege of conducting his own defense at the trial. Lawful incarceration brings about the necessary withdrawal or limitation of many privileges and rights, a retraction justified by the considerations underlying our penal system. Among those so limited is the otherwise unqualified right given by § 272 of the Judicial Code, 28 U.S.C. § 394, 28 U.S.C.A. § 394, to parties in all the courts of the United States to 'plead and manage their own causes personally.' To the extent that this section permits parties to conduct their own oral arguments before appellate courts, it must be modified in its application to prisoners. Oral argument on appeal is not an essential ingredient of due process and it may be circumscribed as to prisoners where reasonable necessity so dictates. 31 A prisoner's right to participate in oral argument on appeal is accordingly to be determined by the exercise of the discretionary power of the circuit court of appeals under § 262. The court below erred in holding that no such power existed. But since the case must go back to the District Court for further proceedings, it is unnecessary here to remand the case to the Circuit Court of Appeals to exercise the discretionary power which rightfully belongs to it. II. 32 We hold that petitioner's fourth petition for a writ of habeas corpus, alleging the knowing use of false testimony to obtain his conviction, was improperly dismissed by the District Court. 33 The Government argues before us that the allegation in question, as presented to the District Court, is a mere allegation of law unsupported by reference to any specific facts. As such, the allegation is said to be fatally deficient and to warrant summary denial. Reference is made in this respect to Ex parte Cuddy, Petitioner, 131 U.S. 280, 286, 9 S.Ct. 703, 705, 33 L.Ed. 154; Kohl v. Lehlback, 160 U.S. 293, 299, 16 S.Ct. 304, 306, 40 L.Ed. 432; United States v. Ju Toy, 198 U.S. 253, 261, 25 S.Ct. 644, 645, 49 L.Ed. 1040; Collins v. McDonald, 258 U.S. 416, 420, 421, 42 S.Ct. 326, 328, 66 L.Ed. 692; Hodge v. Huff, 78 U.S.App.D.C. 329, 140 F.2d 686, 688; and Long v. Benson, 6 Cir., 140 F.2d 195, 196. 34 But this proposition was apparently not presented to or passed upon by the District Court; nor was it determined by the Circuit Court of Appeals. The sole complaint made by the Government in the lower courts, and the main one raised before us, relates to petitioner's alleged abuse of the writ of habeas corpus. A consideration of that factor is preliminary as well as collateral to a decision as to the sufficiency or merits of the allegation itself. We accordingly address ourselves solely to the alleged abuse of the writ, leaving the Government free to press its objections to the adequacy of the allegation after the proceedings are renewed before the District Court. 35 The Circuit Court of Appeals, as we have noted, treated the bare allegation of the knowing use of false testimony as having incorporated the explanatory statement in petitioner's appellate brief. Whether such an expanded allegation states a sufficiently specific violation of due process within the meaning of Mooney v. Holohan, 294 U.S. 103, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406, is a question which we need not now answer. Nor is it necessary here to decide the propriety of treating a statement in an appellate brief as an amplification of an allegation in the trial court, a practice to which the Government makes objection. 36 But in dealing with the alleged abuse of the writ of habeas corpus, we find it undenied that the explanatory statement illuminates the allegation made in the District Court. The statement makes clear the incident to which petitioner had reference when he alleged the knowing use of false testimony. In other words, the essence of petitioner's charge is that the prosecution brought undue pressure to bear on the Government's chief witness, Donner, to change his testimony and that this altered testimony was knowingly used to obtain petitioner's conviction. Cf. Pyle v. Kansas, 317 U.S. 213, 215, 216, 63 S.Ct. 177, 178, 87 L.Ed. 214. The issue now is whether petitioner has so abused the writ of habeas corpus as to bar a consideration of this allegation, whether it be general or specific in form or whether it be supported or unsupported by factual references. From the facts which we have previously detailed it is evident that this allegation was not properly raised prior to the amendment of the fourth petition. None of the three prior petitions had made this point. In the first proceeding, it is true, petitioner's traverse to the warden's return called the court's attention to the differing statements allegedly made by Donner and claimed that certain undefined 'methods' had been used to obtain the change in testimony. Petitioner was apparently trying to raise the due process issue formulated in Mooney v. Holohan, supra. But his effort was without success. A mere claim that a witness gave inconsistent testimony is not enough to charge the prosecution's knowing use of false testimony; it may well be that the witness' subsequent statements were true, in which event the claim of inconsistency is not a constitutional objection. Since this due process issue was not properly raised, we cannot assume that the District Court's action in dismissing the first petition on the pleadings was a determination against petitioner on the merits of the issue. 37 Further elaboration of the Donner incident was made by petitioner in the course of seeking review of the District Court's action on the first petition. Both in the Circuit Court of Appeals and in this Court he claimed that he had been denied a fair and impartial trial by Donner's alleged shift in testimony; and in this Court he stated that there had been a conspiracy to force Donner to change his story. It is noteworthy that the Government did not see fit to deny or controvert petitioner's claim until the case reached this Court. We need not decide whether the due process issue was properly raised in the review proceedings, inasmuch as petitioner's failure to make a proper allegation in that respect in the District Court foreclosed any determination of the matter. And as we have noted, the second and third petitions for habeas corpus were completely silent as to this due process issue. 38 There has thus been no proper occasion prior to the fourth proceeding for a hearing and determination by the District Court as to the allegation that the prosecution knowingly used false testimony to obtain a conviction. That fact renders inapplicable Salinger v. Loisel, 265 U.S. 224, 44 S.Ct. 519, 68 L.Ed. 989, upon which reliance was placed by the Circuit Court of Appeals. It was there held that, while habeas corpus proceedings are free from the res judicata principle, a prior refusal to discharge the prisoner is not without bearing or weight when a later habeas corpus application raising the same issues is considered. But here the three prior applications did not raise the issue now under consideration and the three prior refusals to discharge petitioner can have no bearing or weight on the disposition to be made of the new matter raised in the fourth petition. Waley v. Johnston, 316 U.S. 101, 62 S.Ct. 964, 86 L.Ed. 1302. 39 Likewise irrelevant to the instant proceeding is Wong Doo v. United States, 265 U.S. 239, 44 S.Ct. 524, 68 L.Ed. 999. In that case, the petitioner set forth two grounds for discharge in his first petition. At the hearing, he offered no proof in support of the second ground. The petition was dismissed on the theory that the first ground was not good in law. A subsequent habeas corpus petition relied entirely on the second ground alleged in the first petition. This Court held that the petitioner had had full opportunity to offer proof as to the second point at the hearing on the first petition, proof which was accessible at all times. If he was intending to rely on that ground, good faith required that he produce his proof at the first hearing. 'To reserve the proof for use in attempting to support a later petition, if the first failed, was to make an abusive use of the writ of habeas corpus. No reason for not presenting the proof at the outset is offered.' 265 U.S. at page 241, 44 S.Ct. at page 525, 68 L.Ed. 999. 40 The Wong Doo case thus involved a siu ation where one has properly raised an issue in an earlier petition, has received a full opportunity at a hearing to present evidence on the point, and has refused to avail oneself of that opportunity. The distinguishing features in the instant case are obvious. 41 There is one factor in this case that might be thought to justify the dismissal of the fourth petition as an abusive use of the habeas corpus writ. That factor is that petitioner had prior knowledge of the Donner incident which forms the basis, at least in part, of the due process allegation now being made. The record in the first proceeding shows that petitioner's own lawyer elicited the information from Donner that he had talked with the prosecuting lawyers during the interlude between the allegedly conflicting statements. And petitioner made reference to that information during the course of the first habeas corpus proceeding in the manner heretofore described. Petitioner now utilizes that same information in alleging that the prosecution made a knowing use of false testimony. 42 In the first place, however, we cannot assume that petitioner has acquired no new or additional information since the time of the trial or the first habeas corpus proceeding that might indicate fraudulent conduct on the part of the prosecuting attorneys. As Judge Denman stated in his dissenting opinion below, 161 F.2d at pages 708, 709: 'The gravamen of the misconduct charged is not the fact that the witness changed his testimony but that the prosecuting attorney knowingly caused the witness to give the false testimony. All the accused and his attorney knew at the trial was that the single prosecuting witness changed his testimony. Obviously this in itself does not warrant a charge of fraud. That it was fraudulently done by persuasion of the prosecuting attorney could only have been learned after conviction and after the convicted man was in the penitentiary.' 43 Whether petitioner does or does not have any new information is a matter unrevealed by anything before us or before the Circuit Court of Appeals. It is a matter which should be determined in the first instance by the District Court. And it is one on which petitioner is entitled to be heard either at a hearing or through an amendment or elaboration of his pleadings. Appellate courts cannot make factual determinations which may be decisive of vital rights where the crucial facts have not been developed. Cf. Kennedy v. Silas Mason Co., 334 U.S. 249, 68 S.Ct. 1031. 44 In the second place, even if it is found that petitioner did have prior knowledge of all the facts concerning the allegation in question, it does not necessarily follow that the fourth petition should be dismissed without further opportunity to amend the pleadings or without holding a hearing. If called upon, petitioner may be able to present adequate reasons for not making the allegation earlier, reasons which make it fair and just for the trial court to overlook the delay. The primary purpose of a habeas corpus proceeding is to make certain that a man is not unjustly imprisoned. And if for some justifiable reason he was previously unable to assert his rights or was unaware of the significance of relevant facts, it is neither necessary nor reasonable to deny him all opportunity of obtaining judicial relief. 45 Moreover, we do not believe that the burden was on the petitioner of affirmatively alleging in the first instance that he had acquired new information or that he had adequate reasons for not raising sooner the issue of the knowing use of false testimony. It was enough if he presented an allegation and supporting facts which, if borne out by proof, would entitle him to relief. Prisoners are often unlearned in the law and unfamiliar with the complicated rules of pleading. Since they act so often as their own counsel in habeas corpus proceedings, we cannot impose on them the same high standards of the legal art which we might place on the members of the legal profession. Especialy is this true in a case like this where the imposition of those standards would have a retroactive and prejudicial effect on the prisoner's inartistically drawn petition. Cf. Holiday v. Johnston, 313 U.S. 342, 350, 61 S.Ct. 1015, 1017, 85 L.Ed. 1392; Pyle v. Kansas, supra, 317 U.S. at page 216, 63 S.Ct. at page 178, 87 L.Ed. 214; Tomkins v. Missouri, 323 U.S. 485, 487, 65 S.Ct. 370, 371, 89 L.Ed. 407; Rice v. Olson, 324 U.S. 786, 791, 792, 65 S.Ct. 989, 992, 89 L.Ed. 1367. 46 And so if the Government chooses not to deny the allegation or to question its sufficiency and desires instead to claim that the prisoner has abused the writ of habeas corpus, it rests with the Government to make that claim with clarity and particularity in its return to the order to show cause. That is not an intolerable burden. The Government is usually well acquainted with the facts that are necessary to make such a claim. Once a particular abuse has been alleged, the prisoner has the burden of answering that allegation and of proving that he has not abused the writ. If the answer is inadequate, the court may dismiss the petition without further proceedings. But if there is a substantial conflict, a hearing may be necessary to determine the actual facts. Appropriate findings and conclusions of law can then be made. In this way an adequate record may be established so that appellate courts can determine the precise basis of the district court's action, which is often shrouded in ambiguity where a petition is dismissed without an expressed reason. And the prisoner is given a fairer opportunity to meet all possible objections to the filing of his petition. 47 It is obvious that the procedure followed in the District Court in the instant proceeding precluded a proper development of the issue of the allegedly abusive use of the habeas corpus writ. The Government's response to the order to show cause was too indefinite and vague to give petitioner a fair opportunity to meet this important issue. Merely quoting the court's opinion in the third habeas corpus proceeding was not enough to require petitioner to explain his reasons for failing to present earlier his allegation as to the knowing use of false testimony. And the court either failed or was unable to delineate the issue by making specific findings and conclusions of law or by explaining its view of the matter in a written opinion. 48 We are not unaware of the many problems caused by the numerous and successive habeas corpus petitions filed by prisoners.13 But the answer is not to be found in repeated denials of petitions without leave to amend or without the prisoners having an opportunity to defend against their alleged abuses of the writ. That only encourages the filing of more futile petitions. The very least that can and should be done is to make habeas corpus proceedings in district courts more meaningful and decisive, making clear just what issues are determined and for what reasons. 49 To that end, we reverse the judgment below and remand the instant case to the District Court for further proceedings consistent with this opinion. We do not hold that the District Court, on remand, must grant the fourth habeas corpus petition if it is unsupported and unsubstantiated; nor do we hold that a hearing must now be held on the merits of the allegation in question. Rather the case must be developed further in light of the principles discussed herein. The Government is free to amend its return to bring into focus whatever abuse of the writ of habeas corpus it thinks petitioner has committed. And the petitioner is free to answer such charge as may be made in that respect, the burden being on him to show that he is entitled at this late date to make the allegation as to the knowing use of false testimony. The District Court may then dispose of the matter ont he pleadings or order that a hearing be had to develop the facts. If the court eventually determines that petitioner has not abused the writ, the allegation of the knowing use of false testimony should be decided as to its sufficiency and its merits. But in any event the court should make explicit its determination of the preliminary problem of the abusive use of the writ. 50 Reversed and remanded. 51 Mr. Justice FRANKFURTER, dissenting. 52 I agree with the views of Mr. Justice JACKSON that, in the light of all the long-drawn-out prior proceedings, the two lower courts justifiably found the fourth petition for habeas corpus in this case without merit on its face. It is not too much to ask the petitioner to state, however informally, that his fourth petition is based on newly discovered matter, or, in any event, on a claim that he could not fairly have been asked to bring to the court's attention in his three prior petitions. Such a requirement certainly does not narrow the broad protection which the writ of habeas corpus serves. I also agree with his general attitude against a prisoner being brought from Alcatraz—or any other federal prison—to argue his own case on appeal. My difference with him is that I would not bolt the door to such an undesirable practice, as a matter of law, but merely leave it as a rigorous rule of practice. The power to depart from this rule ought not to be wholly foreclosed, even though opportunity for its exercise is left for contingencies not easily foreseeable. 53 The office of the writ of habeas corpus precludes definitive formulation of its limitations precisely because it is the prerogative writ available for vindicating liberties. See Sunal v. Large, 332 U.S. 174, 184, 187, 67 S.Ct. 1588, 1593, 1595, 91 L.Ed. 1982. Therefore, I would not preclude the use of the writ to bring a convict before a circuit court of appeals where circumstances in the interests of justice make his presence compelling. See Adams v. United States ex rel. McCann, 317 U.S. 269, 272—275, 63 S.Ct. 236, 238—240, 87 L.Ed. 268, 143 A.L.R. 435. It is a very different thing to judge the use of the writ for the purpose of having an incarcerated petitioner argue his own case on appeal by the ordinary standards of judicial discretion. To acknowledge such power in the circuit courts of appeals implies too broad an authority, in that the abuse of its exercise in granting the writ is too narrow a basis for review. A general rule should preclude the use of the writ for the purpose of taking a prisoner out of confinement merely to argue his own case on appeal from dismissal of a petition for habeas corpus after conviction. Every legitimate right of such a prisoner can be safeguarded by means much more consonant with the fair and seemly and wise administration of justice. 54 The CHIEF JUSTICE and Mr. Justice REED join in this dissent. 55 Mr. Justice JACKSON, dissenting. 56 I cannot agree that the District Court erred in dismissing this unsupported and unsubstantiated fourth habeas corpus petition, whether his action in so doing was based on its obvious lack of merit or on the prisoner's abuse of the writ. Nor can I agree that appearance of a prisoner merely to argue his case is 'necessary for the exercise' of the jurisdiction of the Court of Appeals and 'agreeable to the usages and principles of law' as is required by § 262 of the Judicial Code, 28 U.S.C. § 377, 28 U.S.C.A. § 377. 57 This case is typical of many based on repeated habeas corpus petitions by the same prisoner.1 This petitioner is serving a long term for armed bank robbery. Confinement is neither enjoyable nor profitable. And it is safe to assume that it neither gives rise to new scruples nor magnifies old ones which would handicap petitioner's preparation of one habeas corpus application after another. If the trial court rules one set of allegations deficient, concoction of another set may bring success. Under this decision, failure to allege the most obvious grounds in earlier applications,o r to support them with facts in a later petition, is not fatal. The number of times the Government must re-try the case depends only on the prisoner's ingenuity, industry and imagination. This prisoner, in his fourth petition in eitht years, has now gotten around to charging that, at his trial in 1938, the Government knowingly employed false testimony to obtain the conviction. This issue substantially involves a retrial of the original conviction after more than ten years have passed by, memories are blurred, evidence is lost, and parties dispersed. The petition is unaccompanied by any particulars supporting this most serious charge against the court and responsible officers of the law. The prisoner, of course, has nothing to lose in any event. Perjury has few terrors for a man already sentenced to 65 years' imprisonment for a crime of violence. Even such honor as exists among thieves is not too precious to be sacrificed for a chance at liberty. Consequently, his varying allegations can run the gamut of all those perpetuated in the pages of the United States reports. 58 The Court now holds that such irresponsible, general, unsupported and belated accusations must be tried out; further, the District Judge erred in that he did not request the perennial petitioner to fill in details, the absence of which, under established rules, justified his dismissal of the petition actually filed. I think that the Government should not be required to go to trial (or rather, retrial) on a case of this kind, unless the petitioner, without prompting or solicitation by the Court, alleges with particularity conduct which would be sufficient, if proved, to entitle him to release. If he does not have such facts, he is doomed ultimately to fail; if he does have them, he should not be permitted to force the court and the Government into further litigation until he has disclosed them. And certainly it is not too much to require that on a fourth petition, eight years after conviction, the petitioner must also set forth facts which will excuse his failure to raise his question in earlier petitions instead of at a period so remote from his trial. 59 Moreover, if any one of petitioner's applications and accompanying facts convince the trial judge that a hearing on the merits is justified, the prisoner's presence in the trial court, to testify, may fairly be said to be necessary. The procedure for bringing him before that court to give his evidence is of ancient origin. But it is another and quite different matter to say that a layman's r esense, solely to take part in a legal argument on a settled record, is necessary for the exercise of the jurisdiction of the appellate court. The only suggested authority for so ordering a jailer to fetch a prisoner to argue his own appeal is § 262 of the Judicial Code, 28 U.S.C. § 377, 28 U.S.C.A. § 377, which provides that 'the Supreme Court, the circuit courts of appeal, and the district courts shall have power to issue all writs not specifically provided for by statute,' and if the statute stopped here, the Court might have some basis for its action. But the section adds, 'which may be necessary for the exercise of their respective jurisdictions, and agreeable to the usages and principles of law.' 60 Even if the Court of Appeals, or this Court, believed that the former should have the power to summon prisoners for argument of their appeals, that is not the issue. The issue is, can the requirements of the statute be met? Is the prisoner's presence merely to argue his case 'necessary for the exercise' of the appellate court's jurisdiction? I think it is farfetched to so hold.2 Such courts may, and usually do, appoint counsel for a prisoner who cannot obtain one for himself. If there is more that the defendant himself wants to present, it can always be done in writing. Many cases are decided in appellate courts solely on written briefs. But the Court fears that some prisoners like this one may not only refuse counsel but also wish not to rest on a written brief. Under the statute, however, it is not the convenience or the egotism of the prisoner that confers power to grant a writ—it is the necessity of the writ for the exercise of the Court's jurisdiction. It is difficult for me to believe that prisoners, whom the Court so often forgives for violating all rules of pleading and procedure on the ground of lay ignorance, can be a necessary source of light and leading to an appellate court. The absence of such a necessity is, I suppose, the reason why no such writ has been known to the law until today's revelation, and why the statute does not allow it. But the Court by this decision makes it proper for any prisoner, whose appeal from either conviction or denial of any one of his multitudinous petitions for habeas corpus is before the Court of Appeals, to insist that he be transported to that court to argue the case and to demand a ruling by the court on that issue as well as on the merits. This seems to open the gate to new and fruitless litigation. 61 Admittedly, the statute's second requirement, viz.: that the writ be 'agreeable to the usages and principles of law,' cannot be met. It is apparent that the latter clause is a limitation on the earlier sweeping grant of power. Ex parte Bollman (Ex parte Swartwout), 4 Cranch 75, 99, 2 L.Ed. 554. The Circuit Courts of Appeal are statutory courts and must look to a statutory basis for any jurisdiction they exercise. But in this cas the Court is authorizing a complete overriding of the limitation Congress has seen fit to impose. The Court's opinion points out that employment of the writ of habeas corpus for this purpose has never been a usage or principle of the common law. No statutory or decisional3 basis for such a usage or principle is cited. Yet, ignoring the limitations of this very statute, the Court concludes that the writ can just be issued anyway. I cannot subscribe to this sort of statutory 'construction.' 62 This is one of a line of cases by which there is being put into the hands of the convict population of the country new and unprecedented opportunities to re-try their cases, or to try the prosecuting attorney or their own counsel, and keep the Government and the courts litigating their cases until their sentences expire or one of their myriad claims strikes a responsive chord or the prisoner make the best of an increased opportunity to escape. I think this Court, by inflating the great and beneficent writ of liberty beyond a sound basis, is bringing about its eventual depreciation.4 1 12 U.S.C. §§ 588b and 588c, 12 U.S.C.A. §§ 588b, 588c. Petitioner was charged with having (1) entered a federally insured bank with intent to rob, (2) robbed the bank by putting an employee in fear, (3) jeopardized the lives of a bank employee and others by the use of a dangerous weapon, and (4) kidnapped a bank employee in the course of such offense. Petitioner was found guilty as charged. 2 His petition to the Sixth Circuit Court of Appeals for a writ of mandamus to require the trial judge to enter a decision on his application for an appeal was dn ied because 'no application for appeal is pending before respondent or in the United States District Court for the Eastern District of Michigan.' Price v. Moinet, 116 F.2d 500. His petition in this Court for a writ of certiorari was denied because filed out of time, 311 U.S. 703, 61 S.Ct. 170, 85 L.Ed. 456, rehearing denied 311 U.S. 729, 61 S.Ct. 316, 85 L.Ed. 474. Petitioner acted as his own counsel in these unsuccessful maneuvers. 3 Point V of petitioner's motion stated: 'Because the respondent shows falsely on the affidavit by Assistant United States Attorney John W. Babcock, respondent's Exhibit 'A', where he states that there was no determination of any one in said office of the United States Attorney to have him convicted falsely. Petitioner calls the attention of this Honorable Court to the testimony of transcript of record at page 35 Second part. Recross examination of the one and only witness that the government produced to testify that there had been a crime committed as charged in indictment No. 24629. Petitioner's Exhibit 'A', testimony given by Fred T. Donner, and it will show just what methods was used to obtain two different statements from this witness.' 4 This testimony was brought out on recross examination of Donner by one of petitioner's attorneys. Part of this colloquy was as follows: 'Q. Witness, perhaps I misunderstood your testimony this morning. Did I understand you correctly to say that last night after you left here, you went up to the department of Justice, or the District Attorney's office, and you discussed your testimony? A. Yes, sir. 'Q. And whom did you discuss it with? A. With the District Attorney, and the assistant. 'A. And after that discussion, you remembered some things that you have testified to this morning? A. I remembered them yesterday, but I just—I was nervous and forgot them. 'Q. Well, my recollection and yours perhaps do not agree on it, but the statements that you made yesterday were all true to the best of your recollection, were they not? A. Yes, sir. 'Q. And your conversations last night after you left the court didn't assist you in giving any testimony, did they? A. No, it did not, only that I had an opportunity, I wanted an opportunity to bring out something that I hadn't said. 'Q. Did it refresh yu r recollection? A. No, it just—there were just some things I didn't tell in my story, that is all.' 5 The lawyer who had represented petitioner in connection with the first application withdrew and another was appointed in his place by the District Court to serve petitioner in the second proceeding. This lawyer filed an amene d petition for the writ of habeas corpus. The writ issued, there was a hearing at which petitioner's counsel was present, a further amendment of the petition was allowed, and testimony was taken. Petitioner gave evidence on his own behalf at this hearing. In prosecuting his appeal from the District Court's action, petitioner once more acted pro se. 6 The District Court's opinion, after briefly stating the background of the case, reads as follows: 'Petitioner alleges 'that the questions now raised was not raised in the prior petitions No. 23268—W and 10.671—R.' However, these matters were known to petitioner when he filed the petitions in 23268—W and 23721—R. If petitioner intended to rely on these matters he should have urged them in 23268—W. 'To reserve them for use in a later proceeding 'was to make an abusive use of the writ of habeas corpus." Swihart v. Johnston, 9 Cir., 1945, 150 F.2d 721. 'Since upon the face of the petition petitioner is not entitled to the writ, Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830, the petition for writ of habeas corpus is denied.' 7 The Government's memorandum of points and authorities, filed with the return, merely quoted the District Court's opinion denying the third petition for a writ of habeas corpus, Price v. Johnston, D.C., 61 F.Supp. 995 (see footnote 6, supra). The memorandum then concluded: R espondent, in reliance on the decision of Judge St. Sure and the authorities which he cites, respectfully urges that the petition for writ of habeas corpus should be denied and the order to show cause, heretofore issued, discharged.' 8 The Government's brief in the Circuit Court of Appeals again was devoted solely to a quotation of the District Court's opinion denying the third petition. See footnote 7, supra. It concluded with the following statement: 'Appellee is in accord with the reasoning of Judge St. Sure and the authorities cited in his memorandum and order denying appellant's thrid application for a writ of habeas corpus, and hereby adopts them in toto as his argument on this appeal to sustain the Court below in its decision denying appellant's fourth application for a writ of habeas corpus in our case at bar.' 9 Blackstone describes the following common law versions of the habeas corpus writ: (1) Habeas corpus ad respondendum. Issued 'when a man hath a cause of action against one who is confined by the process of some inferior court; in order to remove the prisoner, and charge him with this new action in the court above.' (2) Habeas corpus ad satisfaciendum. Issued 'when a prisoner hath had judgment against him in an action, and the plaintiff is desirous to bring him up to some superior court to charge him with process of execution.' (3) Habeas corpus ad prosequendum, testificandum, deliberandum, etc. Issued 'when it is necessary to remove a prisoner, in order to prosecute or bear testimony in any court, or to be tried in the proper jurisdiction wherein the fact was committed.' (4) Habeas corpus ad faciendum et recipiendum. This 'issues out of any of the courts of Westminster hall, when a person is sued in some inferior jurisdiction, and is desirous to remove the action into the superior court; commanding the inferior judges to produce the body of the defendant, together with the day and cause of his caption and detainer, 'whence the writ is frequently denominated an habeas corpus cum causa,) to do and receive whatsoever the king's court shall consider in that behalf.' (5) Habeas corpus ad subjiciendum. The 'great and efficacious writ,' which is 'directed to the person detaining another, and commanding him to produce the body of the prisoner, with the day and cause of his caption and detention, ad faciendum, subjiciendum, et recipiendum, to do, submit to, ad receive whatsoever the judge or court awarding such writ shall consider in that behalf.' Chief Justice Marshall examines the first four of these writs in their relation to the American judicial system in Ex parte Bollman, 4 Cranch 75, 97, 98, 2 L.Ed. 554. 10 The courts of England have long considered themselves powerless to issue a habeas corpus writ to enable a prisoner to defend himself in another proceeding or to argue motions in the trial court. Benns v. Mosley, 2 C.B.(N.S.) 116; Weldon v. Neal, 15 Q.B.D. 471. See also Attorney General v. Hunt, 9 Price 147; Ford v. Nassau, 9 M. & W. 793; Rex v. Parkyns, 3 B. & Ald. 679; Attorney General v. Cleave, 2 Dowl.P.C. 668; Ex parte Cobbett, 3 H. & N. 155; Clark v. Smith, 3 C.B. 982. But the specific problem of whether a prisoner can be produced to argue in person his own appeal under circumstances like those present in the instant case does not appear to have a precise answer in English law. 11 The Circuit Court of Appeals below felt that the production of prisoners to argue their own appeals might lead to 'the wide spread abuse of the writ * * *, not to mention the items of fruitless burden and expense. To the legitimate hope of release by legal means would be added inducements not so legitimate; for temporary relief from prison confinement is always an alluring prospect, and to the hardened criminal the possibility of escape lurks in every excursion beyond prison walls.' 159 F.2d at page 237. 12 But see Bell v. United States, 5 Cir., 129 F.2d 290; Barber v. United States, 4 Cir., 142 F.2d 805. 13 See discussions in Dorsey v. Gill, 80 U.S.App.D.C. 9, 148 F.2d 857; Goodman, 'Use and Abuse of the Writ of Habeas Corpus,' 7 F.R.D. 313; Note, 61 Harv.L.Rev. 657. 1 Petitioner was convicted of armed bank robbery in April, 1938. After that date, and prior to the filing of this current habeas corpus petition, he took the following steps seeking his liberty: 1. In 1940, petitioned the Court of Appeals for mandamus to force the trial judge to act on an application for appeal; that court found no such application was then pending and denied the petition; this Court denied certiorari, 311 U.S. 703, 61 S.Ct. 170, 85 L.Ed. 456, and a rehearing 311 U.S. 729, 61 S.Ct. 316, 85 L.Ed. 474. 2. In 1940, filed an application for habeas corpus. After argument by court-appointed counsel, the application was dismissed. The Court of Appeals affirmed, 9 Cir., 125 F.2d 806; this Court denied certiorari 316 U.S. 677, 62 S.Ct. 1106, 86 L.Ed. 1750, and denied rehearing 316 U.S. 712, 62 S.Ct. 1289, 86 L.Ed. 1777, the latter decision being announced June 1, 1942. 3. On September 24, 1942, filed another habeas corpus petition. After hearing, participated in by court-appointed counsel, the petition was dismissed. The Court of Appeals affirmed, 9 Cir., 144 F.2d 260; this Court denied certiorari, 323 U.S. 789, 65 S.Ct. 312, 89 L.Ed. 629, and denied rehearing 323 U.S. 819, 65 S.Ct. 558, 89 L.Ed. 650, the latter decision being announced on January 29, 1945. 4. Prior to August 22, 1945, filed third habeas corpus petition, which was denied on that date, D.C., 61 F.Supp. 995. The current petition was filed in January, 1946. 2 It is a very different thing to find the presence of the prisoner 'necessary' under such circumstances as in Adams v. United States ex rel. McCann, 317 U.S. 269, 274, 63 S.Ct. 236, 239, 87 L.Ed. 268, 143 A.L.R. 435, where this Court explained the necessity as follows: 'The circumstances that moved the court below to the exercise of its jurisdiction were the peculiar difficulties involved in preparing a bill of exceptions. The stenographic minutes had never been typed. The relator claimed that he was without funds. Since he was unable to raise the bail fixed by the trial judge, he had been in custody since sentence and therefore had no opportunity to prepare a bill of exceptions. The court doubted 'whether any (bill) can ever be made up on which the appeal can be heard. * * * In the particular circumstances of the case at bar, it seems to us that the writ is 'necessary to the complete exercise' of our appellate jurisdiction because * * * there is a danger that it cannot be otherwise exercised at all and a certainty that it must in any event be a good deal hampered." 3 The Court says that it 'translates' the 'assumption,' found in one decision of this Court, one of a Court of Appeals, and one of a state court, into a specific holding that the Circuit Courts of Appeals do have this power. The dictum in Schwab v. Berggren, 143 U.S. 442, 449, 12 S.Ct. 525, 527, 36 L.Ed. 218, is merely this: '* * * But neither reason nor public policy require that he shall be personally present pending proceedings in an appellate court whose only function is to determine whether, in the transcript submitted to them, there appears any error of law to the prejudice of the accused, especially where, as in this case, he had counsel to represent him in the court of review. We do not mean to say that the appellate court may not, under some circumstances, require his personal presence, but only that his presence is not essential to its jurisdiction to proceed with the case.' In Goldsmith v. Sanford, 4 Cir., 132 F.2d 126, 127, certiorari denied 318 U.S. 762, 63 S.Ct. 560, 87 L.Ed. 1134, rehearing denied 318 U.S. 799, 63 S.Ct. 760, 87 L.Ed. 1163, the Court said: '* * * We know of no precedent for taking a prisoner from the penitentiary that he might be present to argue in person his appeal from the adverse judgment on habeas corpus. * * * If there be power to order the removal which was requested, discretion was well exercised in refusing it.' In Donnelly v. State, 26 N.J.L. 463, affirmed 26 N.J.L. 601, which could hardly be even persuasive here, the Court held that the prisoner's presence was not necessary for jurisdiction, nor was it required as a technical necessity or a matter of right. The 'translation' of these 'assumptions' into a holding involves, under this statute, a decision that these three isolated statements represent the 'usages and principles of law.' Those terms have been in the statute since the original Judiciary Act of 1789, and the Court admits there was no such usage or principle prior to that time. These three later cases are therefore the only shadow of a basis for holding that a writ such as the Court now directs meets the requirements of the statute. To consider such unauthoritative sources as a precedent on this point would be bad enough—but to enlarge them to a usage or principle of law is even less warranted. Reliance on these isolated pronouncements, which, either individually or collectively, are far from being authority on this point, seems close to creating precedents out of thin air. 4 Such depreciation has already set in. See Goodman, 'Use and Abuse of the Writ of Habeas Corpus,' 7 F.R.D. 313, stating, at page 315, that from June 1937 to June 1947 6 prisoners in Alcatraz filed a total of 68 petitions, while 57 others filed 183 petitions. See also Dorsey v. Gill, 80 U.S.App.D.C. 9, 148 F.2d 857, at pages 862, 863, stating that in one five-year period one prisoner filed 50 petitions in the District Court for the District of Columbia; four others fild 27, 24, 22 and 20, respectively; and 119 prisoners filed 597 petitions, an average of 5 each.
01
334 U.S. 302 68 S.Ct. 1030 92 L.Ed. 1401 HUNTER, Warden,v.MARTIN. No. 643. Argued April 22, 1948. Decided May 24, 1948. Mr. W. Marvin Smith, of Washington, D.C., for petitioner. Mr. James F. Reilly, of Washington, D.C., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 Petitioner is held prisoner in the United States Penitentiary at Leavenworth, Kansas. He pleaded guilty to charges of forging and uttering United States Treasury checks. He was sentenced to imprisonment for ten years on each count, to run concurrently, and the judgment provided that sentence should 'begin to run at the expiration of the sentence now being served in the Missouri State Penitentiary.' Petitioner was returned to the Missouri authorities to resume the service of a state sentence of three years for automobile theft. On May 13, 1947, before expiration of such period, he was paroled by the State and delivered to the federal authorities, by whom he has since been held. He contends that the federal sentence does not begin until the full term of the State sentence has expired and that, for the period of parole, he is entitled to freedom. The issue as to whether such wording of a federal sentence entitles the prisoner under such circumstances to temporary freedom is one on which Circuit Courts of Appeals are in conflict. Compare United States ex rel. Lombardo v. c Donnell, 7 Cir., 153 F.2d 919; Johnston v. Wright, 9 Cir., 137 F.2d 914; Kirk v. Squier, 9 Cir., 150 F.2d 3; Martin v. Hunter, 10 Cir., 165 F.2d 215. We brought the case here on certiorari, 333 U.S. 854, 68 S.Ct. 736, to resolve the conflict. 2 We think it clear that the purpose of the clause deferring commencement of service of the federal sentence was to prevent conflict between the State and Federal Governments. The present federal imprisonment avoids such conflict and achieves that purpose. Missouri authorities have released petitioner from their custody and surrendered him for the apparent purpose of serving his federal sentence and have reserved control over him as a parolee only in event he is not kept in prison during the period of the federal sentence. For all practical purposes contemplated by the judgment, the State sentence has expired—at least insofar as it was an obstacle to service of the federal sentence. 3 To hold otherwise would mean that a man already finally adjudged guilty of a serious federal crime and sentenced to ten years imprisonment would be left at large and free of all restraint for an interlude between release from the state prison and commencement of the federal term. We do not think such a result is required or intended under the statute, 18 U.S.C. § 709(a), 18 U.S.C.A. § 709a,1 our under the terms of the sentence as imposed. 4 The District Court, after full hearing, dismissed the writ of habeas corpus and remanded petitioner to custody to serve his sentence. We think this was a correct disposition of the matter. The Circuit Court of Appeals' decision to the contrary is error. 5 Judgment reversed. 1 The Act of June 29, 1932, c. 310, § 1, 47 Stat. 381.
01
334 U.S. 258 68 S.Ct. 1035 92 L.Ed. 1351 UNITED STATESv.UNITED STATES DISTRICT COURT FOR SOUTHERN DISTRICT OF NEW YORK et al. No. 527. Argued April 19, 20, 1948. Decided May 24, 1948. Mr. Leonard J. Emmerglick, of Washington, D.C., for petitioner. Mr. William Watson Smith, of Pittsburgh, Pa., for respondents. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The United States brought a proceeding against the Aluminum Company of America (Alcoa) and others to prevent and restrain certain violations of the Sherman Act. 26 Stat. 209, as amended, 15 U.S.C.A. §§ 1, 2, 4, 15 U.S.C.A. §§ 1, 2, 4. After trial the District Court dismissed the complaint. United States v. Aluminum Co. of America, 44 F.Supp. 97. The case came here by appeal, after which we ascertained that due to the disqualification of four Justices to sit in the case, we were without a quorum. Accordingly, we transferred the case to a special docket and postponed further proceedings in it until such time as there was a quorum of Justices qualified to sit in it. 320 U.S. 708, 64 S.Ct. 73, 88 L.Ed. 415. Thereafter Congress amended the statute which provides for a direct appeal to this Court from the District Court in antitrust cases. The Act of June 9, 1944, c. 239, 58 Stat. 272, 15 U.S.C.Supp. V, § 29, 15 U.S.C.A. § 29, passed to meet the contingency of the lack of a quorum here, provides:1 2 'In every suit in equity brought in any district court of the United States under any of said Acts, wherein the United States is complainant, an appeal from the final decree of the district court will lie only to the Supreme Court and must be taken within sixty days from the entry thereof: Provided, however, That if, upon any such appeal, it shall be found that, by reason of i squalification, there shall not be a quorum of Justices of the Supreme Court qualified to participate in the consideration of the case on the merits, then, in lieu of a decision by the Supreme Court, the case shall be immediately certified by the Supreme Court to the circuit court of appeals of the circuit in which is located the district in which the suit was brought which court shall thereupon have jurisdiction to hear and determine the appeal in such case, and it shall be the duty of the senior circuit judge of said circuit court of appeals, qualified to participate in the consideration of the case on the merits, to designate immediately three circuit judges of said court, one of whom shall be himself and the other two of whom shall be the two circuit judges next in order of seniority to himself, to hear and determine the appeal in such case and it shall be the duty of the court, so comprised, to assign the case for argument at the earliest practicable date and to hear and determine the same, and the decision of the three circuit judges so designated, or of a majority in number thereof, shall be final and there shall be no review of such decision by appeal or certiorari or otherwise. 3 "If, by reason of disqualification, death or otherwise, any of said three circuit judges shall be unable to participate in the decision of said case, any such vacancy or vacancies shall be filled by the senior circuit judge by designating one or more other circuit judges of the said circuit next in order of seniority and, if there be none such available, he shall fill any such vacancy or vacancies by designating one or more circuit judges from another circuit or circuits, designating, in each case, the oldest available circuit judge, in order of seniority, in the circuit from which he is selected, such designation to be only with the consent of the senior circuit judge of any such other circuit.' 4 'This Act shall apply to every case pending before the Supreme Court of the United States on the date of its enactment.' 5 Thereupon we certified the cause to the Circuit Court of Appeals for the Second Circuit. 322 U.S. 716, 64 S.Ct. 1281, 88 L.Ed. 1557. That court heard the case, sustained charges of monopoly against Alcoa, reversed the judgment of dismissal, and remanded the cause for further proceedings not inconsistent with its opinion. 2 Cir., 148 F.2d 416. It left open the question of the remedies to be applied. Nearly five years had passed since the evidence was closed, war had intervened, new plants had been constructed by the government, and their disposition under the Surplus Property Act of 1944, 58 Stat. 765, 50 U.S.C.A.Appendix, § 1611, would affect the competitive situation in the ingot market. Petitioner had asked for Alcoa's dissolution. But that question was deferred until Alcoa's position in the industry after the war was known. 148 F.2d pages 445—447. 6 On remand of the cause the District Court entered its judgment on the mandate on April 23, 1946. It enjoined certain practices and retained jurisdiction of the cause until after the Surplus Property Administrator shall have proposed a plan for disposition of the government owned aluminum plants or facilities, in order that the Attorney General might institute proceedings for the dissolution or partial dissolution of Alcoa or for the enforcement of such plan if it will establish competitive conditions in the industry or for such other relief as will establish them; 'and for the purpose of enabling Aluminum Company to apply to this court for a determination of the question whether it still has a monopoly of the aluminum ingot market in the United States.' 7 Pursuant to the quoted provision Alcoa filed a petition in the District Court praying that a final judgment be entered adjudicating that it no longer has a monopoly of the aluminum ingot market in the United States and that as a consequence competitive conditions in the industry have been restored. The motion of the United States to dismiss the e tition was denied and the question whether Alcoa still had a monopoly was set for trial. The United States thereupon filed a petition for a writ of mandamus in the Circuit Court of Appeals to require the district judge to vacate so much of its judgment of April 23, 1946, as reserved jurisdiction to enable Alcoa to apply for a determination whether it still has a monopoly, and to dismiss the petition of Alcoa. 8 The Circuit Court of Appeals dismissed the petition for mandamus. United States v. Caffey, 2 Cir., 164 F.2d 159. The case is here on a petition for a writ of certiorari which we granted to settle the important question under the Act. 9 The Circuit Court of Appeals concluded that its power to issue the writ of mandamus exists only as an incident to its jurisdiction to entertain an appeal from a judgment of the District Court. It read the Act of June 9, 1944, as confining its jurisdiction to the determination of the appeal which it had heard under our certificate. Moreover, control over its mandate ended with the end of the term during which the mandate went down.2 The court therefore concluded that it had no power to issue the writ. 10 We put to one side the question whether another appeal in the case would be decided by the Circuit Court of Appeals or by this Court, now that there is a quorum of Justices qualified to sit in it. No matter how that question were resolved, it is our opinion that the Circuit Court of Appeals has jurisdiction in this mandamus proceeding. 11 Section 262 of the Judicial Code, 28 U.S.C. § 377, 28 U.S.C.A. § 377, provides that the federal courts 'shall have power to issue all writs not specifically provided for by statute, which may be necessary for the exercise of their respective jurisdictions, and agreeable to the usages and principles of law.' It was early recognized that the power to issue a mandamus extended to cases where its issuance was either an exercise of appellate jurisdiction or in aid of appellate jurisdiction. See Marbury v. Madison, 1 Cranch, 137, 175, 2 L.Ed. 60; Ex parte Crane, 5 Pet. 190, 8 L.Ed. 92. That power protects the appellate jurisdiction which might be otherwise defeated and extends to support an ultimate power of review, though it not be immediately and directly involved. McClellan v. Carland, 217 U.S. 268, 30 S.Ct. 501, 54 S.Ct. 762; Ex parte United States, 287 U.S. 241, 246, 53 S.Ct. 129, 130, 77 L.Ed. 283. In that category will often fall cases involving issuance of mandamus requiring the lower court to enforce the judgment of the appellate court. Delaware L. & W.R. Co. v. Rellstab, 276 U.S. 1, 5, 48 S.Ct. 203, 72 L.Ed. 439. 12 But the fact that mandamus is closely connected with the appellate power does not necessarily mean that the power to issue it is absent where there is no existing or future appellate jurisdiction to which it can relate. Cf. Township of Chickaming v. Carpenter, 106 U.S. 663, 665, 1 S.Ct. 620, 621, 27 L.Ed. 307; In re Washington & Georgetown R. Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339, is a case in point. The lower court in violation of the mandate of this Court allowed interest on a judgment. The amount of the interest was too small to be the subject of a writ of error from this Court. It was held that mandamus was the proper remedy to enforce compliance with the mandate. And see City Nat. Bank of Ft. Worth v. Hunter, 152 U.S. 512, 515, 14 S.Ct. 675, 38 L.Ed. 534. It is, indeed, a high function of mandamus to keep a lower tribunal from interposing unauthorized obstructions to enforcement of a judgment of a higher court. Delaware, L. & W.R. Co. v. Rellstab, supra. That function may be as important in protecting a past exercise of jurisdiction as in safeguarding a present or future one. When Congress authorized 'the cs e' to be certified to the Circuit Court of Appeals, it excepted none of the powers of that court which might be brought to bear on the litigation. Those powers include the power to issue mandamus to protect the mandate of the Circuit Court of Appeals, even though we assume arguendo that all further appeals in the case would come here. 13 The Circuit Court of Appeals seems to have been influenced to the other view by the feeling that the question presented by the mandamus cuts so wide a swathe in the litigation that it should hold its hand. Its position was that the issue raised by the petition for mandamus had an important relation to the reserved problem of dissolution, that the judgment on dissolution would in its view eventually come here on appeal, that any ruling by it on the mandamus would therefore limit our freedom to deal with the dissolution issue as, if, and when it got here. 14 Those considerations may be of large importance in the totality of this proceeding, once we accept the premise of the Circuit Court of Appeals that it will have nothing to do with any other appeals in the case. But they do not seem to us germane to the question whether the Circuit Court of Appeals has the power to enforce obedience to its mandate. We think the Act of June 9, 1944, gave the Circuit Court of Appeals the full amplitude of judicial power to deal with the cause which we certified. That power does not contract with the importance or gravity of the question presented. The power to compel obedience with the mandate turns on whether the lower court has obstructed enforcement of it, not on the collateral repercussions which enforcement may entail. 15 Reversed. 16 Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of this case. 17 Mr. Justice FRANKFURTER, concurring. 18 When this case originally came here by appeal, an extraordinarily rare, if not unique, situation in the history of the Court precluded its consideration for want of a qualified quorum. The impasse was met by the special jurisdictional Act of June 9, 1944, 58 Stat. 272, 15 U.S.C. § 29, 15 U.S.C.A. § 29. For reasons that seem to me too obvious to need spelling out, that Act should be interpreted as transferring to the Circuit Court of Appeals the case and not merely a stage in its disposition if the Congressional language reasonably permits the Act to be so read. Since it can be so read I do so read it and conclude that the whole appellate process in this case was vested in the Circuit Court of Appeals, regardless of the piecemeal exercise of that process. I find such a construction of the Act of June 9, 1944, freer from difficulties than some of the technical questions pertaining to mandamus that arise on the view taken by the Court. 1 See H.R.Rep.No.1317, 78th Cong., 2d Sess.; Sen.Rep.No.890, 78th Cong., 2d Sess. 2 The term of court in which the mandate issued expired September 30, 1945, on which day the court lost power to change it except as to matters of form. See Fairmont Creamery Co. v. Minnesota, 275 U.S. 70, 48 S.Ct. 97, 72 L.Ed. 168.
89
334 U.S. 304 68 S.Ct. 1039 92 L.Ed. 1403 BRIGGSv.PENNSYLVANIA R. CO. No. 530. Argued and Submitted March 30, 1948. Decided May 24, 1948. Mr. Sol Gelb, of New York City, for petitioner. Mr. Wm. J. O'Brien, Jr., of New York City, for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 This case first presents the question whether a plaintiff recovering under the Federal Employers' Liability Act, 45 U.S.C.A. § 51, is entitled to have interest on the verdict for the interval between its return and the entry of judgment, where the Circuit Court of Appeals' mandate which authorized the judgment contains no direction to add interest and is never amended to do so. 2 The jury returned a verdict of $42,500. The District Court then granted a motion, as to which decision had been reserved during the trial, to dismiss the complaint for lack of jurisdiction, and the judgment entered was therefore one of dismissal. However, the Circuit Court of Appeals reversed, 2 Cir., 153 F.2d 841, 163 A.L.R. 841, and directed that judgment be entered on the verdict for plaintiff. When the District Court entered judgment, it added to the verdict interest from the date theref to the date of judgment. The mandate of the Circuit Court of Appeals had made no provision for interest. No motion to recall and amend the mandate had been made and the term at which it was handed down had expired. Motion to resettle so as to exclude the interest was denied by the District Court. The Circuit Court of Appeals has modified the judgment to exclude the interest in question and to conform to its mandate, 164 F.2d 21, and the case is here on certiorari, 333 U.S. 836, 68 S.Ct. 609. 3 In its earliest days this Court consistently held that an inferior court has no power or authority to deviate from the mandate issued by an appellate court. Himely v. Rose, 5 Cranch 313, 3 L.Ed. 111; The Santa Maria, 10 Wheat. 431, 6 L.Ed. 359; Boyce's Executors v. Grundy, 9 Pet. 275, 9 L.Ed. 127; Ex parte Sibbald v. United States, 12 Pet. 488, 9 L.Ed. 1167. The rule of these cases has been uniformly followed in later days; see, for example, In re Washington & Georgetown R. Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339; Ex parte Union Steamboat Company, 178 U.S. 317, 20 S.Ct. 904, 44 L.Ed. 1084; Kansas City Southern R. Co. v. Guardian Trust Co., 281 U.S. 1, 50 S.Ct. 194, 74 L.Ed. 659. Chief Justice Marshall applied the rule to interdict allowance of interest not provided for in the mandate, Himely v. Rose, 5 Cranch 313, 3 L.Ed. 111; Mr. Justice Story explained and affirmed the doctrine, The Santa Maria, 10 Wheat. 431, 6 L.Ed. 359; Boyce's Executors v. Grundy, 9 Pet. 275, 9 L.Ed. 127. We do not see how it can be questioned at this time. It is clear that the interest was in excess of the terms of the mandate and hence was wrongly included in the District Court's judgment and rightly stricken out by the Circuit Court of Appeals. The latter court's mandate made no provision for such interest and the trial court had no power to enter judgment for an amount different than directed. If any enlargement of that amount were possible, it could be done only by amendment of the mandate. But no move to do this was made during the term at which it went down. While power to act on its mandate after the term expires survives to protect the integrity of the court's own processes, Hazel-Atlas Glass Co. v. Hartford Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250, it has not been held to survive for the convenience of litigants. Fairmont Creamery Co. v. Minnesota, 275 U.S. 70, 48 S.Ct. 97, 72 L.Ed. 168. 4 The plaintiff has at no time moved to amend the mandate which is the basis of the judgment. That it made no provision for interest was apparent on its face. Plaintiff accepted its advantages and brings her case to this Court, not on the proposition that amendment of the mandate has been improperly refused, but on the ground that the mandate should be disregarded. Such a position cannot be sustained. Hence the question whether interest might, on proper application, have been allowed, is not reached.1 In re Washington & Georgetown R. Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339.2 5 Affirmed. 6 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK, Mr. Justice DOUGLAS and Mr. Justice MURPHY join, dissenting. 7 We granted certiorari to resolve a conflict between the decision of the Circuit Court of Appeals, 2 Cir., 164 F.2d 21, and one rendered by the like court for the Fifth Circuit in Louisiana & Arkansas R. Co. v. Pratt, 5 Cir., 142 F.2d 847, 153 A.L.R. 851. 8 In each case the jury returned a verdict for the plaintiff, but the trial court nevertheless gave judgment for the defendant as a matter of law;1 upon appeal that judgment was reversed; and the cause was remanded with directions to enter judgment on the verdict. In both cases the appellate courts' mandates were silent concerning interest, but the trial courts included in the judgments interest from the date of the verdict, not merely from the time when judgment was entered following receipt of the appellate courts' mandates.2 In the Pratt case this action of the trial court was sustained as conforming to the mandate; in this case the trial court's like action was reversed as being in excess of and, to that extent, contrary to the mandate. 9 The two cases thus present squarely conflicting decisions on two questions: (1) whether the appellate court's mandate includes the interest provided by 28 U.S.C. § 811, 28 U.S.C.A. § 811,3 although the mandate makes no explicit mention of interest; (2) whether, if so, the interest allowed by the section properly runs from the date of the verdict4 or only from the time of entering judgment after receipt of the appellate court's mandate. Both questions are necessarily involved on petitioner's presentation and should now be decided. 10 This Court, however, declines to answer the second question, because it determines the first in respondent's favor, accepting, erroneously I think, the decision of the Circuit Court of Appeals in this phase of the case.5 That court construed its mandate as not including interest. This was on the basis that the mandate was siln t concerning interest, mentioning expressly only the principal sum awarded by the verdict. In such a case the court said, 'the District Court is without power to enter judgment for a different sum.'6 Hence, it was held, the mandate was violated when interest was added to that sum. 164 F.2d at 23. And even upon the assumption that the mandate might have been amended to include interest by timely application for that purpose, this could not be done after expiration of the term at which the judgment was rendered, as petitioner sought to have done.7 Ibid. 11 It is this treatment of the court's mandate, now accepted by this Court and forming the basis for its disposition of the case without reaching the question certiorari was granted to review, from which I dissent. It confuses settled lines of distinction between different statutes and of decisions relating to them. I think these were correctly drawn and ought to be maintained. If that were done, we would be forced to reach and decide the question now avoided concerning the effect of § 811. 12 Ordinarily it is for the court issuing a mandate to determine its scope and effect, and other courts are bound by its determination. But this is not always so. If it were true, for example, that the silence of a mandate or a judgment regarding interest invariably precluded its recovery, the Court's decision and that of the Circuit Court of Appeals would be correct. But an explicit provision for interest is not always necessary to its inclusion, whether in a judgment or a mandate. In some instances interest attaches as a matter of law, even though the mandate or judgment is wholly silent regarding it. In others explicit mention is necessary to its inclusion. Blair v. Durham, 6 Cir., 139 F.2d 260, and authorities cited. 13 Where the claim for interest rests upon statute, whether the one or the other effect results depends upon the terms and effect of the particular statute on which the claim is founded. Because not all statutes are alike in this respect, the terms and intent of each must be examined, when put in question, to ascertain whether the interest allowed attaches to the judgment or the mandate by operation of law or only upon explicit judicial direction. Usually this is resolved by determining whether the interest allowed is to be given in the court's discretion or as a matter of right. Blair v. Durham, supra. 14 As the Blair opinion points out, ordinarily there is no occasion to mention statutory interest expressly, since it attaches as a legal incident from the statute allowing it.8 On the other hand, it has often been declared that interest is not allowed on judgments affirmed by this Court or the Circuit Courts of Appeals unless so ordered expressly.9 The Blair opinion, however, further notes that all the cases so declaring are founded upon another statute than the one involved here, namely, 28 U.S.C. § 878, 28 U.S.C.A. § 878.10 And, it may be added, the decisions relied upon by this Court and by the Circuit Court of Appeals in this phase of the case presently before us involved either § 878 or the allowance of other relief not based on § 811.11 15 It becomes important therefore to ascertain whether the two statutes, §§ 811 and 878, are alike in their effects as requiring or not requiring explicit mention of the interest provided for in order for it to be included in a judgment or mandate. The two sections are very different in their terms. Section 878 authorizes the federal appellate courts to award damages for delay,12 and in terms makes the award discretionary with the reviewing court. Schell v. Cochran, 107 U.S. 625, 2 S.Ct. 827, 27 L.Ed. 543. It is in connection with such awards, as has been stated, that the repeated decisions now applied to petitioner's claim, grounded solely on § 811, have held that interest is to be deemed denied unless explicitly mentioned in the mandate.13 16 On the other hand, § 811 is very different. Nothing in its terms permits an implication that the award of interest is to be made as a matter of judicial discretion. The language is mandatory.14 The section's obviously discriminating use of words, emphasized by comparison with that of § 878, gives the interest it encompasses as a matter of right. United States v. Verdier, 164 U.S. 213, 17 S.Ct. 42, 41 L.Ed. 407. This is so whether that interest begins to run as of one date or another. Whatever interest the section allows attaches as an incident flowing from the statute and is dependent in no way upon judicial discretion or upon judicial inadvertence in failing to mention it. This was the effect of the decisions in the Pratt and Blair cases, as well as United States v. Verdier, supra. 17 The Court's decision ignores these vital differences in the statutes, their terms and effects. Consequently it misapplies the decisions relating to § 878 and other situations where the relief sought was discretionary, to this claim arising only under § 811. The same thing happened in the Circuit Court of Appeals. However, the two sections differ so greatly in their terms, as beai ng on whether the mandate's failure to mention interest excluded it, that there can be no justification for confusing or identifying them in this respect. The decisions construing § 878 are neither controlling nor pertinent to that problem when it arises under § 811. 18 Petitioner's only claim is under the latter section. He seeks as of right interest given by § 811 and attaching to the judgment entered in his favor regardless of the mandate's omission to mention interest. This claim in my opinion is well grounded, to whatever extent § 811 allows interest. To that extent interest attaches and was meant to attach by operation of law, and regardless of the mandate's specificity, to the judgment rendered for the plaintiff. The extent to which the section gives interest is, of course, a distinct question, depending in this case on whether the section contemplates that the interest shall begin to run at one date or another. 19 Since the Court does not decide that question, I reserve decision upon it. But I dissent from the refusal to decide it now. The question is of considerable importance for the proper and uniform administration of the statute; it is not entirely without difficulty;15 and the uncertainty as well as the conflict of decision should be ended. There is no good reason for permitting their indefinite continuance, to the perplexity of courts and counsel, and to an assured if unpredictable amount of injustice to litigants. 2 'We do not consider the question as to whether interest was allowable by law, or rule, or statute, on the original judgment of the special term, or whether it would have been proper for the special term, in rendering the judgment or otherwise, to have allowed interest upon it, or whether it would have been proper for the general term to do so; but we render our decision solely upon the point that, as neither the special term nor the general term allowed interest on the judgment, and as this court awarded no interest in its judgment of affirmance, all that the general term could do, after the mandate of this court went down, was to enter a judgment carrying out the mandate according to its terms, and simply affirming the prior judgment of the general term, and directing execution of the judgment of the special term * * * with costs, and without interest * * *.' 140 U.S. 91 st pae 97, 11 S.Ct. 673 at page 674, 35 L.Ed. 339. 1 Compare Louisiana & Arkansas R. Co. v. Pratt, 5 Cir., 142 F.2d 847, 153 A.L.R. 851, with Briggs v. Pennsylvania R. Co. 164 F.2d 21. 1 In this case the complaint was dismissed on the ground that the plaintiff administratrix lacked capacity to bring the action; in the Pratt case the trial court found the verdict inconsistent with answers given to special interrogatories, and therefore gave judgment for the defendant. 2 In the Pratt case the District Court allowed interest not only from the date of the verdict but also from the date of judicial demand. This was modified on appeal to allow interest only from the date of verdict. 5 Cir., 142 F.2d 847, 153 A.L.R. 851. 3 The section is as follows: 'Interest shall be allowed on all judgments in civil causes, recovered in a district court, and may be levied by the marshal under process of execution issued thereon, in all cases where, by the law of the State in which such court is held, interest may be levied under process of execution on judgments recovered in the courts of such State; and it shall be calculated from the date of the judgment, at such rate as is allowed by law on judgments recovered in the courts of such State.' Rev.Stat. § 966, 28 U.S.C. § 811, 28 U.S.C.A. § 811. 4 Although § 811 requires calculation of interest 'from the date of the judgment,' the claim is that, in circumstances like these, the words 'the judgment' should be taken to specify not the time of entering judgment after appeal and issuance of mandate following reversal, but the time when judgment properly would have been entered but for the delay caused by the defendant's resistance to the plaintiff's rightful claim as established on appeal. Cf. Fed. Rules Civ. Proc., Rule 58, 28 U.S.C.A. following section 723c. Petitioner fixes this time as the date of the verdict. It is not necessary now to consider whether, if petitioner's broad contention were accepted, the proper date would be that of the verdict or that on which the trial court concluded its consideration of the case and entered the original judgment for the defendant. 5 The Circuit Court of Appeals not only rested upon its construction of its mandate and the view that it could not be altered after the term, but also decided the question concerning petitioner's right to interest under § 811 adversely to his claim that it begins to run prior to the date of the trial court's entry of judgment after remand. To what extent this ruling influenced the decision as to the mandate's effect is not clear. 6 Citing In re Washington & Georgetown R'd Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339; Thornton v. Carter, 8 Cir., 109 F.2d 316. See text infra at note 11. 7 In the Pratt case the term of court at which the original mandate of the Circuit Court of Appeals had been handed down had similarly expired. 8 Massachusetts Benefit Ass'n v. Miles, 137 U.S. 689, 11 S.Ct. 234, 34 L.Ed. 834. 9 See the cases i ted in note 10. 10 139 F.2d 260, 261. The authorities cited were In re Washington & Georgetown R'd Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339; Boyce's Executors v. Grundy, 9 Pet. 275, 9 L.Ed. 127; De Witt v. United States, D.C., 298 F. 182; Green v. Chicago, S. & C.R. Co., 6 Cir., 49 F. 907; Hagerman v. Moran, 9 Cir., 75 F. 97. 11 None of the cases on which this Court bases its decision involves § 811. They involve either § 878 (Boyce's Executors v. Grundy, 9 Pet. 275, 9 L.Ed. 127; In re Washington & Georgetown R'd Co., 140 U.S. 91, 11 S.Ct. 673, 35 L.Ed. 339, which the majority emphasize by quotation); the allowance of interest in the absence of statute as, e.g., where goods are illegally seized and detained (Himely v. Rose, 5 Cranch 313, 3 L.Ed. 111; The Santa Maria 10 Wheat 431, 6 L.Ed. 359); or the granting of relief, other than interest, beyond that decreed in the mandate (Ex parte Sibbald v. United States, 12 Pet. 488, 9 L.Ed. 1167; Ex parte The Union Steamboat Company, 178 U.S. 317, 20 S.Ct. 904, 44 L.Ed. 1084; Kansas City So. Ry. v. Trust Co., 281 U.S. 1, 50 S.Ct. 194, 74 L.Ed. 659). Of the cases cited by the Circuit Court of Appeals, see note 6, In re Washington & Georgetown R'd Co., supra, is a § 878 case, and Thornton v. Carter, 8 Cir., 109 F.2d 316, does not turn on § 811. Thus, none of the authorities relied on governs the question presented here, viz., whether under § 811 the mandate of the reviewing court excluded interest and was violated by its addition. 12 The section is as follows: 'Where, upon a writ of error, judgment is affirmed in the Supreme Court or a circuit court of appeals, the court shall adjudge to the respondents in error just damages for his delay, and single or double costs, at its discretion.' Rev.Stat. § 1010, 28 U.S.C. § 878, 28 U.S.C.A. § 878. 13 See the authorities cited in note 10; see also note 11. 14 'Interest shall be allowed on all judgments in civil causes, recovered in a district court, and may be levied * * *'; 'it shall be calculated * * *.' (Emphasis added.) See note 3. 15 Cf. note 4. The matter is somewhat complicated by the anomaly which would result from a decision that, while § 878 provides for allowance of interest as damages for delay when a decision is affirmed, neither that section nor § 811 explicitly provides any such indemnity when a judgment for the defendant is reversed with directions to enter judgment for the plaintiff; and by the considerations, obviously relevant on the face of § 811, see note 3, relative to securing uniformity in the allowance of interest as between the federal courts and courts of the state in which the federal court sits. Cf. Massachusetts Benefit Ass'n v. Miles, 137 U.S. 689, 11 S.Ct. 234, 34 L.Ed. 834; cf. also Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.
89
334 U.S. 314 68 S.Ct. 1044 92 L.Ed. 1409 PATERNOv.LYONS, Commissioner of Correction of New York. No. 583. Argued April 28, 1948. Decided June 1, 1948. William H. Collins, of Washington, D.C., for petitioner. Irving I. Waxman, of Albany, N.Y., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 October 30, 1936, the petitioner was indicted in the County Court of Erie County, New York, on a charge of 2 'Buying, receiving, concealing and withholding property, knowing the same to have been stolen or appropriated wrongfully in such manner as to constitute larceny, contrary to the Penal Law, Section 1308, in that he, the said Joseph Paterno on or about the 5th day of October, 1936, at the City of Tonawanda, in this County, feloniously brought, received, concealed and withheld property stolen from Charles M. Rosen, doing business under the assumed name and style of Arcade Jewelry Shop.' 3 The punishments provided for this offense and for larceny are substantially the same. Both may, according to circumstances, range up to ten years at hard labor.1 November 10, 1936, petitioner appeared in court with counsel, pleaded not guilty to the indictment, and was released on a bond of $2500. Five months later, on April 14, 1937, he again appeared in Erie County Court and upon agreement with the district attorney was 'permitted to plead guilty to the reduced charge of Attempted Grand Larceny 2nd Degree.' Under New York law the punishment for such an attempt and be no more than half the punishment provided for the offense attempted.2 The sentence, not imposed until July 16, three months after the plea of guilty, was for fifteen months minimum and thirty monthsm aximum at hard labor. This sentence was suspended and petitioner was placed on probation with a requirement that he 'make restitution of $75.00 cash balance as determined by probation dept.' 4 Although discharged from probation December 1, 1938, petitioner on December 27, 1945, made a motion in the nature of coram nobis in the Erie County Court asking that court to vacate and set aside its former conviction of petitioner, permit withdrawal of the plea of guilty, and for leave to plead de novo. There was a special reason why petitioner wished to vacate this judgment long after the probationary restraints of the sentence had been lifted. In the meantime he had pleaded guilty in the Chautauqua County Court, New York, to the crime of robbery second degree under an indictment charging him with robbery first degree. In accordance with the requirements of the New York second felony offender law3 the Chautauqua County judge had sentenced petitioner to 15 to 30 years at hard labor, proof having been made before him of petitioner's prior Erie County conviction for attempted grand larceny second degree. 5 The grounds of the motion in the nature of coram nobis were that the Erie County Court had exceeded its power in accepting his plea of guilty to the offense of attempted grand larceny second degree under the indictment which charged him with the offense of receiving, concealing, and withholding property knowing it to have been stolen. He alleged that judgment of conviction in a case initiated by an indictment which did not include the charge to which he had pleaded guilty denied him his right under Art. 1, § 6 of the New York Constitution to be prosecuted for an infamous crime only by indictment of a grand jury,4 and also denied him due process of law guaranteed by the Fourteenth Amendment.5 The judge of the Erie County Court was of opinion that acceptance of the plea of guilty to the lesser offense deprived him of rights guaranteed by the New York Constitution and that therefore his conviction was without due process of law. People v. Paterno, 187 Misc. 56, 60 N.Y.S.2d 813. That judge was prevented from vacating the judgment, however, by a writ of prohibition issued upon the application of the State by the Supreme Court of Erie County. That court held that Paterno had 'been denied no constitutional or legal right.' The Fourth Department of the Supreme Court, Appellate Division, affirmed. Matter of Lyons, 272 App.Div. 120, 69 N.Y.S.2d 715. Stating that acceptance of Paterno's plea to the lesser offense might have been an error of law which would have justified relief by motion in arrest of judgment or by appeal as of right; but that petitioner, having declined to avail himself of these remedies within the statutory period, could not later raise the question.6 It failed to accept Paterno's claim that the circumstances under which his plea was entered deprived him of due process of law. The New York Court of Appeals affirmed without opinion. 297 N.Y. 617, 75 N.E.2d 630. We granted certiorari. 333 U.S. 831, 68 S.Ct. 455. 6 It is again contended here that acceptance of petitioner's plea of guilty to attempted grand larceny second degree under an indictment which charged that he had bought, received, concealed and withheld stolen property deprived him of his right under the New York Constitution to be prosecuted for an infamous crime only by a grand jury indictment and that consequently the Erie County judgment of conviction is a nullity. But this contention as to New York law has previously been rejected by the State's highest court, in People ex rel. Wachowicz v. Martin, 293 N.Y. 361, 57 N.E.2d 53, 154 A.L.R. 1128, and was again rejected by the New York courts in this case. Their decision on such a state question is final here. In re Duncan, 139 U.S. 449, 462, 11 S.Ct. 573, 577, 35 L.Ed. 219; West v. Louisiana, 194 U.S. 258, 261, 24 S.Ct. 650, 651, 48 L.Ed. 965. 7 Petitioner next argues that the State has failed to supply him an available remedy to attack the judgment against him and that such a failure denies him due process of law guaranteed by the Fourteenth Amendment. See Mooney v. Holohan, 294 U.S. 103, 113, 55 S.Ct. 340, 342, 79 L.Ed. 791, 98 A.L.R. 406. But this contention falls with its premise. Petitioner, within the periods prescribed by New York statutes, could have challenged any alleged errors of state law either by filing a motion to withdraw his plea of guilty, or a motion in arrest of judgment, or by taking a direct appeal from the original judgment.7 Certainly in the absence of any showing that petitioner was without an opportunity effectively to take advantage of these corrective remedies to challenge purely state questions, such remedies are adequate from a due process standpoint. See Parker v. Illinois, 333 U.S. 571, 68 S.Ct. 708; American Surety Co. v. Baldwin, 287 U.S. 156, 169, and cases cited n. 6, 53 S.Ct. 98, 102, 103, 77 L.Ed. 231, 86 A.L.R. 298. 8 Petitioner further challenges the judgment as a denial of due process upon the ground that the indictment charged him with one offense and that the judgment was based on a plea of guilty to an entirely separate offense. This challenge again basically rests on the allegation that under New York law an id ictment for receiving stolen property does not necessarily include a charge of an attempt to steal the property. Petitioner's motion to vacate on such a federal constitutional ground appears to be an available procedure under New York law,8 and the courts below so assumed. Determination of this federal due process question does not depend upon whether as a matter of New York law the Erie County judge erred in permitting petitioner to plead guilty.9 The question turns rather upon whether the petitioner under the circumstances here disclosed was given reasonable notice and information of the specific charge against him and a fair hearing in open court. In re Oliver, 333 U.S. 257, 273, 278, 68 S.Ct. 499, 507, 510; Cole v. Arkansas, 333 U.S. 196, 201, 68 S.Ct. 514, 517. We agree with the New York courts that this petitioner had such notice and information. The fairness of the hearing afforded petitioner is not challenged. 9 There is close kinship between the offense of larceny and that of receiving stolen property knowing that it was stolen. When related to the same stolen goods, as here, the two crimes certainly may fairly be said to be 'connected with the same transaction' as the New York Court of Appeals noted in the Wachowicz case. 293 N.Y. at page 367, 57 N.E.2d at page 56, 154 A.L.R. 1128. A person commits larceny under New York law if he 'unlawfully obtains or appropriates' an article, N.Y.Penal Law, § 1294; he violates the receiving of stolen property statute if he 'in any way * * * conceals, withholds, or aids in concealing or withholding * * * property, knowing the same to have bene stolen, or appropriated wrongfully in such a manner as to constitute larceny,' N.Y.Penal Law § 1308. The overlapping nature of the two offenses is further emphasized by the definition of larceny in § 1290, which includes conduct whereby any person who 'with intent to deprive or defraud another of the use and benefit of property, or to appropriate the same to the use of the taker, or of any other person other than the true owner, wrongfully takes, obtains or withholds (any property) by any means whatever, from the possession of the true owner or of any other person * * *.' 10 It would be exaltation of technical precision to an unwarranted degree to say that the indictment here did not inform petitioner that he was charged with substantial elements of the crime of larceny thereby enabling him, as a means of cutting his sentence in half, to agree to plead guilty to an attempted larceny. Procedural requirements are essential constitutional safeguards in our system of criminal law. These safeguards should constantly and vigilantly be observed to afford those accused of crime every fair opportunity to defend themselves. This petitioner had such opportunity. Months after his first appearance in court he came back and pleaded guilty to an attempt wrongfully to 'withhold' the very property of another which the indictment had originally charged him with wrongfully 'withholding.'10 It would be a strained interpretation of petitioner's constitutional rights to hold that under these circumstances he was not given sufficient notice of the charge against him to afford a basis for an intelligent decision to plead guilty to a related but lesser offense than that specifically described in the indictment. The due process clause of the Federal Constitution requires no such holding. 11 Affirmed. 12 Mr. Justice DOUGLAS dissents. 13 Mr. Justice FRANKFURTER, concurring. 14 The New York Constitution requires that prosecution for an 'infamous crime' be upon indictment by grand jury. The New York Court of Appeals has held that this constitutional requirement does not nullify the acceptance by a trial court of a plea of guilty to the offense of attempted grand larceny, second degree, upon an indictment for knowingly receiving stolen goods. Since, so far as the United States Constitution is concerned, the States may dispense with accusations by grand juries, it is for New York and not for us to decide when the procedural requirements of New York law, not touching those fundamental safeguards which the United States Constitution protects, are satisfied. What is here challenged is New York's determination that the knowing receipt of stolen goods is sufficiently related to larceny so as to permit acceptance of a plea of guilty of the latter on the assumption that an indictment for one affords adequate notice of the other. Surely this does not rise to the dignity of a substantial federal question. In the early days of the Fourteenth Amendment, this Court deemed it appropriate to remind that that Amendment had not made this Court an appellate tribunal to supervise the administration of the criminal law of the States. It is not irrelevant to recall this admonition. 15 Thus, I agree with the Court's opinion, but draw from it the conclusion that the writ of certiorari should be dismissed for want of a substantial federal question. 1 N.Y. Penal Law, Consol.Laws, c. 88, §§ 1294, 1297, 1308. 2 N.Y.Penal Law, § 261. Maximum punishment for grand larceny, second degree is 5 years. N.Y.Penal Law, § 1297. The District Attorney explained his reasons for the agreement in these words: 'Only a very small portion of the stolen property was recovered and that was found in the possession of several admitted inmates of a disorderly house who are of necessity the chief witnesses for the People in this case. For these reasons and because of the character of these witnesses, it is recommended that the defendant be permitted to plead guilty to the reduced charge of Attempted Grand Larceny 2nd Degree.' 3 N.Y.Penal Law, § 1941. 4 'No person shall be held to answer for a capital or otherwise infamous crime unless on indictment of a grand jury * * *.' N.Y.Const., Art. 1, § 6. 5 These questions had previously been raised by petitioner in other New York courts withu t success. In 1943 he had moved the Chautauqua County Court to vacate its judgment, under which he had been sentenced as a second felony offender. That Court held it was without power to pass upon the validity of the Erie County judgment and dismissed his motion. People v. Paterno, 182 Misc. 491, 50 N.Y.S.2d 713. In another proceeding the Appellate Division of the New York Supreme Court, relying on People ex rel. Wachowicz v. Martin, 293 N.Y. 361, 57 N.E.2d 53, 154 A.L.R. 1128, held that habeas corpus was not available to obtain vacation of the judgment, and that the only way to raise a question as to whether a plea of guilty to attempted larceny could be accepted under an indictment such as that against Paterno was by appeal or motion in arrest of judgment. People ex rel. Paterno v. Martin, 268 App.Div. 956, 51 N.Y.S.2d 679. 6 The State argues here that while petitioner had a right to appeal and challenge acceptance of the plea of guilty under the circumstances shown, neither People ex rel. Wachowicz v. Martin, 293 N.Y. 361, 57 N.E.2d 53, 154 A.L.R. 1128, nor any other New York Court of Appeals case has squarely held that the trial court's action would have constituted reversible error. 7 N.Y.Code Crim.Proc. §§ 337, 467, 469, 517, 519—521; N.Y.Laws 1946, c. 942; N.Y.Laws 1947, c. 706; Matter of Hogan v. Court of General Sessions, 296 N.Y. 1, 68 N.E.2d 849; Matter of Hogan v. New York Supreme Court, 295 N.Y. 92, 65 N.E.2d 181; People ex rel. Wachowicz v. Martin, 293 N.Y. 361, 57 N.E.2d 53, 154 A.L.R. 1128; People v. Gersewitz, 294 N.Y. 163, 61 N.E.2d 427; Matter of Morhous v. New York Supreme Court, 293 N.Y. 131, 56 N.E.2d 79; Matter of Lyons v. Goldstein, 290 N.Y. 19, 47 N.E.2d 425, 146 A.L.R. 1422; see Canizio v. New York, 327 U.S. 82, 84, 85, 66 S.Ct. 452, 453, 90 L.Ed. 545. 8 See cases cited note 7; Fuld, The Writ of Error Coram Nobis, 117 N.Y.L.J. 2212, 2230, 2248. 9 See Caldwell v. Texas, 137 U.S. 692, 698, 11 S.Ct. 224, 226, 34 L.Ed. 816; In re Converse, 137 U.S. 624, 631, 11 S.Ct. 191, 193, 34 L.Ed. 796; Leeper v. Texas, 139 U.S. 462, 468, 11 S.Ct. 577, 579, 35 L.Ed. 225; Davis v. Texas, 139 U.S. 651, 11 S.Ct. 675, 35 L.Ed. 300; Howard v. Kentucky, 200 U.S. 164, 173, 26 S.Ct. 189, 191, 50 L.Ed. 421. 10 The Appellate Division's opinion in this case said: 'It is true that the crime of attempted grand larceny second degree is not necessarily included une r a charge of criminally receiving stolen property (the then indictment against Paterno) (People ex rel. Wachowicz v. Martin, 293 N.Y. 361, 57 N.E.2d 53, 154 A.L.R. 1128) but one can conceive a set of facts under which one guilty of criminally receiving stolen property could be guilty of larceny in unlawfully withholding the stolen property from the owner thereof. Penal Law, § 1290; See People v. Vitolo, 271 App.Div. 959, 68 N.Y.S.2d 3; 136 A.L.R. 1091; and 2 Wharton on Criminal Law, Sections 1122 and 1168.' 272 App.Div. at page 126, 69 N.Y.S.2d at page 719.
34
334 U.S. 323 68 S.Ct. 1020 92 L.Ed. 1416 HILTONv.SULLIVAN et al. No. 560. Argued April 21, 1948. Decided June 1, 1948. Mr. Charles Fahy, of Washington, D.C., for petitioner. [Argument of Counsel from page 324 intentionally omitted] Mr. Paul A. Sweeney, of Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case raises questions concerning the relative rights of war veteran and nonveteran employees to retention in government service when a program of reduction in the number of government civilian employees makes it necessary for some to be chosen for discharge. The acute point of controversy is this: In the treatment of permanent tenure civil service employees, should qualified honorably discharged war veterans, merely because they are such, be retained in preference to nov eterans, even though those nonveterans have served the Government a substantially longer time than the veterans. The questions depend upon whether certain regulations promulgated by the Civil Service Commission are valid under a proper interpretation of controlling statutes. 2 The petitioner was for twelve years, from 1934 to 1946, a duly appointed permanent status civil service employee working in the Charleston Navy Yard. His work was of such high quality as to earn him an efficiency rating of 'Excellent.' By successive promotions, he arrived at the responsible position of Leadingman Shipfitter at a basic wage of $12.08 per day. January 7, 1946, shortly after the post-hostility reduction of governmental employees began, petitioner was demoted to a position paying $10.08 per day as part of a reduction in force. This demotion apparently was due in part to the fact that he did not have a veteran's preference. October 7, 1946, petitioner was notified that due to curtailment of work and funds it was necessary to eliminate certain positions in his competitive level and that in accordance with civil service regulations his name had been reached for action. He was told that, if he approved, he was then to be placed in a one-year 'furlough status' rather than absolutely separated from service because it was hoped that conditions might justify his recall to duty within the year. He was also informed that his 'active service' had already been terminated and that unless sooner recalled to duty he would be separated for reduction in force at the end of his one-year furlough period. 3 The civil service regulations said to require termination of petitioner's active service divide government employees into three main groups—A, B, and C. Group A, which has the highest priority for retention, is composed of 'permanent employees'; groups B and C are composed of employees with limited tenures of employment. Group A is divided into five subgroups, the first three of which are of particular importance here. These three subgroups are: 4 Subgroup A-1 Plus, (Veterans of World War II) for a one-year period after return to duty; 5 Subgroup A-1, Veteran's preference employees with 'good' (or higher) efficiency ratings; 6 Subgroup A-2, Employees without veteran's preference with 'good' (or higher) efficiency ratings.1 7 The result of these Commission groupings is that A-1 Plus veterans have the highest retention priority; A-1 the second; and A-2, in which, not having a veteran's preference, petitioner is classified, has the third. Thus if these regulations are valid, every member of both Subgroup A-1 Plus and Subgroup A-1 must be retained in preference to petitioner. 8 After receiving notice of his one-year furlough, petitioner filed this complaint in district court for declaratory judgment, mandamus, and other relief. The defendants were the Secretary of the Navy and the members of the Civil Service Commission. The complaint charged that petitioner's demotion and furlough were the result of the Commission's regulations which prescribed retention priorities for veterans' preference employees in A-1 Plus and A-1 over all nonveteran employees without regard to the longer periods of service of some of the nonveteran employees, including petitioner. The failure of the Commission to consider relative length of service in establishing these retention priorities was charged to be 'unreasonable, arbitrary, and capricious, without statutory warrant, and contrary to the express provisions' of applicable statutes. The petitioner's prayer was that the Commission's A-1 Plus and A-1 classifications be declared void, that the Secretary of the Navy be compelled to restore him to his original o sition as Leadingman Shipfitter, that the Commission be required to rescind the regulations and promulgate new ones in accordance with law, and that 'such other and further relief as is just' be granted him. After answer and certain stipulations of fact, both parties moved for summary judgment and the government's motion was granted. The Court of Appeals for the District of Columbia affirmed. 165 F.2d 251. Importance of the questions raised prompted us to grant certiorari. 333 U.S. 841, 68 S.Ct. 663. 9 First. While admitting petitioner's right to challenge the validity of Subgroup A-1 in this action, the Government contends that he cannot challenge A-1 Plus. The premise of this argument is that, even if A-1 Plus were invalid, the veterans grouped in it would fall within Subgroup A-1. We find no adequate support for this premise in the record. Veterans in Subgroup A-1 Plus could not qualify for A-1 unless they had efficiency ratings of 'good' or better. But the language defining A-1 Plus includes veterans of all ratings, even below 'good.' And when the summary judgment in this case was rendered, 61 of the 118 veterans comprising A-1 Plus had not been rated at all. True, the Government asserts that 60 of these veterans have now been rated 'good' and the sixty-first member has resigned. But the potential membership of Subgroup A-1 Plus is not limited to those veterans who were in it when the case was tried. The classification provides for a continuing status of preference of one year for all returning veterans who left government employment for war duty. There is no indication that additional war veterans qualified for classification under A-1 Plus will not return to Charleston Navy Yard and reclaim shipfitter jobs in preference to otherwise qualified nonveteran employees. And the Government does not claim that this classification has been repealed or altered so that in the future it can include only those veterans who have an efficiency rating of 'good' or higher. Under these circumstances we are unable to say that all members of A-1 Plus could qualify or will be able to qualify as members of A-1. Therefore we cannot accept the government's contention that petitioner's likelihood of injury from A-1 Plus is too remote to justify his attack on it. If invalid, there is as much reason for his right to challenge this subgroup as for his right to challenge Subgroup A-1. 10 Second. The Government finds support for Subgroup A-1 Plus in § 8 of the Selective Training and Service Act of 1940, 54 Stat. 885, 890, 50 U.S.C.Appendix, § 308, 50 U.S.C.A.Appendix, § 308. That section provides reemployment rights to any person who under that Act left a position other than a temporary one in order to perform training and service in the armed forces and who satisfactorily completed his training. It further requires that upon appropriate application after release from training, such person, if still qualified to perform the duties of his old job and 'if such position was in the employ of the United States Government, * * * shall be restored to such position or to a position of like seniority, status, and pay.' Section 8(c) also provides that a person so restored to his old position 'shall not be discharged from such position without cause within one year after such restoration.' 11 There appears to be little room for contention that there is ambiguity in the language that Congress selected to express its purpose to require the restoration of a former government employee who entered the armed forces to his old position and to give him the right to retention for a year. The language is that such an employee 'shall be restored' to his position or to one like it, supplemented by language that he 'shall not be discharged from such position without cause within one year after such restoration.' We have examined the legislative history of the Selective Training and Service Act of 1940 and find nothing whatever which faintly suggests that Congress intended its language to be e §§ mandatory than implied by the words it used. The command in § 8(b)(A) that the Federal Government rehire its returning veteran employees contrasted sharply with the requirement in § 8(b)(B) that a private employer need not reemploy such a veteran when 'the employer's circumstances have so changed as to make it impossible or unreasonable to do so.' This difference was noted by the congressional sponsors of the 1940 Act, who thought that the Federal Government should set an example to private industry by providing jobs for all returning veteran employees.2 Congress, having, thus provided that the veteran who left a government job must be reemployed, also required his retention by declaring that he should not be discharged within a year without cause. 12 Petitioner contends, however, that this Court's interpretations of § 8(b)(B) and § 8(c) in Trailmobile Co. v. Whirls, 331 U.S. 40, 67 S.Ct. 982, 91 L.Ed. 1328, and in Fishgold v. Sullivan Drydock & Repair Co., 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230, 167 A.L.R. 110, require a holding that the regulations establishing A-1 Plus are invalid. The Trailmobile case dealt only with the obligations of a private employer to veterans after the first year of their return to his employment, and our holding there is of no relevance here. In the other case, Fishgold, following his discharge from the armed forces, had been restored to his old position by his former private employer. Within one year thereafter temporary layoffs became necessary on each of nine days. Fishgold was laid off while nonveterans with longer service were continuously kept at work in accordance with a collective bargaining agreement which required that 'decreases' in the working force be based primarily upon 'length of service.' This Court held that since Fishgold's layoffs were temporary, he still retained an employment relationship, and thus had not been 'discharged' within the meaning of § 8(c). The statute was held not to require that when slack work compelled a private employer to lay off some workers temporarily a veteran restored to his job be given continuous work for one year after his reinstatement in preference to other nonveteran employees who under the terms of company employer-employee contract were entitled to such work by reason of their greater 'length of service.' 13 There are several reasons why we cannot accept petitioner's argument that the Fishgold case requires the invalidation of the A-1 Plus classification. In the first place, we are here concerned with the one-year retention rights of veterans restored under § 8(b)(A) to their old jobs with the Federal Government, not, as in the Fishgold case, with the rights of veterans restored to jobs in private industry under § 8(b)(B). We have previously pointed out that Congress in § 8(b)(A) imposed a mandatory and unconditional reemployment obligation upon the Federal Government; in other words the section guaranteed that a returning veteran would get back his job with the Government. But § 8(b)(B) imposed no such unconditional guarantee that a returning veteran would be reemployed by his former private employer. For that subsection does not require restoration of returning veterans to their former private jobs if 'the employer's circumstances have so changed as to make it impossible or unreasonable' to rehire him. 14 Thus Congress, evidently considering that there were significant differences in industrial and governmental employment practices and potentialities, imposed obligations to rehire returning veterans of a markedly different nature upon government and private employers. It did not define the 'impossible or unreasonable' circumstances that might relieve a private employer of the duty to rehire veterans, nor need we attempt to do so now. But it is plain that such circumstances might conceivably be such as seriously to affect, no only the reasonableness and possibility of rehiring, but also the reasonableness and possibility of retaining him for a full year's continuous work. For this reason, among others, interpretation of § 8(c)'s prohibition against discharge of a returning veteran must be made in light of whether he returns to a government-guaranteed or to a private non-guaranteed job. Therefore § 8(c)'s prohibition against 'discharge' by a private employer cannot be accepted as determinative of the scope of the congressional prohibition against 'discharge' by the Government. 15 The foregoing distinction is illustrated by the fact that civil service workers, unlike the private employees in the Fishgold case, are not confronted by a situation in which their employer, the Government, has an outstanding contract with them providing that they shall be retained in service in proportion to their 'length of service' as reductions in force become necessary. Whatever seniority rights government employees have when discharges or reductions in force are made depend entirely upon congressional acts and regulations issued in harmony with them. See 37 Stat. 555, 5 U.S.C. § 652, 5 U.S.C.A. § 652. We have discovered no acts or regulations which can be construed to recognize a nonveteran's length of government service as a factor sufficient to override the requirement of § 8(b)(A) and § 8(c) that a veteran must be restored to his old job with the Federal Government and cannot be discharged therefrom without cause for one year. Thus, unlike the employees in the Fishgold case whose private-employment contract-derived seniority prevented their being laid off, petitioner has no comparable statutorily derived seniority rights to his job with the Government. Petitioner argues, however, that § 12 of the Veterans' Preference Act of 1944, 58 Stat. 390, 5 U.S.C. § 861, 5 U.S.C.A. § 861, in effect amended § 8 and conferred retention rights upon him based upon his length of service. For the reasons we give below in discussing the validity of Subgroup A-1, we think this contention is without merit. 16 Finally, the Fishgold decision held only that a temporary layoff did not violate a veteran's right under § 8(c) not to be discharged without cause for one year after he had been restored to his old job. Here the petitioner asserts that the statutory one-year prohibition against discharge confers upon a reemployed veteran no security from a furlough for one year without pay, that such a furlough is not a 'discharge' within the meaning of s 8(c). The Commission has here treated a furlough of more than thirty days as the equivalent of a discharge. This is in accordance with prior governmental practice which has considered that the furlough of a veteran with military preference violates regulations providing that he shall not be 'discharged or dropped' when 'reductions in force are being made.'3 Moreover, § 14 of the Veterans' Preference Act, 5 U.S.C.A. § 863, which safeguards preference eligibles against administrative denial of their preference rights, specifically places furloughs and suspensions for more than thirty days without pay on the same basis as discharges. Thus, the common meaning of furlough in governmental practice is not the same as that which the Court in the Fishgold case found to be the meaning of 'layoffs' and 'furloughs' in 'industrial parlance.' To give this one-year 'furlough' any less meaning than the statutory word 'discharge' would result in depriving government employee veterans of the entire congressional guarantee of a year's retention in their old jobs. We hold that the furlough, if applied to veterans, would be a 'discharge' within the meaning of § 8(c). Consequently, the Commission acted within its statutory duty by providing veterans a preference against such removals by establishing Subgroup A-1 Plus. 17 Third. Petitioner strongly urges invalidity of Subgroup A-1, which gives all permanent employee 'Veterans with 'good' or higher efficiency ratings' retention preferences over all nonveterans, even over nonveterans with higher efficiency ratings and longer government service. While conceding that under some limited circumstances veterans with 'good or higher ratings' are granted preference by § 12 of the Veterans' Preference Act of 1944, petitioner argues that the section does not require but actually prohibits any preference for veterans over nonveterans which fails to give substantial weight to a nonveteran's longer government service. The Government urges that the section requires an absolute retention preference for veterans who have the required efficiency ratings without regard to the fact that nonveterans may have had longer government service. An alternative argument is that, whether absolutely required or not, the Commission's subgrouping is well within the power to promulgate 'rules and regulations' specifically authorized by § 12. The question presented is therefore one of interpretation of the relevant language of § 12. 18 The part of the section on which petitioner particularly relies reads: 'In any reduction in personnel in any civilian service of any Federal agency, competing employees shall be released in accordance with Civil Service Commission regulations which shall give due effect to tenure of employment, military preference, length of service, and efficiency ratings: Provided, That the length of time spent in active service in the armed forces of the United States of each such employee shall be credited in computing length of total service * * *.' Petitioner interprets this portion of § 12 as a congressional command that the Commission must invariably give 'due effect' to length of service in determining what employees, whether veterans or nonveterans, shall first be discharged in a reduction-of-force program. In effect he argues that the above language provides no other 'military preference' in civil service for a veteran employee over a nonveteran with greater 'length of service' than that defined in the above proviso, namely, that the length of a veteran's army service shall be credited in computing the length of his total government service. 19 The part of § 12 on which the Government supports the Commission's recognition of a veteran's absolute retention preference without regard to comparative length of service of veterans and nonveterans follows immediately after that section's language on which petitioner relies, and reads: 20 '* * * Provided further, That preference employees whose efficiency ratings are 'good' or better shall be retained in preference to all other competing employees and that preference employees whose efficiency ratings are below 'good' shall be retained in preference to competing nonpreference employees who have equal or lower efficiency ratings * * *.' 21 The Government interprets this proviso as a special withdrawal of the proviso-defined classes of veterans from the general terms of the first clause of § 12 relating to 'length of service.' It views this proviso as the congressional creation of classes of veterans' 'preference employees'4 who 'shall', if they have the defined efficiency ratings, 'be retained in preference to all other competing employees' without regard to length of service as between veterans and nonveterans. Thus, under the government's interpretation, length of service would be given the 'due effect' required by the first clause of § 12 by its consideration in the determination of retention preferences as between veteran and veteran and as between nonveteran and nonveteran. This interpretation of the proviso and the section, it is argued, would give meaning to all the language used in them, is plainly called for by the language, and harmonizes this portion of the Act with all its other parts and with the Act's r oad purposes. The interpretation is compelled, so the Government argues, by the Act's legislative history, particularly when the proviso and preceding clauses in the section are viewed in the light of a long series of prior congressional enactments and authorized executive orders granting preferences in government employment to veterans and their close relatives. We agree with the Government that in the light of the foregoing factors no other interpretation of the pertinent parts of the section can fairly be reached. 22 In 1876, seventy-two years ago, Congress passed a law which required any executive department when making 'any reduction of force' to 'retain those persons who may be equally qualified who have been honorably discharged from the military or naval service of the United States and the widows and orphans of deceased soldiers and sailors.' 19 Stat. 143, 169, 5 U.S.C. § 37, 5 U.S.C.A. § 37.5 In 1912 Congress greatly strengthened the old 1876 policy by providing that 'in the event of reductions being made in the force in any of the executive departments, no honorably discharged soldier or sailor whose record in said department is rated good shall be discharged or dropped, or reduced in rank or salary.' 37 Stat. 360, 413, 5 U.S.C.A. § 648.6 There is nothing ambiguous about this 1912 provision. It was an absolute command that no governmental department should discharge, drop, or reduce in rank any honorably discharged veteran government employee with a rating of 'good.' Length of service in no way qualified the preference given the veteran. And subsequent executive orders not only recognized this provision as giving veterans an absolute preference,7 but also extended the preference to veterans in the field service8 and to positions not under civil service.9 23 Executive Order 4240 of June 4, 1925, as amended by Executive Order 5068 of March 2, 1929, provided, as does Subgroup A-1 here, an absolute retention preference for veterans over nonveterans where the veterans' efficiency ratings were 'good,' and a similar absolute preference over nonveterans whose ratings were less than good if the veterans' ratings were equal to those of the nonveterans. And at the time of passage of the Veterans' Preference Act of 1944, there were 1943 Civil Service Regulations outstanding10 which granted veterans with permanent tenure and with a rating of 'good' or higher, precisely the same absolute retention preference over nonveterans which is now afforded by Subgroup A-1, here attacked as invalid. Consequently, a holding that veterans with a rating of 'good' no longer have a retention preference over nonveterans with longer service, would mean that passage of the Veterans' Preference Act in 1944 narrowed the long-existing scope of veterans' preferences in case of reduction in force of government personnel. The purpose oft hat Act's sponsors and of Congress in passing it appears to have been precisely the opposite—to broaden rather than narrow the preference. 24 The Senate Civil Service Committee was told by the congressional sponsor of the measure that 'this bill takes away no existing veterans' preference, either by statute or Executive order, but it does strengthen, broaden and implement the veterans' preference policy heretofore in effect,' and that it would 'give legislative sanction to existing veterans' preference, to the rules and regulations in the executive branch of the Government. * * *.'11 A member of the Civil Service Commission in explaining the bill to the Senate Committee called the proviso here involved the 'heart of the section,'12 and stated that it 'was substantially the same' as the 1912 Act,13 which as before pointed out, provided for an absolute veterans' retention preference without regard to length of service.14 And in explaining the Bill on the floor of the House, the sponsor and active proponents of the measure explained it as strengthening and broadening veterans' preferences then embodied in statutes and executive orders.15 25 Not only did the friends of the Veterans' Preference Act explain to the Senate Committee on Civil Service and to the Congress the broad preferences the Act would grant. Hostile witnesses graphically pointed out to the Senate Committee what they deemed would be the unfairness of the Act's effect if passed as written. One such witness representing the Civil Service Reform League said: 'I think you ought to give consideration to * * * retention of veterans in civil service regardless of length of service. I do not think it is fair, a veteran be retained in service who has been in the service 6 months as against a person who has been in the service 25 years. I believe some distinction might be made, otherwise you would do a grave injustice to those people who have long years of service in civil service.'16 And another witness against the Bill pointed out that under it nonveterans would 'be the first to be laid off and the last to be taken on.'17 26 Thus Congress passed the bil with full knowledge that the long standing absolute retention preferences of veterans would be embodied in the Act. Petitioner makes an appealing argument against this policy. But it is a policy adopted by Congress, and our responsibility is to interpret the Act, not to overrule the congressional policy.18 27 Affirmed. 28 Mr. Justice REED, concurring. 29 I agree with the conclusion reached by the Court in this case. My disagreement with the opinion is limited to that portion of subdivision Second which indicates that the rights of a veteran as to discharge after restoration to employment by the United States differ from the corresponding rights of a veteran restored to employment by a private employer. 30 The rights to retention of employment of both veterans are governed by the same subsection 8(c). 54 Stat. 890. Section 8(c) specifies the same conditions for retention of employment for all employees whether they are reemployed by the United States or by private employers. 31 Nothing has come to my attention that indicates to me a congressional purpose to grant to one more rights as to continuity of employment than to the other. The legislation as to both depended upon the same constitutional authority—the War Power. I can see no reason to attribute to Congress an intention to guarantee public employment to a returning veteran regardless of the needs of the public service or to discriminate between equally deserving veterans. Compare Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 66 S.Ct. 1105, 90 L.Ed. 1230, 167 A.L.R. 110. 32 Mr. Justice FRANKFURTER and Mr. Justice JACKSON join in this opinion. 33 Mr. Justice RUTLEDGE, concurring. 34 I concur in the result. But I do so without expressing opinion concerning the validity of Subgroup A-1 Plus of the Regulations. That classification, as I understand it and the Court's construction of it, gives preference for retention for one year in governmental work to veterans of World War II over all others, including veterans of World War I, regardless of efficiency and length of service whether of the restored veteran or of his competitors. It may be that upon the sum of the legislation Congress intended to give so broad a priority to returning members of the military services. But if so, it is the one instance in which both efficiency and length of service have been absolutely disregarded. And it is at least possible, I think, to read the complex series of statutes bearing on the problem as not having been intended to go so far. 35 But I do not reach that question, because Subgroup A-1 does take account of efficiency. It gives preference to veterans unless their efficiency rating is less than 'good.' No specific mention of length of service is made. But while a classification which ignores all considerations both of efficiency and of length of service might be found unauthorized under the statutory scheme,1 one which takes due account of efficiency, which is not wholly unrelated to length of service, well might be sustained. And in that event the Commission's judgment that veterans with efficiency ratings of 'good' or better should be preferred to all others could hardly be called arbitrary or in excess of the authority conferred.2 36 It is true that when petitioner was separated from service there were some 61 veterans classified A-1 Plus, without efficiency ratings and in priority to himself.3 But we are informed, and it is not disputed,4 that 60 of these men now have received efficiency ratings of 'good,' and therefore fall into Group A-1 in any event. The other of the 61 has resigned. Hence we are told, and this also is not disputed, that any order of the District Court purporting to require petitioner's restoration would mean that he is entitled to displace one of those veterans. 37 Since in my view Regulation A-1 is valid, regardless of whether A-1 Plus should stand, and since on the facts now before us Regulation A-1 is sufficient to exclude petitioner from restoration at this time, I do not think he has made a sufficient showing to call forth the exercise of our discretionary power in this proceeding to require the Commission to reformulate the Regulations. Upon the showing made the case is not one appropriate, in my judgment, for application of the discretionary remedy of a declaratory judgment. 1 The remaining two subgroups of A, not involved here, are: Subgroup A—3, Veterans with efficiency ratings lower than 'good.' Subgroup A—4, Nonveterans with efficiency ratings lower than 'good.' 5 Code Fed.Reg. (Supp.1945) § 12.303, now found in 5 Code Fed.Reg. (Supp.1947) § 20.3(a). 2 Hearings before House Committee on Military Affairs on H.R. 10132, 76th Cong., 3d Sess. 80—82, 118, 235; 86 Cong.Rec. 11697. 3 See 40 Ops. Att'y Gen. 115 (Sept. 20, 1946) 7, referring to Opinion, Attorney General Mitchell in 1929, interpreting Executive Order 5068, March 2, 1929. The substac e of that Order is set out in this opinion at 68 S.Ct. 1027. 4 The Act not only provides preferences for veterans but under certain circumstances grants preferences to veterans' wives, widows and mothers. § 2, 5 U.S.C. § 851, as amended by Pub.L. No. 396, 80th Cong., 2d Sess., Jan. 19, 1948, 5 U.S.C.A. § 851. See H.R.Rep. No. 1289, 78th Cong., 2d Sess. 3. 5 Disabled veterans had been granted employment preferences in 1865. 13 Stat. 571. This statutory policy was expressly preserved by § 7 of the Civil Service Act of 1883, 22 Stat. 403, 406, 5 U.S.C.A. § 638, was carried forward in other Acts, and has been repeated in a most comprehensive manner in § 2 of the Veterans' Preference Act of 1944. 6 It is of interest that this legislative expression, like the one before us, was a proviso in a section, and that the section as a whole had to do with the manner in which the Civil Service Commission should provide for efficiency ratings in relation to promotions, demotions and dismissals of civil service employees. 7 § 7, Executive Order 3567, October 24, 1921. 8 Executive Order 3801, March 3, 1923. 9 Departmental Circular 146, U.S. Civil Service Comm'n, October 22, 1936. 10 5 Code Fed.Reg. (Supp.1943) §§ 12.301—12.313. These regulations, like those attacked here, separated all civil service employees into different categories according to their tenure, with permanent employees having the highest retention status. Thus all permanent employees, regardless of veteran's preference and of efficiency rating, enjoyed priority over all employees with limited tenures. 11 Hearings before Senate Committee on Civil Service on S. 1762 and H.R. 4115, 78th Cong., 2d Sess. 8—9. 12 Id. at 29. 13 Id. at 27, 29. 14 Three veterans' organizations collaborated with the legislative sponsors in drafting the Act. Hearings before Senate Committee on Civil Service on S. 1762 and H.R. 4115, 78th Cong., 2d Sess. 8. A representative of one of these organizations stated to the Committee: 'This measure gives to honorably discharged veterans of World War I and World War II, their widows, and the wives of disabled veterans who themselves are not qualified, preference in employment where Federal funds are disbursed. It provides, by law, a definite preference both in appointment and retention in Federal positions. While such a preference in many instances now exists by virtue of Executive orders and Civil Service Commission regulations, this bill gives such preference a permanent standing that cannot be changed except by congressional action. The bill, likewise, does not take away from the veteran any rights previously granted under any existing law, Executive order, civil-service rule, or regulation of any department of the Government, but prescribes by law additional preferences and confirms many now existing by regulation.' Id. at 41—42. 15 90 Cong.Rec. 3502, 3503, 3505. 16 Hearings before Senate Committee on Civil Service on S. 1762 and H.R. 4115, 78th Cong., 2d Sess. 33—34. 17 Id. at 63, 65. 18 It is worthy of note, however, that Congress, in recognition of hardships resulting from replacement of older government employees by veterans, hass passed Acts which grant special pensions to employees over 55 years of age who have worked for the Government for 25 years or more and who have been involuntarily separated from the service in reductions in force. 60 Stat. 939, 5 U.S.C.A. § 691(e); Pub.L. No. 426, 80th Cong., 2d Sess., Feb. 28, 1948, 5 U.S.C.A. § 691 et seq. See 90 Cong.Rec. 9201—9202, H.R. No. 2443, 79th Cong., 2d Sess. 1, S.Rep. No. 1678, 79th Cong., 2d Sess. 1—2. 1 Depending upon whether § 8 of the Selective Training and Service Act of 1940, 54 Stat. 890, 50 U.S.C.App. § 301, et seq., 50 U.S.C.A.Appendix, § 301 et seq., requiring restr ation to employment and forbidding discharge without cause for one year, has been qualified by the later enactment of § 12 of the Veterans' Preference Act, 58 Stat. 390, 5 U.S.C., Supp.1946, § 861, 5 U.S.C.A. § 861, quoted in the Court's opinion, particularly the second proviso. See note, 2. 2 The second proviso, cf. note 1, specifies that preference employees (i.e., veterans) with efficiency ratings of 'good' or better shall be retained in preference to 'all other competing employees,' a designation certainly of the most comprehensive scope. The very terms of the section appear thus to place much greater stress upon efficiency ratings than upon length of service. 3 The practice in relation to these positions has been to withhold efficiency ratings, in this case, for a period of six months, and then to award them on the basis of actual performance. 4 Ordinarily, of course, rights are to be determined as of the time the interests involved are adversely affected. But it would seem hardly consistent with the legislative scheme that employees with deferred status could defeat the use of a reasonable period to determine the veteran's efficiency rating by actual performance. In any event, the discretionary declaratory judgment remedy should not be applied to oust preference employees entitled to priority over others, even though their status as preference employees is established after trial but before final disposition of the cause of appellate review.
12
334 U.S. 410 68 S.Ct. 1138 92 L.Ed. 1478 TORAO TAKAHASHIv.FISH AND GAME COMMISSION et al. No. 533. Argued April 21, 22, 1948. Decided June 7, 1948. Messrs. Dean G. Acheson, of Washington, D.C., and A. L. Wirin, of Los Angeles, Cal., for petitioner. Mr. Ralph Winfield Scott, of San Francisco, Cal., for respondents. [Argument of Counsel from page 411 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court. 1 The respondent, Torao Takahashi, born in Japan, came to this country and became a resident of California in 1907. Federal laws, based on distinctions of 'color and race,' Hidemitsu Toyota v. United States, 268 U.S. 402, 411, 412, 45 S.Ct. 563, 565, 566, 69 L.Ed. 1016, have permitted Japanese and certain other nonwhite racial groups to enter and reside in the country, but have made them ineligible for United States citizenship.1 The question presented is whether California can, consistently with the Federal Constitution and laws passed pursuant to it, use this federally created racial ineligibility for citizenship as a basis for barring Takahashi from earning his living as a commercial fisherman in the ocean waters off the coast of California. 2 Prior to 1943 California issued commercial fishing licenses to all qualified persons without regard to alienage or ineligibility to citizenship. From 1915 to 1942 Takahashi, under annual commercial fishing licenses issued by the State, fished in ocean waters off the California coast, apparently both within and without the three-mile coastal belt, and brought his fresh fish ashore for sale. In 1942, while this country was at war with Japan, Takahashi and other California residents of Japanese ancestry were evacuated from the State under military orders. See Korematsu v. United States, 323 U.S. 214, 65 S.Ct. 193, 89 L.Ed. 194. In 1943, during the period of war and evacuation, an amendment to the California Fish and Game Code was adopted prohibiting issuance of a license to any 'alien Japanese.' Cal.Stats. 1943, ch. 1100. In 1945, the state code was again amended by striking the 1943 provision for fear that it might be 'declared unconstitutional' because directed only 'against alien Japanese';2 the new amendment banned issuance of licenses to any 'person ineligible to citizenship,' which classification included Japanese. Cal.Stats. 1945, ch. 181.3 Because of this state provision barring issuance of commercial fishing licenses to persons ineligible for citizenship underf ederal law, Takahashi, who met all other state requirements, was denied a license by the California Fish and Game Commission upon his return to California in 1945. 3 Takahashi brought this action for mandamus in the Superior Court of Los Angeles County, California, to compel the Commission to issue a license to him. That court granted the petition for mandamus. It held that lawful alien inhabitants of California, despite their ineligibility to citizenship, were entitled to engage in the vocation of commercial fishing on the high seas beyond the three-mile belt on the same terms as other lawful state inhabitants, and that the California code provision denying them this right violated the equal protection clause of the Fourteenth Amendment. The State Supreme Court, three judges dissenting, reversed, holding that California had a proprietary interest in fish in the ocean waters within 3 miles of the shore, and that this interest justified the State in barring all aliens in general and aliens ineligible to citizenship in particular from catching fish within or without the threemile coastal belt and bringing them to California for commercial purposes. 30 Cal.2d 719, 185 P.2d 805, 808.4 To review this question of importance in the fields of federal-state relationships and of constitutionally protected individual equality and liberty, we granted certiorari. 4 We may well begin our consideration of the principles to be applied in this case by a summary of this Court's holding in Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 9, 60 L.Ed. 131, L.R.A. 1916D, 545, Ann.Cas. 1917B, 283, not deemed controlling by the majority of the California Supreme Court, but regarded by the dissenters as requiring the invalidation of the California law. That case involved an attack upon an Arizona law which required all Arizona employers of more than five workers to hire not less than eighty (80) per cent qualified electors or native-born citizens of the United States. Raich, an alien who worked as a cook in a restaurant which had more than five employees, was about to lose his job solely because of the state law's coercive effect on the restaurant owner. This Court, in upholding Raich's contention that the Arizona law was invalid, declared that Raich, having been lawfully admitted into the country under federal law, had a federal privilege to enter and abide in 'any state in the Union' and thereafter under the Fourteenth Amendment to enjoy the equal protection of the laws of the state in which he abided; that this privilege to enter in and abide in any state carried with it the 'right to work for a living in the common occupations of the community,' a denial of which right would make of the Amendment 'a barren form of words.' In answer to a contention that Arizona's restriction upon the employment of aliens was 'reasonable' and therefore permissible, this Court declared: 5 'It must also be said that reasonable classification implies action consistent with the legitimate interests of the state, and it will not be disputed that these cannot be so broadly conceived as to bring them into hostility to exclusive Federal power. The authority to control immigration—to admit or exclude aliens—is vested solely in the Federal government. Fong Yue Ting v. United States, 149 U.S. 698, 713, 13 S.Ct. 1016, 1022, 37 L.Ed. 905, 913. The assertion of an authority to deny to aliens the opportunity of earning a livelihood when lawfully admitted to the state would be tantamount to the assertion of the right to deny them entrance and abode, for in ordinary cases they cannot live where they cannot work. And, if such a policy were permissible, the practical result would be that those lawfully admitted to the country under the authority of the acts of Congress, instead of enjoying in a substantial sense and in their full scope the privileges conferred by the admission, would be seggregated in such of the states as chose to offer hospitality.' Truax v. Raich, supra, 239 U.S. at page 42, 36 S.Ct. at page 11, 60 L.Ed. 131, L.R.A. 1916D, 545, Ann.Cas. 1917B, 283. 6 Had the Truax decision said nothing further than what is quoted above, its reasoning, if followed, would seem to require invalidation of this California code provision barring aliens from the occupation of fishing as inconsistent with federal law, which is constitutionally declared to be 'the supreme Law of the Land.' Const. art. 6, cl. 2. However, the Court there went on to note that it had on occasion sustained state legislation that did not apply alike to citizens and non-citizens, the ground for the distinction being that such laws were necessary to protect special interests either of the state or of its citizens as such. The Truax opinion pointed out that the Arizona law, aimed as it was against employment of aliens in all vocations, failed to show a 'special public interest with respect to any particular business * * * that could possibly be deemed to support the enactment.' The Court noted that it had previously upheld various state laws which resricted the privilege of planting oysters in the tidewater rivers of a state to cii zens of that state, and which denied to aliens within a state the privilege of possessing a rifle and of shooting game within that state; it also referred to decisions recognizing a state's broad powers, in the absence of overriding treaties, to restrict the devolution of real property to non-aliens.5 7 California now urges, and the State Supreme Court held, that the California fishing provision here challenged falls within the rationale of the 'special public interest' cases distinguished in the Truax opinion, and thus that the state's ban upon commercial fishing by aliens ineligible to citizenship is valid. The contention is this: California owns the fish within three miles of its coast as a trustee for all California citizens as distinguished from its noncitizen inhabitants; as such trustee-owner, it has complete power to bar any or all aliens from fishing in the three-mile belt as a means of conserving the supply of fish; since migratory fish caught while swimming in the three-mile belt are indistinguishable from those caught while swimming in the adjacent high seas, the State, in order to enforce its three-mile control, can also regulate the catching and delivery to its coast of fish caught beyond the three mile belt under this Court's decision in Bayside Fish Co. v. Gentry, 297 U.S. 422, 56 S.Ct. 513, 80 L.Ed. 772. Its law denying fishing licenses to aliens ineligible for citizenship, so the state's contention goes, tends to reduce the number of commercial fishermen and therefore is a proper fish conservation measure; in the exercise of its power to decide what groups will be denied licenses, the State has a right if not a duty, to bar first of all aliens, who have no community interest in the fish owned by the State. Finally, the legislature's denial of licenses to those aliens who are 'ineligible to citizenship' is defended as a reasonable classification, on the ground that California has simply followed the Federal Government's lead in adopting that classification from the naturalization laws. 8 First. The state's contention that its law was passed solely as a fish conservation measure is vigorously denied. The petitioner argues that it was the outgrowth of racial antagonism directed solely against the Japanese, and that for this reason alone it cannot stand. See Korematsu v. United States, supra, 323 U.S. at page 216, 65 S.Ct. at page 194, 89 L.Ed. 194; Kotch v. Board of River Pilot Com'rs, 330 U.S. 552, 556, 67 S.Ct. 910, 912, 91 L.Ed. 1093; Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220; In re Ah Chong, C.C., 2 F. 733, 737. We find it unnecessary to resolve this controversy concerning the motives that prompted enactment of the legislation. Accordingly, for purposes of our decision we may assume that the code provision was passed to conserve fish in the California coastal waters, or to protect California citizens engaged in commercial fishing from competition by Japanese aliens, or for both reasons. 9 Second. It does not follow, as California seems to argue that because the United States regulates immigration and naturalization in part on the basis of race and color classifications, a state can adopt one or more of the same classifications to prevent lawfully admitted aliens within its borders from earning a living in the same way that other state inhabitants earn their living. The Federal Government has broad constitutional powers in determining what aliens shall be admitted to the United States, the period they may remain, regulation of their conduct before naturalization, and the terms and conditions of their naturalization. See Hines v. Davidowitz, 312 U.S. 52, 66, 61 S.Ct. 399, 403, 85 L.Ed. 581. Under the Constitution the states are grante no such powers; they can neither add to nor take from the conditions lawfully imposed by Congress upon admission, naturalization and residence of aliens in the United States or the several states. State laws which impose discriminatory burdens upon the entrance or residence of aliens lawfully within the United States conflict with this constitutionally derived federal power to regulate immigration, and have accordingly been held invalid.6 Moreover, Congress, in the enactment of a comprehensive legislative plan for the nation-wide control and regulation of immigration and naturalization, has broadly provided: 10 'All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.' 16 Stat. 140, 144, 8 U.S.C. § 41, 8 U.S.C.A. § 41. 11 The protection of this section has been held to extend to aliens as well as to citizens.7 Consequently the section and the Fourteenth Amendment on which it rests in part protect 'all persons' against state legislation bearing unequally upon them either because of alienage or color. See Hurd v. Hodge, 334 U.S. 24, 68 S.Ct. 847. The Fourteenth Amendment and the laws adopted under its authority thus embody a general policy that all persons lawfully in this country shall abide 'in any state' on an equality of legal privileges with all citizens under non-discriminatory laws. 12 All of the foregoing emphasizes the tenuousness of the state's claim that it has power to single out and ban its lawful alien inhabitants, and particularly certain racial and color groups within this class of inhabitants, from following a vocation simply because Congress has put some such groups in special classifications in exercise of its broad and wholly distinguishable powers over immigration and naturalization. The state's law here cannot be supported in the employment of this legislative authority because of policies adopted by Congress in the exercise of its power to treat separately and differently with aliens from countries composed of peoples of many diverse cultures, races, and colors. For these reasons the power of a state to apply its laws exclusively to its alien inhabitants as a class is confined within narrow limits. 13 Third. We are unable to find that the 'special public interest' on which California relies provides support for this state ban on Takahashi's commercial fishing. As before pointed out, California's claim of 'special public interest' is that its citizens are the collective owners of fish swimming in the three-mile belt. It is true that this Court did long ago say that the citizens of a state collectively own 'the tide-waters * * * and the fish in them, so far as they are capable of ownership while running.' McCready v. Virginia, 94 U.S. 391, 394, 24 L.Ed. 248. Cf. United States v. California, 332 U.S. 19, 38, 67 S.Ct. 1658; Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156. The McCready case upheld a Virginia law which prohibited citizens of other states from planting oysters in a Virginia tidewater river. Though the McCready case has been often distinguished, its rationale has been relied on in other cases, including Geer v. Connecticut, 161 U.S. 519, 16 S.Ct. 600, 40 L.Ed. 793. That decision, where only te commerce clause was involved, sustained a state law, that, in order to restrict the use of game to the people of the state, prohibited the out-of-state transportation of game killed within the state. On the other hand, where Louisiana laws declared that the state owned all shrimp within the waters of the state, but permitted ultimate sale and shipment of shrimp for consumption outside that state's boundaries, Louisiana was denied power under the commerce clause to require the local processing of shrimp taken from Louisiana marshes as a prerequisite to out-of-state transportation. Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147. In the absence of overriding federal treaties, this Court sustained a state law barring aliens from hunting wild game in the interest of conserving game for citizens of the state against due process and equal protection challenges. Patsone v. Pennsylvania, 232 U.S. 138, 34 S.Ct. 281, 58 L.Ed. 539. Later, however, the Federal Migratory Bird Treaty Act of 1918, 40 Stat. 755, 16 U.S.C.A. § 703, was sustained as within federal power despite the claim of Missouri of ownership of birds within its boundaries based on prior statements as to state ownership of game and fish in the Geer case. Missouri v. Holland, 252 U.S. 416, 40 S.Ct. 382, 64 L.Ed. 641, 11 A.L.R. 984. The Court was of opinion that 'To put the claim of the State upon title is to lean upon a slender reed.' 252 U.S. at page 434, 40 S.Ct. at page 384, 64 L.Ed. 641, 11 A.L.R. 984. We think that same statement is equally applicable here. To whatever extent the fish in the three-mile belt off California may be 'capable of ownership' by California, we think that 'ownership' is inadequate to justify California in excluding any or all aliens who are lawful residents of the State from making a living by fishing in the ocean off its shores while permitting all others to do so. 14 This leaves for consideration the argument that this law should be upheld on authority of those cases which have sustained state laws barring aliens ineligible to citizenship from land ownership.8 Assuming the continued validity of those cases,9 we think they could not in any event be controlling here. They rested solely upon the power of states to control the devolution and ownership of land within their borders, a power long exercised and supported on reasons peculiar to real property. They cannot be extended to cover this case. 15 The judgment is reversed and remanded for proceedings not inconsistent with this opinion. 16 Reversed. 17 Mr. Justice MURPHY, with whom Mr. Justice RUTLEDGE agrees, concurring. 18 The opinion of the Court, in which I join, adequately expresses my views as to all but one important aspect of this case. That aspect relates to the fact that § 990 of the California Fish and Game Code, barring those ineligible to citizenship from securing commercial fishing licenses, is the direct outgrowth of antagonism toward persons of Japanese ancestry. Even the most cursory examination of the background of the statute demonstrates that it was designed solely to discriminate against such persons in a manner inconsistent with the concept of equal protection of the laws. Legislation of that type is not entitled to wear the cloak of constitutionality. 19 The statute in question is but one more manifestation of the anti-Japanese fever which has been evident in California in varying degrees since the turn of the century. See concurring opinion in Oyama v. California, 332 U.S. 633, 650, 68 S.Ct. 269, 277 and dissenting opinion in Korematsu v. United States, 323 U.S. 214, 233, 65 S.Ct. 193, 201, 89 L.Ed. 194. That fever, of course, is trc eable to the refusal or the inability of certain groups to adjust themselves economically and socially relative to residents of Japanese ancestry. For some years prior to the Japanese attack on Pearl Harbor, these protagonists of intolerance had been leveling unfounded accusations and innuendoes against Japanese fishing crews operating off the coast of California. These fishermen numbered about a thousand and most of them had long resided in that state. It was claimed that they were engaged not only in fishing but in espionage and other illicit activities on behalf of the Japanese Government. As war with Japan approached and finally became a reality, these charges were repeated with increasing vigor. Yet full investigations by appropriate authorities failed to reveal any competent supporting evidence; not even one Japanese fisherman was arrested for alleged espionage. Such baseless accusations can only be viewed as an integral part of the long campaign to undermine the reputation of persons of Japanese background and to discourage their residence in California. See McWilliams, Prejudice (1944), ch. VII. 20 More specifically, these accusations were used to secure the passage of discriminatory fishing legislation. But such legislation was not immediately forthcoming. The continued presence in California of the Japanese fishermen without the occurrence of any untoward incidents on their part served for a time as adequate and living refutation of the propaganda. Then came the evacuation of all persons of Japanese ancestry from the West Coast. See Korematsu v. United States, supra. Once evacuation was achieved, an intensive campaign was begun to prevent the return to California of the evacuees. All of the old charges, including the ones relating to the fishermen, were refurbished and augmented. This time the Japanese were absent and were unable to provide effective opposition. The winds of racial animosity blew unabated. 21 During the height of this racial storm in 1943, numerous anti-Japanese bills were considered by the California legislators. Several amendments to the Alien Land Law were enacted. And § 990 of the Fish and Game Code was altered to provide that 'A commercial fishing license may be issued to any person other than an alien Japanese.' No pretense was made that this alteration was in the interests of conservation. It was made at a time when all alien Japanese were excluded from California, with no immediate return indicated; thus the banning of fishing licenses for them could have no early effect upon the conservation of fish. Moreover, the period during which this amendment was passed was one in which both federal and state authorities were doing their utmost to encourage greater food production for wartime purposes. The main desire at this time was to increase rather than to decrease the catch of fish. Certainly the contemporaneous bulletins and reports of the Bureau of Marine Fisheries of California did not indicate the existence of any conservation problem due to an excess number of fishermen. See Thirty-Eighth Biennial Report (July 1, 1944), pp. 33-36; Fish Bulletin No. 58, for the year 1940; Fish Bulletin No. 59, for the years 1941 and 1942. 22 These circumstances only confirm the obvious fact that the 1943 amendment to § 990 was intended to discourage the return to California of Japanese aliens. By taking away their commercial fishing rights, the lives of those aliens who plied the fisherman's trade would be made more difficult and unremunerative. And the non-Japanese fishermen would thereby be free from the competition afforded by these aliens. The equal protection clause of the Fourteenth Amendment, however, does not permit a state to discriminate against resident aliens in such a fashion, whether the purpose be to give effect to racial animosity or to protect the competitive interests of other residents. 23 The 1945 amendment to § 900 which is now before us stands in no better position than the 1943 amendment. This later alteratio eliminated the reference to 'alien Japanese' and substituted therefor 'a person ineligible to citizenship.' Adoption of this change also occurred during a period when anti-Japanese agitation in California had reached one of its periodic peaks. The announcement of the end of the Japanese exclusion orders, plus this Court's decision in Ex parte Endo, 323 U.S. 283, 65 S.Ct. 208, 89 L.Ed. 243, made the return to California of many of the evacuees a reasonable certainty. The prejudices, the antagonisms and the hatreds were once again aroused, punctuated this time by numerous acts of violence against the returning Japanese Americans. Another wave of anti-Japanese proposals marked the 1945 legislative session. It was in this setting that the amendment to § 990 was proposed and enacted in 1945. 24 It is of interest and significance that the amendment in question was proposed by a legislative committee devoted to Japanese resettlement problems, not by a committee concerned with the conservation of fish. The Senate Fact-Finding Committee on Japanese Resettlement issued a report on May 1, 1945. This report dealt with such matters as the Alien Land Law, the Japanese language schools, dual citizenship and the Tule Lake riot. And under the heading 'Japanese Fishing Boats' (pp. 5-6) appeared this explanation of the proposed amendment to § 900: 'The committee gave little consideration to the problems of the use of fishing vessels on our coast owned and operated by Japanese, since this matter seems to have previously been covered by legislation. The committee, however, feels that there is danger of the present statute being declared unconstitutional, on the grounds of discrimination, since it is directed against alien Japanese. It is believed that this legal question can probably be eliminated by an amendment which has been proposed to the bill which would make it apply to any alien who is ineligible to citizenship. The committee has introduced Senate Bill 413 to make this change in the statute.' 25 Not a word was said in this reort regarding the need for the conservation of fish or the necessity of limiting the number of fishermen. The obvious thought behind the amendment was to attempt to legalize the discrimination against Japanese alien fishermen by dropping the specific reference to them. 26 The proposed revision was adopted. The trial court below correctly described the situation as follows: 'As it was commonly known to the legislators of 1945 that Japanese were the only aliens ineligible to citizenship who engaged in commercial fishing in ocean waters bordering on California, and as the Court must take judicial notice of the same fact, it becomes manifest that in enacting the present version of Section 990, the Legislature intended thereby to eliminate alien Japanese from those entitled to a commercial fishing license by means of description rather than by name. To all intents and purposes and in effect the provision in the 1943 and 1945 amendments are the same, the thin veil used to conceal a purpose being too transparent. Under each and both, alien Japanese are denied a right to a license to catch fish on the high seas for profit, and to bring them to shore for the purpose of selling the same in a fresh state * * * this discrimination constitutes an unequal exaction and a greater burden upon the persons of the class named than that imposed upon others in the same calling and under the same conditions, and amounts to prohibition. This discrimination, patently hostile, is not based upon a reasonable ground of classification and, to that extent, the section is in violation of Section 1 of the Fourteenth Amendment to the Constitution of the United States, * * *.' 27 We should not blink at the fact that § 990, as now written, is a discriminatory piece of legislation having no relation whatever to any constitutionally cognizable interest of California. It was drawn against a background of racial and economic tension. It is directed in spirit and in effect soley against aliens of Japanese birth. It denies them commercial fishing rights not because they threaten the success of any conservation program, not because their fishing activities constitute a clear and present danger to the welfare of California or of the nation, but only because they are of Japanese stock, a stock which has had the misfortune to arouse antagonism among certain powerful interests. We need but unbutton he seemingly innocent words of § 990 to discover beneath them the very negation of all the ideals of the equal protection clause. No more is necessary to warrant a reversal of the judgment below. 28 Mr. Justice REED, dissenting. 29 The reasons which lead me to conclude that the judgment of the Supreme Court of California should be affirmed may be briefly stated. As fishing rights have been treated traditionally as a natural resource, in the absence of federal regulation, California as a sovereign state has power to regulate the taking and handling of fish in the waters bordering its shores.1 It is, I think, one of the natural resources of the state that may be preserved from exploitation by aliens.2 The ground for this power in the absence of any exercise of federal authority is California's authority over its fisheries. 30 The right to fish is analogous to the right to own land, a privilege which a state may deny to aliens as to land within its borders. Terrace v. Thompson, 263 U.S. 197, 44 S.Ct. 15, 68 L.Ed. 255.3 It is closely akin to the right to hunt, a privilege from which a state may bar aliens, if reasonably deemed advantageous to its citizens.4 A state's power has even been held to extend to the exclusion of aliens from the operation of pool and billiard halls when a city deemed them not as well qualified as citizens for the conduct of a business thought to have harmful tendencies. Clarke v. Deckebach, 274 U.S. 392, 47 S.Ct. 630, 71 L.Ed. 1115.5 31 The Federal Government has not pursued a policy of equal treatment of aliens and citizens. Citizens have rights superior to those of aliens in the ownership of land and in exploiting natural resources.6 Perhaps Congress as a matter of immigration policy may require that states open every door of opportunity in America to all resident aliens, but until Congress so determines as to fisheries, I do not feel that the judicial arm of the Government should require the states to admit all aliens to this privilege. 32 Certainly Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131, L.R.A. 1916D, 545, Ann.Cas. 1917B, 283, upon which the majority opinion appears to rely in holding that the California statute denies equal protection in attempting to classify aliens by putting restrictions on their right to land fish, is not an authority for such a decision. The power of a state to discriminate against aliens on public works and the exploitation of natural resources was recognized in that case.7 And, at the very time that it was under consideration, this Court also had before it Heim v. McCall, 239 U.S. 175, 36 S.Ct. 78, 60 L.Ed. 206, Ann.Cas. 1917B, 287.8 In that case, Heim attacked the constitutionality of a New York statute which provided that 'In the construction of public works by the state or a municipality, or by persons contracting with the state or such municipality, only citizens of the United States shall be employed; and in all cases where laborers are employed on any such public works, preference shall be given citizens of the state of New York.'9 A unanimous court held that the statute, which was attacked on the ground that it denied aliens their rights under the privileges and immunities, due process, and equal protection clauses of the Constitution, was a constitutional exercise of state power as applied to the construction of New York City subways by private contractors.10 The Constitution that permits the bar of aliens from public works surely must permit their bar from state fishing rights. A state has power to exclude from enjoyment of its natural resources those who are unwilling or unable to become citizens. 33 If aliens, as I think they can, may be excluded by a state from fishing privileges, I see no reason why the classification established by California excluding only aliens ineligible to citizenship is prohibited by the Constitution. Terrace v. Thompson, 263 U.S. 197, 220, 44 S.Ct. 15, 19, 68 L.Ed. 255. Whatever we may think of the wisdom of California's statute, we should intervene only when we conclude the state statute passes constitutional limits. 34 Mr. Justice JACKSON joins in this dissent. 1 The comprehensive laws adopted by Congress regulating the immigration and naturalization of aliens are included in Title 8 of the U.S.Code, 8 U.S.C.A.; for codification of laws governing racial and color prerequisites of aliens to citizenship see 8 U.S.C. § 703, 8 U.S.C.A. § 703. An act adopted by the first Congress in 1790 made 'free white persons' only eligible for citizenship. 1 Stat. 103. Later acts have extended eligibility of aliens to citizenship to the following groups: in 1870, 'aliens of African nativity and * * * persons of African descent,' 16 Stat. 254, 256; in 1940, 'descendants of races indigenous to the Western Hemisphere,' 54 Stat. 1137, 1140, 8 U.S.C.A. § 703; in 1943, 'Chinese persons or persons of Chinese descent,' 57 Stat. 600, 601, 8 U.S.C.A. § 703; and in 1946, Filipinos and 'persons of races indigenous to India,' 60 Stat. 416, 8 U.S.C.A. § 703. While it is not wholly clear what racial groups other than Japanese are now ineligible to citizenship, it is clear that Japanese are among the few groups still not eligible, see Oyama v. California, 332 U.S. 633, 635, n. 3, 68 S.Ct. 269, 270, and that, according to the 1940 census, Japanese aliens constituted the great majority of aliens living in the United States then ineligible for citizenship. See concurring opinion of Mr. Justice Murphy in Oyama v. California, supra 332 U.S. at pages 650, 665, 666, nn. 20 and 22, 68 S.Ct. at pages 277, 284, 285. 2 Report of the California Senate Fact-Finding Committee on Japanese Resettlement, May 1, 1945, pp. 5—6. 3 As amended the code section now reads: 'Persons required to procure license: To whom issuable. Every person who uses or operates or assists in using or operating any boat, net, trap, line, or other appliance to take fish, mollusks or crustaceans for profit, or who brings or causes fish, mollusks or crustaceans to be brought ashore at any point in the State for the purpose of selling the same in a fresh state, shall procure a commercial fishing license. 'A commercial fishing license may be issued to any person other than a person ineligible to citizenship. A commercial fishing license may be issued to a corporation only if said corporation is authorized to do business in this State, if none of the officers or directors thereof are persons ineligible to citizenship, and if less than the majority of each class of stockholders thereof are persons ineligible to citizenship.' Cal. Fish and Game Code, § 990. In 1947 the code was amended to permit 'any person, not a citizen of the United States,' to obtain hunting and sport fishing licenses, both of which had been denied to 'alien Japanese' and to persons 'ineligible to citizenship' under the 1943 and 1945 amendments. Cal.Stats.1947, c. 1329, Cal. Fish and Game Code §§ 427, 428. 4 The Superior Court first ordered issuance of a commercial fishing license authorizing Takahashi to bring ashore 'catches of fish from the waters of the high seas beyond the State's territorial jurisdiction.' After appeal to the State Supreme Court by the State Commission the Superior Court amended its judgment so as to order a commercial license authorizing Takahashi to bring in catches of fish taken from the three-mile ocean belt adjacent to the California coast as well as from the high seas. The State Supreme Court held that the Superior Court was without jurisdiction to amend its judgment after appeal and accordingly treated the amended judgment as void. California argues here that its State Fish and Game Commission is authorized by statute to issue only one type of commercial fishing license, namely, one permitting ocean fish to be brought ashore whether caught within or without the three-mile belt, that the Superior Court's first judgment ordering issuance of a license limited to catches of high seas fish directed the Commission to do something it was without authority to do, and that on this ground we should affirm the state court's denial of the requested license. The State Supreme Court did not, however, decide the case on that ground, but ruled against petitioner on the ground that the challenged o de provision was valid under the Federal Constitution and that the Commission's refusal to grant a license was required by its terms. Since the state court of last resort relied solely upon federal grounds for its decision, we may properly review its action here. 5 The opinion cited the following cases: McCready v. Virginia, 94 U.S. 391, 24 L.Ed. 248; Patsone v. Pennsylvania, 232 U.S. 138, 34 S.Ct. 281, 58 L.Ed. 539; Hauenstein v. Lynham, 100 U.S. 483, 25 L.Ed. 628; and Blythe v. Hinckley, 180 U.S. 333, 21 S.Ct. 390, 45 L.Ed. 557. 6 Truax v. Raich, supra; Chy Lung v. Freeman, 92 U.S. 275, 280, 23 L.Ed. 550; see Hines v. Davidowitz, supra, 312 U.S. at pages 65, 68, 61 S.Ct. at pages 403, 404, 85 L.Ed. 581. 7 Yick Wo v. Hopkins, supra, 118 U.S. at page 369, 6 S.Ct. at page 1070, 30 L.Ed. 220; United States v. Wong Kim Ark, 169 U.S. 649, 696, 18 S.Ct. 456, 475, 42 L.Ed. 890; In re Tiburcio Parrott, C.C., 1 F. 481, 508, 509; Fraser v. McConway & Torley Co., C.C., 82 F. 257. 8 Terrace v. Thompson, 263 U.S. 197, 44 S.Ct. 15, 68 L.Ed. 255; Porterfield v. Webb, 263 U.S. 225, 44 S.Ct. 21, 68 L.Ed. 278; Webb v. O'Brien, 263 U.S. 313, 44 S.Ct. 112, 68 L.Ed. 318; Frick v. Webb, 263 U.S. 326, 44 S.Ct. 115, 68 L.Ed. 323. 9 See Oyama v. California, 332 U.S. 633, 646, 649, 672, 68 S.Ct. 269, 275, 276, 288. 1 Bayside Fish Flour Co. v. Gentry, 297 U.S. 422, 425, 56 S.Ct. 513, 514, 80 L.Ed. 772. The statute, see note 3 of the Court's opinion for the text, seems obviously to cast no burden on commerce. A Washington statute similar to the one now before us was considered in Lubetich v. Pollock, D.C., 6 F.2d 237. 2 Even citizens of other states have been excluded by a state from such opportunities. McCready v. Virginia, 94 U.S. 391, 24 L.Ed. 248 (planting oyster beds). Fishing licenses discriminating between residents and non-residents are permissible. Haavik v. Alaska Packers Ass'n, 263 U.S. 510, 44 S.Ct. 177, 68 L.Ed. 414. 3 The right of an alien to own land is controlled by the law of the state in which the land is located. Such was the rule of the common law. Collingwood v. Pace, 1 Vent. 413, 86 Eng.Rep. 262. That has long been the law of nations, 2 Vattell, Law of Nations (1883) c. 8, § 114, and has been accepted in this country. Chirac v. Chirac, 2 Wheat. 259, 4 L.Ed. 234; Levy v. McCartee, 6 Pet. 102, 113; Hauenstein v. Lynham, 100 U.S. 483, 25 L.Ed. 628; Blythe v. Hinckley, 180 U.S. 333, 341, 21 S.Ct. 390, 45 L.Ed. 557. Whether the philosophical basis of that power, or the power over fish and game, is a theory of ownership or trusteeship for its citizens or residents or conservation of natural resources or protection of its land or coasts is not material. The right to control the ownership of land rests in sovereign governments and, in the United States, it rests with the individual states in the absence of federal action by treaty or otherwise. 4 Patsone v. Pennsylvania, 232 U.S. 138, 34 S.Ct. 281, 58 L.Ed. 539. In expressing the conclusion of a unanimous Court, Mr. Justice Holmes phrased the rule as follows, in 232 U.S. at pages 145, 146, 34 S.Ct. at pages 282, 283, 58 L.Ed. 539. 'It is to be remembered that the subject of this whole discussion is wild game, which the state may preserve for its own citizens if it pleases.' 5 In that case a unanimous Court, speaking through Mr. Justice Stone, said, 274 U.S. at page 396, 47 S.Ct. at page 631, 1 L.Ed. 1115: 'The objections to the constitutionality of the ordinance are not persuasive. Although the Fourteenth Amendment has been held to prohibit plainly irrational discrimination against aliens, * * * it does not follow that alien race and allegiance may not bear in some instances such a relation to a legitimate object of legislation as to be made the basis of a permitted classification.' 6 The United States limits the rights of aliens as compared with citizens in land ownership in its territories, 8 U.S.C. §§ 71 86, 8 U.S.C.A. §§ 71—86; in disposition of mineral lands, 30 U.S.C. § 181, 30 U.S.C.A. § 181; of public lands, 43 U.S.C. § 161, 43 U.S.C.A. § 161; in engaging in coastwise trade, 46 U.S.C. §§ 11, 13, 46 U.S.C.A. §§ 11, 13; in operating aircraft, 49 U.S.C. §§ 176(c), 521, 49 U.S.C.A. §§ 176(c), 521. It was deemed necessary to limit the benefits of the Emergency Relief Appropriation Act of 1938 to aliens who had 'filed a declaration of intention to become an American citizen * * *.' 52 Stat. 809, 813, 15 U.S.C.A. §§ 721—728 note. 7 239 U.S. 33, 39, 40, 36 S.Ct. 7, 9, 10, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283: 'The discrimination defined by the act does not pertain to the regulation or distribution of the public domain, or of the common property or resources of the people of the state, the enjoyment of which may be limited to its citizens as against both aliens and the citizens of other states. * * * The case now presented is not within these decisions, or within those relating to the devolution of real property * * *; and it should be added that the act is not limited to persons who are engaged on public work or receive the benefit of public moneys. The discrimination here involved is imposed upon the conduct of ordinary private enterprise.' 8 Truax v. Raich, supra, was aru ed October 15, 1915, and decided November 1, 1915; Heim v. McCall, supra, was argued October 12, 1915, and decided November 29, 1915. 9 239 U.S. 175, 176, 177, 36 S.Ct. 78, 79, 60 L.Ed. 206, Ann.Cas.1917B, 287. 10 The problem of natural resources was not directly discussed in the opinion. But it is clear that the Court was not unaware of the relation of its decision to the natural resources cases. See 239 U.S. 175, 194, 36 S.Ct. 78, 80, 60 L.Ed. 206, Ann.Cas.1917B, 287. The fact that this case was before the Court at the same time as Truax v. Raich, probably explains the careful reservation of the natural resources and public works problems in that case. See 239 U.S. 33, 39, 40, 36 S.Ct. 7, 9, 10, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283.
12
334 U.S. 555 68 S.Ct. 1221 92 L.Ed. 1572 KREIGERv.KREIGER. No. 371. Argued Feb. 2, 3, 1948. Decided June 7, 1948. Mr. James G. Purdy, of New York City, for petitioner. Mr. Charles Rothenberg, of New York City, for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a companion case to Estin v. Estin, 334 U.S. 541, 68 S.Ct. 1213, also here on certiorari to the Court of Appeals of New York. 2 The parties were married in New York in 1933 and lived together until their separation in 1935. In 1940 respondent obtained a decree of separation in New York on grounds of abandonment. Petitioner appeared in the action; and respondent was awarded $60 a week alimony for the support of herself and their only child, whose custody she was given. 3 Petitioner thereafter went to Nevada where he continues to reside. He instituted divorce proceedings in that state in the fall of 1944. Constructive service was made on respondent who made no appearance in the Nevada proceedings. While they were pending, respondent obtained an order in New York purporting to enjoin petitioner from seeking a divorce and from remarrying. Petitioner was neither served with process in New York nor entered an appearance in the latter proceeding. The Nevada court, with knowledge of the injunction and the New York judgment for alimony, awarded petitioner an absolute divorce on grounds of three consecutive years of separation without cohabitation. The judgment made no provision for alimony. It did provide that petitioner was to support, maintain and educate the child, whose custody it purported to grant him, and as to which jurisdiction was reserved. Petitioner thereafter tendered $50 a month for the support of the child but ceased making payments under the New York decree. 4 Respondent thereupon brought suit on the New York judgment in a federal district court in Nevada. Without waiting the outcome of that litigation she obtained a judgment in New York for the amount of the arrears, petitioner appearing and unsuccessfully pleading his Nevada divorce as a defense. The judgment was affirmed by the Appellate Division, two judges dissenting. 271 App.Div. 872, 66 N.Y.S.2d 798. The Court of Appeals affirmed without opinion, but stating in its remittitur that its action was based upon Estin v. Estin, 296 N.Y. 308, 73 N.E.2d 113. Respondent does not attack the bona fides of petitioner's Nevada domicile. 5 For the reasons stated in Estin v. Estin, supra, we hold that Nevada had no power to adjudicate respondent's rights in the New York judgment and thus New York was not required to bow to that provision of the Nevada decree. It is therefore unnecessary to pass upon New York's attempt to enjoin petitioner from securing a divorce or to reach the question whether the New York judgment was entitled to full faith and credit in the Nevada proceedings. No issue as to the custody of the child was raised either in the court below or in this Court. The judgment is affirmed. 6 Affirmed. 7 Mr. Justice FRANKFURTER dissents for the reasons stated in his dissenting opinion in Estin v. Estin, supra. 8 Mr. Justice JACKSON dissents for the reasons set forth in his opinion in Estin v. Estin, supra.
1011
334 U.S. 385 68 S.Ct. 1156 92 L.Ed. 1460 TOOMER et al.v.WITSELL et al., No. 415. Argued Jan. 13, 14, 1948. Decided June 7, 1948. Rehearing Denied Oct. 11, 1948. See 69 S.Ct. 12. Appeal from the United States District Court for the Eastern District of South Carolina. [Syllabus from pages 385-387 intentionally omitted] Messrs. Robert E. Falligant and Aaron Kravitch, both of Savannah, Ga., for appellants. Messrs. David W. Robinson, of Washington, D.C., and J. Monroe Fulmer, of Columbia, S.C., for appellees. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 This is a suit to enjoin as unconstitutional the enforcement of several South Carolina statutes governing commercial shrimp fishing in the three-mile maritime belt off the coast of that State. Appellants, who initiated the action, are five individual fishermen, all citizens and residents of Georgia, and a non-profit fish dealers' organization incorporated in Florida. Appellees are South Carolina officials charged with enforcement of the statutes. 2 The three-judge Federal District Court which was convened to hear the case1 upheld the statutes, denied an injunction and dismissed the suit.2 On direct appeal from that judgment3 we noted probable jurisdiction. 3 The fishery which South Carolina attempts to regulate by the statutes in question is part of a larger shrimp fishery extending from North Carolina to Florida.4 Most of the shrimp in this area are of a migratory type, swimming south in the late summer and fall and returning northward in the spring. Since there is no federal regulation of the fishery, the four States most intimately concerned have gone their separate ways in devising conservation and other regulatory measures. While action by the States has followed somewhat parallel lins , efforts to secure uniformity throughout the fishery have by and large been fruitless.5 Because of the integral nature of the fishery, many commercial shrimpers, including the appellants, would like to start trawling off the Carolinas in the summer and then follow the shrimp down the coast to Florida. Each State has been desirous of securing for its residents the opportunity to shrimp in this way, but some have apparently been more concerned with channeling to their own residents the business derived from local waters. Restrictions on non-resident fishing in the marginal sea, and even prohibitions against it, have now invited retaliation to the point that the fishery is effectively partitioned at the state lines; bilateral bargaining on an official level has come to be the only method whereby any one of the States can obtain for its citizens the right to shrimp in waters adjacent to the other States.6 4 South Carolina forbids trawling for shrimp in the State's inland waters,7 which are the habitat of the young shrimp for the first few months of their life. It also provides for a closed season in the three-mile maritime belt during the spawning season, from March 1 to July 1.8 The validity of these regulations is not questioned. 5 The statutes appellants challenge relate to shrimping during the open season in the three-mile belt: Section 3300 of the South Carolina Code provides that the waters in that area shall be 'a common for the people of the State for the taking of fish.'9 Section 3374 imposes a tax of 1/8¢ a pound on green, or raw, shrimp taken in those waters.10 Section 3379, as amended in 1947, requires payment of a license fee of $25 for each shrimp boat owned by a resident, and of $2,500 for each one owned by a non-resident.11 Another statute, not integrated in the Code, conditions the issuance of non-resident licenses for 1948 and the years thereafter on submission of proof that the applicants have paid South Carolina income taxes on all profits from operations in that State during the preceding year.12 And § 3414 requires that all boats licensed to trawl for shrimp in the State's waters dock at a South Carolina port and unload, pack, and stamp their catch 'before shipping or transporting it to another State or the waters thereof.'13 Violation of the fishing laws enti ls suspension of the violator's license as well as a maximum of a $1,000 fine, imprisonment for a year, or a combination of a $500 fine and a year's imprisonment.14 6 First. We are confronted at the outset with appellees' contention, rejected by the District Court, that injunctive relief is inappropriate in this case, regardless of the validity of the challenged statutes, since appellants failed to show the imminence of irreparable injury and did not come into court with clean hands. 7 As to the corporate appellant, we agree with the appellees that there has been no showing that enforcement of the statute would work an irreparable injury. The record shows only that the corporation is an association of fish dealers and that it operates no fishing boats. Indeed, neither the record nor the appellants' brief sheds any light on how the statutes affect the corporation, let alone how their enforcement will cause it irreparable injury. Under such circumstances, the corporation has no standing to ask a federal court to take the extraordinary step of restraining enforcement of the state statutes. The remainder of this opinion will therefore be addressed to the individual appellants' case. 8 As to them, it is agreed that the appellees were attempting to enforce the statutes. It is also clear that compliance with any but the income tax statute would have required payment of large sums of money for which South Carolina provides no means of recovery, that defiance would have carried with it the risk of heavy fines and long imprisonment, and that withdrawal from further fishing until a test case had been taken through the South Carolina courts and perhaps to this Court would have resulted in a substantial loss of business for which no compensation could be obtained. Except as to the income tax statute, we conclude that appellants sufficiently showed the imminence of irreparable injury for which there was no plain, adequate and complete remedy at law.15 9 Appellants' position on the income tax statute16 is that it is unconstitutional for South Carolina to require Georgia residents to pay South Carolina income taxes on profits made from operations in South Carolina waters. Another South Carolina statute, however, permits any taxpayer who believes a tax to be 'illegal for any cause' to pay the tax under protest and then sue in a state court to recover the amounts so paid.17 In the absence of any showing by appellants that they could not take advantage of this procedure to raise their constitutional objections to the tax, we cannot say that they do not have an adequate remedy at law. 10 Some of the individual appellants had previously been convicted of shrimping out of season and in inland waters. The District Court held that this previous misconduct, not having any relation to the constitutionality of the challenged statutes, did not call for application of the clean hands maxim. We agree. 11 Second. The appellants too press a contention which, if correct, would dispose of the case. They urge that South Carolina has no jurisdiction over coastal waters beyond the low-water mark. In the court below United States v. California, 1947, 332 U.S. 19, 67 S.Ct. 1658, 91 L.Ed. 1889, was relied upon for this proposition. Here appellants seem to concede, and correctly so, that such is neither the holding nor the implication of that case; for in deciding that the United States, where it asserted its claim, had paramount rights in the three-mile belt, the Court pointedly quoted and supplied emphasis to a statement in Skiriotes v. Florida, 1941, 313 U.S. 69, 75, 61 S.Ct. 924, 928, 85 L.Ed. 1193, that 'It is also clear that Florida has an interest in the proper maintenance of the sponge fishery and that the (state) stt ute so far as applied to conduct within the territorial waters of Florida, in the absence of conflicting federal legislation, is within the police power of the State.'18 12 Since the present case evinces no conflict between South Carolina's regulatory scheme and any assertion of federal power, the District Court properly concluded that the State has sufficient interests in the shrimp fishery within three miles of its coast so that it may exercise its police power to protect and regulate that fishery.19 13 It does not follow from the existence of power to regulate, however, that such power need not be exercised within the confines of generally applicable Constitutional limitations. In the view we take, the heart of this case is whether South Carolina's admitted power has been so exercised. We now proceed to various aspects of that problem. 14 Third. Appellants contend that § 3374,20 which imposes a tax of 1/8¢ a pound on green shrimp taken in the maritime belt, taxes imports and unduly burdens interstate commerce in violation of §§ 8 and 10 of Art. I of the Constitution. We agree with the court below that there is no merit in this position. 15 Since South Carolina has power to regulate fishing in the three-mile belt, at least where the federal government has made no conflicting assertion of power, fish caught in that belt cannot be considered 'imports' in a realistic sense of the word. Appellants urge, however, that the tax is imposed on shrimp caught outside, as well as within the three-mile limit. On its face the statute has no such effect, and appellants call our attention to no South Carolina decision so interpreting it. Since we do not have the benefit of interpretation by the State courts and since this suit for an injunction does not present a concrete factual situation involving the application of the statute to shrimping beyond the imaginary three-mile line, it is inappropriate for us to rule in the abstract on the extent of the State's power to tax in this regard.21 16 Nor does the statute violate the commerce clause. It does not discriminate against interstate commerce in shrimp, and the taxable event, the taking of shrimp, occurs before the shrimp can be said to have entered the flow of interstate commerce.22 17 Fourth. Appellants' most vigorous attack is directed at § 337923 which, as amended in 1947, requires non-residents of South Carolina to pay license fees one hundred times as great as those which residents must pay. The purpose and effect of this statute, they contend, is not to conserve shrimp, but to exclude non-residents and thereby create a commercial monopoly for South Carolina residents. As such, the statute is said to violate the privileges and immunities clause of Art. IV, § 2, of the Constitution and the equal protection clause of the Fourteenth Amendment. 18 Article IV, § 2, so far as relevant reads as follows: 19 'The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.' 20 The primary purpose of this clause, like the clauses between which it is located—those relating to full faith and credit and to interstate extradition of fugitives from justice—was to help fuse into one Nation a collection of independent, sovereign States. It was designed to insure to a citizen of State A who ventures into State B the same privileges which the citizens of State B enjoy.24 For protection of such equality the citizen of State A was not to be restricted to the uncertain remedies afforded by diplomatic processes and official retaliation.25 'Indeed, without some provision of the kind removing from the citizens of each State the disabilities of alienage in the other States, and giving them equality of privilege with citizens of those States, the Republic would have constituted little more than a league of States; it would not have constituted the Union which now exists. Paul v. Virginia, 1868, 8 Wall. 168, 180, 19 L.Ed. 357. 21 In line with this underlying purpose, it was long ago decided that one of the privileges which the clause guarantees to citizens of State A is that of doing business in State B on terms of substantial equality with the citizens of that State.26 22 Like many other constitutional provisions, the privileges and immunities clause is not an absolute. It does bar discrimination against citizens of other States where there is no substantial reason for the discrimination beyond the mere fact that they are citizens of other States. But it does not preclude disparity of treatment in the many situations where there are perfectly valid independent reasons for it. Thus the inquiry in each case must be concerned with whether such reasons do exist and whether the degree of discrimination bears a close relation to them.27 The inquiry must also, of course, be conducted with due regard for the principal that the States should have considerable leeway in analyzing local evils and in prescribing appropriate cures. 23 With these factors in mind, we turn to a consideration of the constitutionality of § 3379. 24 By that statute South Carolina plainly and frankly discriminates against non-residents, and the record leaves little doubt but what the discrimination is so great that its practical effect is virtually exclusionary.28 This the appellees do not seriously dispute. Nor do they argue that since the statute is couched in terms of residence it is outside the scope of the privileges and immunities clause, which speaks of citizens. Such an argument, we agree, would be without force in this case.29 25 As justification for the statute, appellees urge that the State's obvious purpose was to conserve its shrimp supply, and they suggest that it was designed to head off an impending threat of excessive trawling. The record casts some doubt on these statements.30 But in any event, appellees' argument assumes that any means adopted to attain valid objectives necessarily squares with the privileges and immunities clause. It overlooks the purpose of that clause, which, as indicated above, is to outlaw classifications based on the fact of non-citizenship unless there is something to indicate that non-citizens constitute a peculiar source of the evil at which the statute is aimed. 26 In this connection appellees mention, without further elucidation, the fishing methods used by non-residents, the size of their boats, and the allegedly greater cost of enforcing the laws against them. One statement in the appellees' brief might also be construed to mean that the State's conservation program for shrimp requires expenditure of funds beyond those collected in license fees—funds to which residents and not non-residents contribute. Nothing in the record indicates that non-residents use larger boats or different fishing methods than residents, that the cost of enforcing the laws against them is appreciably greater, or that any substantial amount of the State's general funds is devoted to shrimp conservation. But assuming such were the facts, they would not necessarily support a remedy so drastic as to be a near equivalent of total exclusion. The State is not without power, for example, to restrict the type of equipment used in its fisheries,31 to graduate license fees according to the size of the boats,32 or even to charge non-residents a differential which would merely compensate the State for any added enforcement burden they may impose or for any conservation expenditures from taxes which only residents pay. We would be closing our eyes to reality, we believe, if we concluded that there was a reasonable relationship between the danger represented by non-citizens, as a class, and the severe discrimination practiced upon them. 27 Thus, § 3379 must be held unconstitutional unless commercial shrimp fishing in the maritime belt falls within some unexpressed exception to the privileges and immunities clause. 28 Appellees strenously urge that there is such an exception. Their argument runs as follows: Ever since Roman times, animals ferae naturae, not having been reduced to individual possession and ownership, have been considered as res nullius or part of the 'negative community of interests' and hence subject to control by the sovereign or other governmental authority. More recently this thought has been expressed by saying that fish and game are the common property of all citizens of the governmental unit and that the government, as a sort of trustee, exercises this 'ownership' for the benefit of its citizens. In the case of fish, it has also been considered that each government 'owned' both the beds of its lakes, streams, and tidewaters and the waters themselves; hence it must also 'own' the fish within those waters. Each government may, the argument continues, regulate the corpus of the trust in the way best suited to the interests of the beneficial owners, its citizens, and may discriminate as it sees fit against persons lacking any beneficial interest. Finally, it is said that this special property interest, which nations and similar governmental bodies have traditionally had, in this country vested in the colonial governments and passed to the individual States. 29 Language frequently repeated by this Court appears to lend some support to this analysis.33 But in only one case, McCready v. Virginia, 1876, 94 U.S. 391, 24 L.Ed. 248, has the Court actually upheld State action discriminating against commercial fishing or hunting by citizens of other States where there were advanced no persuasive independent reasons justifying the discrimination.34 In that case the Court sanctioned a Virginia statute applied so as to prohibit citizens of other States, but not Virginia citizens, from planting oysters in the tidal waters of the Ware River. The right of Virginians in Virginia waters, the Court said, was 'a property right, and not a mere privilege or immunity of citizenship.' And an analogy was drawn between planting oysters in a river bed and planting corn in state-owned land. 30 It will be noted h at there are at least two factual distinctions between the present case and the McCready case. First, the McCready case related to fish which would remain in Virginia until removed by man. The present case, on the other hand, deals with free-swimming fish which migrate through the waters of several States and are off the coast of South Carolina only temporarily. Secondly, the McCready case involved regulation of fishing in inland waters, whereas the statute now questioned is directed at regulation of shrimping in the marginal sea. 31 Thus we have, on the one hand, a single precedent which might be taken as reading an exception into the privileges and immunities clause and, on the other, a case which does not fall directly within that exception. Viewed in this light, the question before us comes down to whether the reasons which evoked the exception call for its extension to a case involving the factual distinctions here presented. 32 However satisfactory the ownership theory explains the McCready case, the very factors which make the present case distinguishable render that theory but a weak prop for the South Carolina statute. That the shrimp are migratory makes apposite Mr. Justice Holmes' statement in Missouri v. Holland, 1920, 252 U.S. 416, 434, 40 S.Ct. 382, 384, 64 L.Ed. 641, 11 A.L.R. 984, that 'To put the claim of the State upon title is to lean upon a slender reed. Wild birds are not in the possession of anyone; and possession is the beginning of ownership.' Indeed, only fifteen years after the McCready decision, a unanimous Court indicated that the rule of that case might not apply to free-swimming fish.35 The fact that it is activity in the three-mile belt which the South Carolina statute regulates is of equal relevance in considering the applicability of the ownship doctrine. While United States v. California, 1947, 332 U.S. 19, 67 S.Ct. 1658, 91 L.Ed. 1889, as indicated above, does not preclude all State regulation of activity in the marginal sea, the case does hold that neither the thirteen original colonies nor their successor States separately acquired 'ownership' of the three-mile belt.36 33 The whole ownership theory, in fact, is now generally regarded as but a fiction expressive in legal shorthand of the importance to its people that a State have power to preserve and regulate the exploitation of an important resource.37 And there is no necessary conflict between that vital policy consideration and the constitutional command that the State exercise that power, like its other powers, so as not to discriminate without reason against citizens of other States. 34 These considerations lead us to the conclusion that the McCready exception to the privileges and immunities clause, if such it be, should not be expanded to cover this case. 35 Thus we hold that commercial shrimping in the marginal sea, like other common callings, is within the purview of the privileges and immunities clause. And since we have previously concluded that the reasons advanced in support of the statute do not bear a reasonable relationship to the high degree of discrimination practiced upon citizens of other States, it follows that § 3379 violates Art. IV, § 2, of te Constitution. 36 Appellants maintain that by a parity of reasoning the statute also contravenes the equal protection clause of the Fourteenth Amendment. That may well be true, but we do not pass on this argument since it is unnecessary to disposition of the present case. 37 Fifth. Appellants contend that § 3414,38 which requires that owners of shrimp boats fishing in the maritime belt off South Carolina dock at a South Carolina port and unload, pack, and stamp their catch (with a tax stamp) before 'shipping or transporting it to another state,' burdens interstate commerce in shrimp in violation of Art. I, § 8, of the Constitution. 38 The record shows that a high proportion of the shrimp caught in the waters along the South Carolina coast, both by appellants and by others, is shipped in interstate commerce. There was also uncontradicted evidence that appellants' costs would be materially increased by the necessity of having their shrimp unloaded and packed in South Carolina ports rather than at their home bases in Georgia where they maintain their own docking, warehousing, refrigeration and packing facilities. In addition, an inevitable concomitant of a statute requiring that work be done in South Carolina, even though that be economically disadvantageous to the fishermen, is to divert to South Carolina employment and business which unight otherwise go to Georgia; the necessary tendency of the statute is to impose an artificial rigidity on the economic pattern of the industry. 39 Appellees do not contest the fact that the statute thereby burdens, to some extent at least interstate commerce in shrimp caught in waters off the South Carolina coast. Again, however, they rely on the fact that the commerce affected is in fish rather than some other commodity. They urge that South Carolina, because of its ownership of the shrimp, could constitutionally prohibit all shipments to other States. It follows, they imply, that the State could impose lesser restrictions, such as those here at issue, on out-of-state shipments. 40 There is considerable authority, starting with Geer v. Connecticut, 1896, 161 U.S. 519, 16 S.Ct. 600, 40 L.Ed. 793, to support the contention that a State may confine the consumption of its fish and game wholly within the State's limits. We need not pause to consider whether this power extends to free-swimming fish in the three-mile belt, for even as applied to fish taken in inland waters it has been held that where a State did not exercise its full power, but on the contrary permitted shipments to other States, it could not at the same time condition such shipments so as to burden interstate commerce. In Foster-Fountain Packing Co. v. Haydel, 1928, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147, the Court held it was an abuse of discretion for a district court not to enter an order temporarily enjoining, as an unconstitutional burden on interstate commerce, enforcement of a Louisiana statute which permitted the shipment of shrimp from Louisiana to other States only if the heads and hulls had previously been removed. In distinguishing the Geer case, the following comment was made: 41 'As the representative of its people, the state might have retained the shrimp for consumption and use therein. * * * But by permitting its shrimp to be taken and all the products thereof to be shipped and sold in interstate commerce, the state necessarily releases its hold and, as to the shrimp so taken, definitely terminates its control. Clearly such authorization and the taking in pursuance thereof put an end to the trust upon which the state is deemed to own or control the shrimp for the benefit of its people. And those taking the shrimp under the authority of the act necessarily thereby become entitled to the rights of private ownership and the protection of the commerce clause.'39 42 In Johnson v. Haydel, 1928, 278 U.S. 16, 49 S.Ct. 6, 73 L.Ed. 155, the same conclusion was reache, on the basis of the Foster-Fountain Packing Co. case, as to a similar statute relating to oysters. 43 Similarly in the present case, South Carolina has not attempted to retain for the use of its own people the shrimp caught in the marginal sea. Indeed, the State has been eager to stimulate interstate shipments and sales as a means of increasing the employment and income of its shrimp industry.40 Thus even if we assume that South Carolina could retain for local consumption shrimp caught in the maritime belt to the same extent as if they were taken in inland waters, the Geer case would not support § 3414. 44 In upholding this statute, the court below adduced a reason not advanced by appellees, that the requirements as to docking, unloading, packing, and affixing a tax stamp were a proper means of insuring collection of the 1/8¢ a pound tax.41 But the importance of having commerce between the forty-eight States flow unimpeded by local barriers persuades us that State restrictions inimical to the commerce clause should not be approved simply because they facilitate in some measure enforcement of a valid tax. 45 Thus we hold that § 3414 violates the commerce clause of Art. I, § 8 of the Constitution. 46 To sum up, we hold that the District Court had jurisdiction to entertain the attacks pressed by the individual appellants, but not the corporate appellant, on all the statutes save the one relating to income taxes; that South Carolina has power, in the absence of a conflicting federal claim, to regulate fishing in the marginal sea; and that in § 3374 of the South Carolina Code, though not in §§ 3379 and 3414, the State has exercised that power in a manner consistent with restraints which the Constitution imposes upon the States. The District Court's judgment refusing equitable relief is affirmed with respect to § 3374 and the income tax statute and reversed with respect to §§ 3379 and 3414. 47 Affirmed in part and reversed in part. 48 Mr. Justice BLACK concurs in the judgment of the Court and all of the opinion except part Fifth. 49 Mr. Justice FRANKFURTER, whom Mr. Justice JACKSON, joins, concurring. 50 Barring the portion entitled Fourth I join the Court's opinion. While I agree that South Carolina has exceeded her power to control fisheries within her waters, I rest the invalidity of her attempt to do so on the Commerce Clause. The Court reaches this result by what I deem to be a misapplication of the Privileges-and-Immunities Clause of Art.I V, § 2, of the Constitution. 51 To regard any limitation upon the Privileges-and-Immunities Clause as 'some unexpressed exception' and not give any clue to the basis on which such an 'exception' may be implied is to leave the matter too much at large. It deals with the Constitution as though its various clauses were discrete and not a coherent scheme for government. Specifically, the Privileges-and-Immunities Clause, like the Contract Clause, must be put 'in its proper perspective in our constitutional framework.' East New York Savings Bank v. Hahn, 326 U.S. 230, 232, 66 S.Ct. 69, 70, 90 L.Ed. 34, 160 A.L.R. 1279. 52 Like other provisions of the Constitution, the Clause whereby 'The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States' must be read in conjunction with the Tenth Amendment to the Constitution. This clause presupposes the continued retention by the States of powers that historically belonged to the States, and were not explicitly given to the central government or withdrawn from the States. I think it is fair to summarize the decisions which have applied Art. IV, § 2, by saying that they bar a State from penalizing the citizens of other States by subjecting them to heavier taxation merely because they are such citizens or by discriminating against citizens of other States in the pursuit of ordinary livelihoods in competition with local citizens. It is not conceivable that the framers of the Constitution meant to obliterate all special relations between a State and its citizens. This Clause does not touch the right of a State to conserve or utilize its resources on behalf of its own citizens, provided it uses these resources within the State and does not attempt a control of the resources as part of a regulation of commerce between the States. A State may care for its own in utilizing the bounties of nature within her borders because it has technical ownership of such bounties or, when ownership is in no one, because the State may for the common good exercise all the authority that technical ownership ordinarily confers. 53 When the Constitution was adopted, such, no doubt, was the common understanding regarding the power of States over its fisheries, and it is this common understanding that was reflected in McCready v. Virginia, 94 U.S. 391, 24 L.Ed. 248. The McCready case is not an isolated decision to be looked at askance. It is the symbol of one of the weightiest doctrines in our law. It expressed the momentum of legal history that preceded it, and around it in turn has clustered a voluminous body of rulings. Not only has a host of State cases applied the McCready doctrine as to the power of States to control their game and fisheries for the benefit of their own citizens, but in our own day this Court formulated the amplitude of the McCready doctrine by referring to 'the regulation or the distribution of the public domain, or of the common property or resources of the people of the state, the enjoyment of which may be limited to its citizens as against both aliens and the citizens of other states.' Truax v. Raich, 239 U.S. 33, 39, 40, 36 S.Ct. 7, 10, 60 L.Ed. 131, L.R.A.1916D, 545, Ann.Cas.1917B, 283. 54 But a State cannot project its powers over its own resources by seeking to control the channels of commerce among the States. It is one thing to say that a food supply that may be reduced to control by a State for feeding its own people should be only locally consumed. The State has that power and the Privileges-and-Immunities Clause is no restriction upon its exercise. It is a wholly different thing for the State to provide that only its citizens shall be engaged in commerce among the States, even though based on a locally available food supply. That is not the exercise of the basic right of a State to feed and maintain and give enjoyment to its own people. When a State regulates the sending of products across State lines we have commerce among the States as to which State intev ention is subordinate to the Commerce Clause. That is the nub of the decision in Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 49 S.Ct. 1, 73 L.Ed. 147. South Carolina has attempted such regulation of commerce in shrimp among the States. In doing so she has exceeded the restrictions of the Commerce Clause. 55 Mr. Justice RUTLEDGE, concurring. 56 I agree with the result and the Court's opinion, subject to one interpretation of qualification of the opinion's Fifth part. 57 The requirement that owners of boats fishing in the maritime belt dock at a South Carolina port, unload, pack, and stamp their catch (for tax purposes), before 'shipping or transporting it to another state,' is not merely a regulation of commerce burdening it in the sense of materially increasing the shipper's costs. Many valid regulations of commerce do this. The regulation in question goes farther. It is aimed in terms directly at interstate commerce alone, and thus would seem to be discriminatory in intent and effect upon that commerce. Moreover, in my opinion, it is of such a character that, if applied, for all practical purposes it would block the commerce. 58 Since it was exactly that sort of state regulation the commerce clause was designed to strike down, I agree that this one cannot stand. The same considerations I also think would be applicable to nullify the license fees levied against nonresidents, since upon the record their transportation of catches would seem to be exclusively in interstate commerce, or practically so. 1 The court was convened pursuant to § 266 of the Judicial Code, 28 U.S.C. § 380, 28 U.S.C.A. § 380. 2 1947, 73 F.Supp. 371. 3 The appeal is authorized by § 266 of the Judicial Code, 28 U.S.C. § 380, 28 U.S.C.A. § 380. 4 See Johnson and Lindner, Shrimp Industry of the South Atlantic and Gulf States (U.S. Dept. of Commerce, Bureau of Fisheries Investigational Rep. No. 21, 1934); Annual Rep. of S.C. State Board of Fisheries (1946). 5 At least three of the States (Florida, Georgia, and South Carolina) belong to the Atlantic States Marine Fisheries Commission, one of the principal aims of which is to secure the enactment of uniform fisheries laws. The Commission was established pursuant to an interstate compact which has been ratified by at least thirteen eastern States. Its duties, however, are largely consultive and advisory, and to date its efforts have produced little in the way of concrete results insofar as the South Altantic shrimp fishery is concerned. See 56 Stat. 267 (1942); Fla.Stat.Ann. § 374.43; Ga.Code Ann. § 45-1001 et seq. (Supp.1947); S.C.Code Ann. (1944 Supp.) § 1776-1; Annual Rep. of the S.C. State Board of Fisheries (1943); id. (1944); id. (1945); id. (1946). 6 See Fla.Stat.Ann. § 374.14(3), as amended by 1947 Gen.Laws of Fla., Act 163, c. 23777; Ga.Code Ann. §§ 45-216, 45-217 (1937); N.C.Gen.Stat.Ann. § 113-238, as amended 1947 Session Laws of N.C., c. 256; S.C. Acts of 1947, Act 281, §§ 1, 2, 5. See also statements by the S.C. State Planning Board that 'In revising these (shrimp) laws * * * nonresident licenses (should be) placed on a par or reciprocal basis with those of other states in the South Atlantic group' and 'Under existing regulations our fishermen are discriminated against.' S.C. State Planning Board Bull No. 14, p. 59 (1944). 7 S.C.Code Ann. § 3410 (Supp. 1944). 8 S.C.Code Ann. § 3408. 9 'The waters and bottoms of the bays, rivers, creeks and marshes within the State or within three miles of any point along low water mark on the coast thereof, not heretofore conveyed by grant from the Legislature or lawful compact with the State, shall continue and remain as a common for the people of the State for the taking of fish * * *.' 10 'The following fisheries' tax is hereby imposed upon all fish or fisheries products taken or canned, shucked or shipped for market, to-wit * * * on each pound of green shrimp, one-eighth of one cent. * * *' 11 Prior to 1947 there was imposed on resident and non-resident shrimpers alike a boat tax of $1.50 per ton; a personal license tax of $5; and a tax of $5 for each shrimp trawl net. S.C.Code Ann. §§ 3375, 3376, 3379. These taxes, with the possible exception of § 3375 imposing a boat tax graduated by tonnage, apparently remain in effect and, in addition, § 3379 was amended as follows: '* * * All owners of shrimp boats, who are residents of the State of South Carolina shall take out a license for each boat owned by him, and said license shall be Twenty-five ($25.00) dollars per year, and all owners of shrimp boats who are non-residents of the State of South Carolina, and who have had one or more boats licensed in South Carolina during each of the past three years, shall take out a license for each boat owned by him and said license shall be One hundred and fifty ($150,00) dollars per year, and all owners of shrimp boats who are nonresidents of the State of South Carolina and who have not had one or more boats licensed during each of the past three years, shall take out a license for each boat owned by him and said license shall be Two thousand five hundred ($2,500.00) dollars per year.' S.C. Acts of 1947, Act 281, § 1. The appellants cannot qualify for $150 licenses and hence are subject to the $2,500 provision. As introduced in the legislature and passed by the South Carolina House of Representatives, the bill to amend § 3379 did not contain the $150 provision. That provision was inserted by amendment in the Senate at the instance of a senator from Beaufort County, which is the coastal county adjoining Georgia. See House Bill 555; Senate Bill 576; Senate Journal No. 69, May 9, 1947, pp. 53-5; Charleston News and Courier, May 17, 1947, p. 1, cols. 2-3. Other parts of the same 1947 statute, not attacked in this case, limit to 100 the number of non-resident boats which may be licensed and forbid altogether the issuance of licenses, even on payment of the $2,500 fee, to residents of States which do not grant licenses to fish in their waters to South Carolina residents at the same or a lower fee. Id. §§ 2, 5. 12 'The Board of Fisheries, before issuing any non-resident licenses in the year 1948 and thereafter, shall require proof that the owner of the non-resident boat has paid all income taxes due to the State of South Carolina for profits made from operations in South Carolina during the preceding year.' Id. § 3. 13 'All boats licensed by this State to trawl for shrimp in the waters of the State of South Carolina shall land or dock at some point in South Carolina, and shall unload their catch of shrimp, and pack and properly stamp the same before shipping or transporting it to another State or the waters thereof. * * *' The stamping refers to tax stamps. 14 S.C. Acts of 1947, Act 281, § 4; S.C. Code Ann. §§ 3407, 3414. 15 Appellees stress American Federation of Labor v. Watson, 1946, 327 U.S. 582, 66 S.Ct. 761, 90 L.Ed. 873. We think the doctrine of that case applicable to one of the arguments made against § 3374, supra note 10. See the third division of this opinion, infra, 334 U.s. at page 394, 68 S.Ct. at page 1161. As to all the other statutes except that relating to state income taxes, however, we agree with the District Court that there is neither need for interpretation of the statutes nor any other special circumstance requiring the federal court to stay action pending proceedings in the State courts. 16 See note 12 supra. 17 S.C. Code Ann. § 2469. This section provides that a taxpayer may institute suit to recover the amounts paid within thirty days of the payment under protest. See Argent Lumber Co. v. Query, 1935, 178 S.C. 1, 5, 182 S.E. 93, 94. 18 1947, 332 U.S. 19, 38, 67 S.Ct. 1658, 1668, 91 L.Ed. 1889. 19 (7) Appellants also contend that until 1924 South Carolina had itself limited its boundaries by the low-water mark and had asserted no power over the maritime belt. But, as the District Court held, the statute cited by appellants need not be given the effect which they would attribute to it, and even if it were so construed, it did not impose a constitutional limit on the power of future legislatures. 20 See note 10 supra. 21 See American Federation of Labor v. Watson, 1946, 327 U.S. 582, 66 S.Ct. 761, 90 L.Ed. 873; cf. Rescue Army v. Municipal Court, 1947, 331 U.S. 549, 67 S.Ct. 1409, 91 L.Ed. 1666. 22 See Hope Natural Gas Co. v. Hall, 1927, 274 U.S. 284, 47 S.Ct. 639, 71 L.Ed. 1049; Lacoste v. Dept. of Conservation, 1924, 263 U.S. 545, 44 S.Ct. 186, 68 L.Ed. 437; Oliver Iron Mining Co. v. Lord, 1923, 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929; Heisler v. Thomas Colliery Co., 1922, 260 U.S. 245, 43 S.Ct. 83, 67 L.Ed. 237; Coe v. Errol, 1886, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715. 23 See note 11 supra. 24 See Paul v. Virginia, 1868, 8 Wall. 168, 180, 181, 19 L.Ed. 357; Travis v. Yale & Towne Mfg. Co., 1920, 252 U.S. 60, 78, 40 S.Ct. 228, 231, 64 L.Ed. 460. 25 Travis v. Yale & Towne Mfg. Co., supra note 24, 252 U.S. at page 82, 40 S.Ct. at page 232, 64 L.Ed. 460. 26 Ward v. Maryland, 1870, 12 Wall. 418, 20 L.Ed. 449; see also Chalker v. Birmingham & N.W.R. Co., 1919, 249 U.S. 522, 39 S.Ct. 366, 63 L.Ed. 748; Shaffer v. Carter, 1920, 252 U.S. 37, 52, 53, 40 S.Ct. 221, 225, 64 L.Ed. 445. 27 See Travis v. Yale & Towne Mfg. Co., 1920, 252 U.S. 60, 79, 40 S.Ct. 228, 231, 64 L.Ed. 460. 28 The parties stipulated that in 1946, the year before non-residents had to pay higher fees than residents, 100 non-resident boats were licensed and that in 1947 only 15 such boats were licensed. Even those 15 were presumably owned by persons who had fished in South Carolina waters the three preceding years and were thus eligible for $150 licenses, since the appellees conceded on oral argument here that no $2,500 licenses had been taken out. See note 11 supra. 29 See Blake v. McClung, 1898, 172 U.S. 239, 247, 19 S.Ct. 165, 168, 43 L.Ed. 432; Chalker v. Birmingham & N.W.R. Co., 1919, 249 U.S. 522, 39 S.Ct. 366, 63 L.Ed. 748; Travis v. Yale & Towne Mfg. Co., 1920, 252 U.S. 60, 79, 40 S.Ct. 228, 231, 64 L.Ed. 40 . 30 It is relevant to note that the statute imposes no limitation on the number of resident boats which may be licensed, and it was stipulated that while the number of non-resident boats fell from 100 to 15 between 1946 and 1947, the total number of boats licensed increased during that time from 254 to 271. The reports of the State Board of Fisheries for several years back, while expressing solicitude as to the need for conservation measures, reveal equal concern with methods for increasing the market for shrimp—by advertising, air shipments, etc.—and contain frequent references to the economic importance of the shrimp industry to the State. The 1945 report, for example, said that 'The shrimp business in our State is quite an industry, it employs numbers of men and boat crews spend large sums of money on repairs, gasoline, oil and food besides the money that is spent by the individuals personally.' In connection with the possibility of air shipments to large consuming centers such as New York, the same report said that air transportation 'should increase the consumption of same (i.e., seafoods) in large quantities; it will also create a much greater demand for shrimp and seafoods all over the universe, and it will place them in sections where they are very seldom consumed with the result that many more people will get sold on the idea of eating same.' And the 1946 report's section on shrimp concluded with the statement that 'To be able to make this report is certainly a pleasure to the State Board of Fisheries as we are able to show that the catch of shrimp this season was nearly twice as large as in the previous year.' 31 See Fla. Stat. Ann. § 374.14(5) (Supp. 1946); 1947 Gen.Laws of Fla., Act 654, F.S.A. §§ 374.15—12 to 374.15—15; Ga.Code Ann. § 45-109 (1937); Johnson and Lindner, Shrimp Industry of the South Ata ntic and Gulf States (U.S. Dept. of Commerce, Bureau of Fisheries Investigational Rep. No. 21, 1934) 62—63. 32 South Carolina has itself imposed such a graduated tax in years past. S.C. Code Ann. § 3375 (1942). See also Ga.Code Ann. § 45-210 (1937); N.C. Gen. Stat. Ann. § 113-165 (Supp. 1945). 33 The most extended exposition appears in the majority opinion in Geer v. Connecticut, 1896, 161 U.S. 519, 16 S.Ct. 600, 40 L.Ed. 793. 34 Appellees rely also upon Patsone v. Pennsylvania, 1914, 232 U.S. 138, 34 S.Ct. 281, 58 L.Ed. 539, and Haavik v. Alaska Packers' Ass'n. 1924, 263 U.S. 510, 44 S.Ct. 177, 68 L.Ed. 414. The Patsone case involved a 1909 Pennsylvania statute, P.L. 466, forbidding resident aliens to kill game or to possess firearms useful for that purpose. On the record before it, the Court concluded that it could not say that the Pennsylvania legislature was not warranted in assuming that resident aliens were at that time 'the peculiar source of the evil that it desired to prevent.' (232 U.S. 138, 34 S.Ct. 282.) The statute was therefore held not to violate the Fourteenth Amendment. But the theory of the case was that there was a substantial reason for the discrimination beyond the mere fact of alienage. The Haavik case involved the validity, under an Act of Congress, of an Alaskan statute imposing on nonresidents, but not residents, a $5 fishing license fee. In upholding the statute the Court pointed out that 'We are not here concerned with taxation by a state.' (263 U.S. 510, 44 S.Ct. 178) And in considering the power of Congress to authorize such a tax, it was added that the fee was a reasonable contribution toward the protection which the local government afforded to non-residents. 35 Manchester v. Massachusetts, 1891, 139 U.S. 240, 265, 11 S.Ct. 559, 565, 35 L.Ed. 159. In that case appellant, a citizen of Rhode Island, was convicted of violating a Massachusetts statute which regulated fishing in Buzzard's Bay. The Court upheld Massachusetts' power to enact the regulation, but pointed out that the statute 'makes no discrimination in favor of citizens of Massachusetts and against citizens of other states.' Ibid. 36 332 U.S. 19, 31, 67 S.Ct. 1658, 1664, 91 L.Ed. 1889. 37 See, e.g., Pound, An Introduction to the Philosophy of Law, 197—202. The fiction apparently gained currency partly as a result of confusion between the Roman term imperium or governmental power to regulate, and dominium, or ownership. Power over fish and game was, in origin, imperium. Ibid. 38 See note 13 supra. 39 278 U.S. 1, 13, 49 S.Ct. 1, 4, 73 L.Ed. 147. 40 See note 30 supra. The District Court thought that the Foster-Fountain Packing Co. and Johnson cases had been rendered inapplicable to this case by Bayside Fish Flour Co. v. Gentry, 1936, 297 U.S. 422, 56 S.Ct. 513, 80 L.Ed. 772. The California statute which the Court upheld in that case, however, was of a far different type than the one with which we are now dealing. The statute in effect limited the number of fish which could be reduced to fish flour as apart from those processed or sold in other forms. In rejecting the appellant's argument that the statute unconstitutionally burdened interstate commerce, the Court said that 'It in no way limits or regulates * * * the movement of the sardines from outside into the state, or the movement of the manufactured product from the state to the outside. The act regulates only the manufacture within the state. Its direct operation, intended and actual, is wholly local.' 297 U.S. 422, 425, 426, 56 S.Ct. 513, 515, 80 L.Ed. 772. 41 The District Court also said that the requirements of § 3414 were a reasonable means of maintaining the good reputation of products originating in South Carolina. But the appellees do not pretend that the statute results in better preservation of the shrimp in healthful form. Moreover, since shrimp caught off the shores of South Carolina are indistinguishable from those taken off the shores of neighboring States, purchasers would have no reason to suppose that shrimp packed in Georgia, if inferior, were products of South Carolina.
12
334 U.S. 495 68 S.Ct. 1107 92 L.Ed. 1533 UNITED STATESv.COLUMBIA STEEL CO. et al. No. 461. Argued April 29, 30, 1948. Decided June 7, 1948. Rehearing Denied June 21, 1948. [Syllabus from pages 495-497 intentionally omitted] Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for appellant. Mr. Nathan L. Miller, of New York City, for appellees Columbia Steel Co. and others. Mr. Alfred Wright, of Los Angeles, Cal., for appellee Consolidated steel corp. Mr. Justice REED delivered the opinion of the Court. 1 The United States brings this suit under § 4 of the Sherman Act to enjoin United States Steel Corporation and its subsidiaries from purchasing the assets of the largest independent steel fabricator on the West Coast on the ground that such acquisition would violate §§ 1 and 2 of the Sherman Act.1 The complaint, filed on February 24, 1947, charged that if the contract of sale between United States Steel and Consolidated Steel Corporation were carried out, competition in the sale of rolled steel products and in fabricated steel products would be restrained, and that the contract indicated an effort on the part of United States Steel to attempt to monopolize the market in fabricated steel products. After a trial before a single judge in the district court, judgment was entered in favor of the defendants, and the government brought the case here by direct appeal. 32 Stat. 823, 15 U.S.C. § 29, 15 U.S.C.A. § 29. 2 The underlying facts in the case are set forth in the findings of the trial court, and with a few exceptions those findings are not disputed by the government. We rely chiefly on the findings to indicate the nature of the commerce here in question and the extent to which competition would be affected by the challenged contract. 3 The steel production involved in this case may be spoken of as being divided into two stages: the production of rolled steel products and their fabrication into finished steel products. Rolled steel products consist of steel plates, shapes, sheets, bars, and other unfinished steel products and are in turn made from ingots by means of rolling mills. The steel fabrication involved herein may also be divided into structural fabrication and plate fabrication. Fabricated structural steel products consist of building framework, bridges, transmission towers, and similar permanent structures, and are made primarily from rolled steel shapes, although plates and other rolled steel products may also be employed. Fabricated plate products on the other hand, consist of pressure vessels, tanks, welded pipe, and similar products made principally from rolled steel plates, although shapes and bars are also occasionally used. Both plate and structural fabricated products are made to specifications for a particular purpose; fabricated products do not include standard products made by repetitive processes in the manufacture of general steel merchandise such as wire, nails, bolts, and window frames. The manufacture of such standardized finished products is not involved in this case. The facilities required for structural fabrication are quite different from those required for plate fabrication; the former require equipment for shearing, punching, drilling, assembling, and riveting or welding structural shapes where as the latter require equipment for bending, rolling, cutting, and forming the plates which go into the finished product. 4 The complaint lists four defendants: Columbia Steel Company, Consolidated Steel Corporation, United States Steel Corporation, and United States Steel Corporation of Delaware. United States Steel and its subsidiaries engage in the business of producing rolled steel products and in structural fabrication, but do no plate fabrication work. Consolidated Steel, the sale of whose assets the government seeks to enjoin, is engaged only in structural fabrication and plate fabrication. United States Steel with its subsidiaries is the largest producer of rolled steel products in the United States, with a total investment of more than a billion and a half dollars. During the ten-year period 1937 1946 United States Steel produced almost exactly a third of all rolled steel products produced in the United States, and average sales for that period were nearly a billion and a half dollars. In the five-year period 1937—1941, average sales were a little over a billion dollars. Consolidated, by contrast, had plants whose depreciated value was less than ten million dollars. During the five-year period 1937—1941, Consolidated had average sales of only twenty million dollars, and the United States Steel committee which negotiated the terms of the purchase of Consolidated estimated that Consolidated's sales in the future would run to twenty-two million dollars annually and agreed with Consolidated on a purchase price of slightly in excess of eight million dollars. During the war Consolidated produced over a billion and a half dollars worth of ships with government furnished facilities. Consolidated no longer possesses any facilities for building ships.2 5 Columbia Steel, a wholly-owned subsidiary of United States Steel, has been the largest rolled steel producer in the Pacific Coast area since 1930, with plants in Utah and California, and has also served as selling agent for other rolled steel subsidiaries of United States Steel, and for two subsidiaries of that company engaged in structural fabrication, the American Bridge Company at Pittsburgh and the Virginia Bridge Company at Roanoke, Virginia, though neither it nor any other subsidiary of United States Steel in the Consolidated market area was a fabricator of any kind. National Tube Company, another United States Steel subsidiary, sells pipe and tubing. Consolidated has structural fabricating plants nea Los Angeles and at Orange, Texas, and plate fabricating facilities in California and Arizona. Consolidated has sold its products during the past ten years in eleven states, referred to hereafter as the Consolidated market: Arizona, California, Idaho, Louisiana, Montana, Nevada, New Mexico, Oregon, Texas, Utah and Washington. It is that market which the government views as significant in determining the extent of competition between United States Steel and Consolidated. It is not the usual Pacific and Mountain States groups employed by the Census.3 United States Steel Corporation of Delaware is a subsidiary of United States Steel which renders technical assistance to other subsidiaries engaged in steel production. 6 Rolled steel products have traditionally been sold on a basing point system.4 Prior to World War II rolled steel was sold on the West Coast at a price computed on the basis of eastern basing points, even though both United States Steel and Bethlehem Steel produced rolled steel products in California. Fabricators such as Consolidated thus did not get the full benefit of their proximity to the western market. The competitive disadvantages under which western fabricators worked is illustrated by the fact that United States Steel has been the largest seller of fabricated structural steel in the Consolidated market, even though it has not fabricating plants in the area. During the ten-year period ending in 1946, 100 different concerns bid successfully in competition with United States Steel for the sale of fabricated structural products in the Consolidated market; 50 of those concerns are located outside the area. United States Steel's principal competitor as measured on a national basis, Bethlehem Steel, does have fabricating facilities in California, however, and prior to World War II United States Steel had prepared plans for the erection of fabricating facilities in California. The war made it necessary to postpone the plans. This use of eastern basing points makes past figures on rolled steel products sales from producers in the Consolidated market unreliable in determining effective competition for the future sales of rolled steel in that market. United States Steel now uses Geneva as a basing point. 7 The urgent wartime demand for steel prompted the government to construct new rolled steel plants in the West. The largest of these plants was erected at Geneva, Utah, at a cost of nearly $200,000,000, and was designed, constructed, and operated by United States Steel for the account of the government. The plant had an annual capacity of more than 1,200,000 tons of ingots, which in turn could be employed to make 700,000 tons of plates and 250,000 tons of shapes. Another large plant was erected by the government a Fontana, California. This is now operated through arrangements of private parties with the government. In January 1945 United States Steel considered the acquisition of the Geneva plant, but because of the speculative nature of the venture and attacks by people within and without the government, United States Steel decided not to submit a bid and notified the Defense Plant Corporation to that effect on August 8, 1945. Shortly thereafter the Surplus Property Administrator wrote to Benjamin F. Fairless, President of United States Steel, advising him that a bid by United States Steel would be welcomed. On May, 1, 1946, United States Steel submitted a bid for the Geneva plant of $47,500,000. The terms of the bid provided that United States Steel would spend not less than $18,000,000 of its own funds to erect additional facilities at Geneva, and $25,000,000 to erect a cold-reduction mill at Pittsburg, California, to consume 386,000 tons of hot rolled coils produced at Geneva.5 The bid estimated that a sufficient market could be found to absorb an annual production ranging from 456,000 to 600,000 tons. The bid stipulated that Geneva products would be sold with Geneva as a basing point. This would offer possibilities for a reduction in the price of rolled steel products to West Coast purchasers and their customers. The variation between 456,000 and 600,000 tons depended on the consumption of rolled steel products by users other than United States Steel's new Pittsburg plant. The bid noted that additional steel consuming manufacturing plants might be located in the West which would provide a market for additional rolled steel products. Apart from the cold-reduction mill to be erected at Pittsburg, the bid was silent as to the acquisition of fabricating facilities by United States Steel to provide a market for Geneva products. 8 On May 23, 1946, the War Assets Administration announced that the bid of United States Steel was accepted. An accompanying memorandum discussed in detail the six bids which had been received, and concluded that United States Steel's bid was the most advantageous. The other bids were found unacceptable for a number of reasons; either the bidder could offer no assurance of his financial responsibility or his ability to operate the plant, or the price offered was too low, or the bidder requested the government to lend the bidder large sums for the erection of additional facilities or to erect such facilities at government expense.6 The memorandum noted that the successful bid would 'foster the development in the West of new independent enterprise' by encouraging the location of steel-consuming manufacturing plants in the western states. 9 On June 17, 1946, the Attorney General advised the War Assets Administration that the proposed sale did not in his opinion constitute a violation of the antitrust laws, and the sale was consummated two days thereafter. The opinion of the Attorney General was requested in accordance with § 20 of the Surplus Property Act of 1944, 58 Stat. 765, 775, 50 U.S.C.A.Appendix § 1629, which requires such procedure when government plants costing more than $1,000,000 are being sold. That section provides that nothing in the Surplus Property Act 'shall impair, amend, or modify the antitrust laws or limit and prevent their application to persons' who buy property under the Act. The Attorney General noted that the ingot capacity of United States Steel had declined from 35.3% of the total national capacity in 1939 to 31.4% in 1946, and that if the Geneva plant were acquired, the percentage would be increased to 32.7%. Considering only the Pacific Coast and Mountain states, the acquisition of Geneva, the Attorney General said, would increase United States Steel's percentage of capacity in that area from 17.3% to 39%. United States Steel, however, estimated that on acquisition of Geneva it would have 51% of ingot capacity in the Pacific Coast area. On the basis of these figures construed in the light of United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, and American Tobacco Co. v. United States, 328 U.S. 781, 66 S.Ct. 1125, 90 L.Ed. 1575, the Attorney General concluded that the proposed sale, as such, would not violate the antitrust laws. The letter added that no opinion was expressed as to the legality of any acts or practices in which United States Steel might have engaged or in which it might engage in the future. See for a comparable situation United States v. United States Steel Corporation, 251 U.S. 417, 446, 40 S.Ct. 293, 297, 64 L.Ed. 343, 8 A.L.R. 1121. 10 Prior to the sale of the Geneva plant, Alden G. Roach, President of Consolidated, approached Fairless of United States Steel and indicated that he would like to sell the business of Consolidated. Roach also had conversations with representatives of Bethlehem and Kaiser with regard to the same end. Roach mentioned the subject again to Fairless in February or March of 1946, and Fairless replied that United States Steel was restudying its decision not to bid on the Geneva plant, and did not want to discuss the purchase of Consolidated until the Geneva issue was decided. After the sale of Geneva was effected in June, Fairless spoke again with Roach and arranged to have a committee from United States Steel make an investigation of the Consolidated plants in August. The committee reported that it would cost $14,000,000 and take three years to construct plants equivalent to those owned by Consolidated, and that the Consolidated properties had a depreciated value of $9,800,000. After further negotiations the parties agreed on a price of approximately $8,250,000 and a purchase agreement was executed on December 14 according to which Columbia agreed to buy the physical assets of Consolidated and four subsidiaries. Fairless testified on the witness stand that United States Steel's purpose in purchasing Consolidated was to assure a market for plates and shapes produced at Geneva, and Roach testified that Consolidated's purpose was to withdraw the stockholders' equity from the fabrication business with its cyclical fluctuations at a time when a favorable price could be realized. I. 11 The theory of the United States in bringing this suit is that the acquisition of Consolidated constitutes an illegal restraint of interstate commerce because all manufacturers except United States Steel will be excluded from the business of supplying Consolidated's requirements of rolled steel products, and because competition now existing between Consolidated and United States Steel in the sale of structural fabricated products and pipe will be eliminated. In addition, the government alleges that the acquisition of Consolidated, viewed in the light of the previous series of acquisitions by United States Steel, constitutes an attempt to monopolize the production and sale of fabricated steel products in the Consolidated market. The appellees contend that the amount of competition which will be eliminated is so insignificant that the restraint effected is a reasonable restraint not an t tempt to monopolize and not prohibited by the Sherman Act.7 On the record before us and in agreemend with the trial court we conclude that the government has failed to prove its contention that the acquisition of Consolidated would unreasonably lessen competition in the three respects charged, and therefore the proposed contract is not forbidden by § 1 of the Sherman Act. We further hold that the government has failed to prove an attempt to monopolize in violation of § 2. 12 We turn first to the charge that the proposed purchase will lessen competition by excluding producers of rolled steel products other than United States Steel from supplying the requirements of Consolidated. Over the ten-year period from 1937 to 1946 Consolidated purchased over two million tons of rolled steel products, including the abnormally high wartime requirements. Whatever amount of rolled steel products Consolidated uses in the future will be supplied insofar as possible from other subsidiaries of United States Steel, and other producers of rolled steel products will lose Consolidated as a prospective customer. 13 The parties are in sharp dispute as to the size and nature of the market for rolled steel products with which Consolidated's consumption is to be compared. The appellees argue that rolled steel products are sold on a national scale, and that for the major producers the entire United States should be regarded as the market. Viewed from this standpoint, Consolidated's requirements are an insignificant fraction of the total market, less than 1/2 of 1%. The government argues that the market must be more narrowly drawn, and that the relevant market to be considered is the elevenstate area in which Consolidated sells its products, and further that in that area by considering only the consumption of structural and plate fabricators a violation of the Sherman Act has been established. If all sales of rolled steel products in the Consolidated market are considered, Consolidated's purchases of two million tons represent a little more than 3% of the total of 60 million tons. The figure is not appreciably different if the fiv-year period 1937—41 or 1946 alone are used as the measuring periods.8 If the comparable market is construed even more narrowly, and is restricted to the consumption of plates and shapes in the Consolidated market, figures for 1937 indicate that Consolidated's consumption of plates and shapes was 13% of the total. Data are offered by the government for 1946 which are too uncertain to furnish a reliable guide.9 14 The government realizes the force of appellees' argument that rolled steel products are sold on a national scale, and attempts to demonstrate that during the non-war years 80% of Consolidated's requirements were produced on the West Coast; Consolidated resorts to data not in the record to demonstrate that in fact only 26% of Consolidated's rolled steel purchases were produced in plants located in the Consolidated market area.10 Whether we accept the government's or Consolidated's figures, however, they are of little value in determining the extent to which West Coast fabricators will purchase rolled steel products in the eastern market in the future, since the construction of new plants at Geneva and Fontana and the creation of new basing points on the West Coast will presumably give West Coast rolled steel producers a far larger share of the West Coast fabricating market than before the war. 15 Another difficulty is that the record furnishes little indication as to the propriety of considering plates and shapes as a market distinct from other rolled steel products. If rolled steel producers can make other products as easily as plates and shapes, then the effect of the removal of Consolidated's demand for plates and shapes must be measured not against the market for plates and shapes alone, but for all comparable rolled products. The record suggests, but does not conclusively indicate, that rolled steel producers can make other products interchangeably with shapes and plates, and that therefore we should not measure the potential injury to competition by considering the total demand for shapes and plates alone, but rather compare Consolidated's demand for rolled steel products with the demand for all comparable rolled steel products in the Consolidated marketing area. 16 We read the record as showing that the trial court did not accept the theory that the comparable market was restricted to the demand for plates and shapes in the Consolia ted area, but did accept the government's theory that the market was to be restricted to the total demand for rolled steel products in the eleven-state area. On that basis the trial court found that the steel requirements of Consolidated represented 'a small part' of the consumption in the Consolidated area, that Consolidated was not a 'substantial market' for rolled steel producers selling in competition with United States Steel, and that the acquisition of Consolidated would not injure any competitor of United States Steel engaged in the production and sale of rolled steel products in the Consolidated market or elsewhere. We recognize the difficulty of laying down a rule as to what areas or products are competitive, one with another. In this case and on this record we have circumstances that strongly indicate to us that rolled steel production and consumption in the Consolidated marketing area is the competitive area and product for consideration. 17 In analyzing the injury to competition resulting from the withdrawal of Consolidated as a purchaser of rolled steel products, we have been considering the acquisition of Consolidated as a step in the vertical integration of United States Steel. Regarded as a seller of fabricated steel products rather than as a purchaser of rolled steel products, however, the acquisition of Consolidated may be regarded as a step in horizontal integration as well, since United States Steel will broaden its facilities for steel fabrication through the purchase of Consolidated. In determining the extent of competition between Consolidated and the two structural fabrication subsidiaries of United States Steel in the sale of fabricated steel products, we must again determine the size of the market in which the two companies may be said to compete. The parties agree that United States Steel does no plate fabrication, and that competition is restricted to fabricating structural steel products and pipe. Consolidated makes pipe by bending and welding plates, whereas National Tube, a United States Steel subsidiary, makes seamless pipe through a process which the parties agree does not fall under the heading of steel fabrication. 18 We turn first to the field of fabricated structural steel products. As in the case of rolled steel, the appellees claim that structural fabricators sell on a national scale, and that Consolidated's production must be measured against all structural fabricators. An index of the position of Consolidated as a structural fabricator is shown by its bookings for the period 1937 1942, as reported by the American Institute of Steel Construction. During that period total bookings in the entire country were nearly 10,000,000 tons, of which Consolidated's share was only 84,533 tons. The government argues that competition is to be measured with reference to the eleven-state area in which Consolidated sells its products. Viewed on that basis, total bookings for the limited area for the six-year period were 1,665,698, of which United States Steel's share was 17% and Consolidated's 5%. The government claims that Consolidated has become a more important factor since that period, and alleges that bookings for 1946 in the Consolidated market were divided among 90 fabricators, of which United States Steel had 13% and Consolidated and Bethlehem Steel each had 11%. The next largest structural fabricators had 9%, 6% and 3% of the total.11 Although the appellees challenge the accuracy of the government's 1946 figures, and the district court made no reference to them in the findings, we accept them as sufficiently reliable for our present purpose. The figures on which the government relies demonstrate that at least in the past competition in structural steel products has been conducted on a national scale. Five out of the ten structural fabricators having the largest sales in the Consolidated market perform their fabrication operations outside the area, including United States Steel and Bethlehem Steel. Purchasers of fabi cated structural products have been able to secure bids from fabricators throughout the country, and therefore statistics showing the share of United States Steel and Consolidated in the total consumption of fabricated structural products in any prescribed area are of little probative value in ascertaining the extent to which consumers of these products would be injured through elimination of competition between the two companies. 19 As in the case of rolled steel products, however, wartime developments have made prewar statistics of little relevance. The appellees urge three reasons why eastern fabricators will be at a competitive disadvantage with western fabricators for the western market: the availability of rolled steel products from the Geneva plant and other West Coast plants at a lower price, the increase in commercial freight rates on fabricated products, and the abolition of land grant rates. The increase in freight rates has made it less profitable for eastern fabricators to sell in the West, and the elimination of land grant rates on government shipments has made it less profitable for eastern fabricators to sell to government agencies in the West. Whatever competition may have existed in the past between Consolidated and the two bridge company subsidiaries of United States Steel, the appellees urge, will exist to a much lesser extent in the future.12 Consequently, even though the government may be correct in claiming that the eleven-state area is the proper market for measuring competition with Consolidated, the government may not at the same time claim that prewar statistics as to United States Steel's share of that market are of major significance. 20 Apart from the question of the geographical size of the market, the appellees urge that the bookings for fabricated structural steel products are of little significance because Consolidated and United States Steel make different types of structural steel products. In view of the fact that structural steel jobs are fabricated on an individual basis, it is difficult to compare the output of United States Steel with that of Consolidated, but the appellees argue that in general Consolidated does only light and medium fabrication, whereas United States Steel does heavy fabrication The appellees support their argument with an elaborate statistical analysis of bids by the two companies. Those figures show that Consolidated and United States Steel submitted bids for the same project in a very small number of instances.13 Such figures are not conclusive of lack of competition; the government suggests that knowledge that one party has submitted a bid may discourage others from bidding. The government has introduced very little evidence, however, to show that in fact the types of structural steel products sold by Consolidated are similar to those sold by United States Steel. The appellees further urge that only a small proportion of Consolidated's business fell in the category of structural steel products, and that as to plate fabrication and miscellaneous work there was no competition with United States Steel whatsoever. The trial court found on this issue that 16% of Consolidated's business was in structural steel products and 70% in plate fabrication. On the basis of the statistics here summarized, the trial court found that competition between the two companies in the manufacture and sale of fabricated structural steel products was not substantial. 21 The government also argues that competition will be eliminated between Consolidated and National Tube in the sale of pipe. In this field we have no difficulty in determining the geographical scope of the market to be considered in determining the extent of competition, since the government claims that Consolidated and National Tube compete on a nation-wide scale in the field of large diameter pipe for oil and gas pipelines. Other types of pipe made by the two concerns are apparently not competitive as the government does not contest this assertion of the appellees.14 Consolidated in the past has specialized in comparatively light walled pipe for low pressure purposes, such as irrigation and water transmission, whereas National Tube has made a heavy walled pipe for high pressure purposes which is used chiefly in the oil and gas industry. National Tube pipe is substantially cheaper to produce. The record does show, however, that in the last few years Consolidated has supplied large diameter pipe for oil and gas pipelines on at least four occasions in three of which National Tube also supplied part of the pipe requirements.15 Although the record does not show the extent of Consolidated's business in this field, one of the witnesses estimated that Consolidated's contract to furnish 90% of the pipe for the Trans-Arabian pipeline would run to almost $30,000,000. The appellees seek to minimize the importance of competition in this field by pointing out that the pipe to be used for the Trans-Arabian pipeline is 30 and 31 inches in diameter, which is too large a size to be made by the seamless process employed by National Tube. The record is barreno n the comparative production between Consolidated and its competitors, other than United States Steel, in the manufacture of large pipe. The record does show that other major companies, not connected with any of the parties to this proceeding, do manufacture welded and seamless pipe.16 The appellees further claim that under normal circumstances Consolidated and National Tube would not compete in this field because Consolidated pipe sells for $30 a ton more than National Tube pipe, and that Consolidated is able to sell its pipe only because of the inability of National Tube and other concerns to take on additional orders. The government argues in reply that Consolidated may be able to reduce its costs of production if a sufficiently large volume of orders is obtained, but no evidence is adduced to support such a conclusion. 22 The opinion of the trial court summarized the facts outlined above, and concluded that there was no substantial competition between National Tube and Consolidated in the sale of pipe; one of the findings went even further, stating that the two companies 'do not compete' in the sale of their pipe products. 23 The trial court also concluded that the government had failed to prove that United States Steel had attempted to monopolize the business of fabricating steel products in the Consolidated market in violation of § 2. The trial judge apparently was of the opinion that since the purchase of Consolidated did not constitute a violation of § 1, it could not constitute a violation of § 2, since every attempt to monopolize must also constitute an illegal restraint. In his findings the trial judge concluded that the purchase agreement was entered into 'for sound business reasons' and with no intent to monopolize the production and sale of fabricated stel products. II. 24 In support of its position that the proposed contract violates § 1 of the Sherman Act, the government urges that all the legal conclusions of the district court were erroneous. It is argued that without regard to the percentages of consumption of rolled steel products by Consolidated just considered, the acquisition by United States Steel of Consolidated violates the Sherman Act. Such an arrangement, it is claimed, excludes other producers of rolled steel products from the Consolidated market and constitutes an illegal restraint per se to which the rule of reason is inapplicable. Or, phrasing the argument differently, the government's contention seems to be that the acquisition of facilities which provide a controlled market for the output of the Geneva plant is a process of vertical integration and invalid per se under the Sherman Act. The acquisition of Consolidated, it is pointed out, would also eliminate competition between Consolidated and the subsidiaries of United States Steel in the sale of structural steel products and pipe products, and would eliminate potential competition from Consolidated in the sale of other steel products. We also note that the acquisition of Consolidated will bring United States for the first time into the field of plate fabrication. 25 A. We first lay to one side a possible objection to measuring the injury to competition by reference to a market which is less than nation-wide in area. The Sherman Act is not limited to eliminating restraints whose effects cover the entire United States; we have consistently held that where the relevant competitive market covers only a small area the Sherman Act may be invoked to prevent unreasonable restraints within that area. In United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010, we sustained the validity of a complaint which alleged that the defendants had monopolized the cab operating business in four large cities.17 It is the volume in the area which the alleged restraints affect that is important. In United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, we found restraint of trade by a chain of motion picture exhibitors covering a small area. Although our previous discussion has indicated the difficulties in accepting the eleven-state area in which Consolidated sells its products as the relevant competitive market, we accept for the purposes of decision the government's argument that this area is the one to be considered in measuring the effect on competition of the withdrawal of Consolidated as a market for other rolled steel producers and of the bringing together under common control of Consolidated and the fabricating subsidiaries of United States Steel. 26 B. The government relies heavily on United States v. Yellow Cab Co., supra, to support its argument that the withdrawal of Consolidated as a possible consumer for the goods of other rolled steel producers constitutes an illegal restraint. The complaint in the Yellow Cab case charged that there was a plan, an intent, to monopolize the cab business, from manufacture through operation in the four large cities, by acquiring cab operating companies or interests therein; tying those companies into a cab manufacturing company and requiring the operating companies to purchase their cabs from the manufacturer at a price above the prevailing market. There was no allegation that the volume of cab production which was thus excluded as a market for rival cab manufacturers was a substantial proportion of the total volume of cabs produced, and the government concludes that the case stands for the proposition that it is illegal per se for a manufacturer to preempt and market for his goods through vertical integration provided that an 'appreciable' amount of interstate commerce is involved.18 27 We do not construe our holding in the Yellow Cab case to make illegal the acquisition by United States Steel of this outlet for its rolled steel without consideration of its effect on the opportunities of other competitor producers to market their rolled steel.19 In discussing the charge in the Yellow Cab case, we said that the fact that the conspirators were integrated did not insulate them from the act, not that corporate integration violated the act. In the complaint the government charged that the defendants had combined and conspired to effect the restraints in question with the intent and purpose of monopolizing the cab business in certain cities, and on motion to dismiss that allegation was accepted as true. Where a complaint charges such an unreasonable restraint as the facts of the Yellow Cab case show, the amount of interstate trade affected is immaterial in determining whether a violation of the Sherman Act has been charged. A restraint may be unreasonable either because a restraint otherwise reasonable is accompanied with a specific intent to accomplish a forbidden restraint or because it falls within the class of restraints that are illegal per se. For example, where a complaint charges that the defendants have engaged in price fixing,20 or have concertedly refused to deal with non-members of an association,21 or have licensed a patented device on condition that unpatented materials be employed in conjunction with the patented device,22 then the amount of commerce involved is immaterial because such restraints are illegal per se. Nothing in the Yellow Cab case supports the theory that all exclusive dealing arrangements are illegal per se. 28 A subsidiary will in all probability deal only with its parent for goods the parent can furnish. That fact, however, does not make the acquisition invalid. When other elements of Sherman Act violations are present, the fact of corporate relationship is material and can be considered in the determination of whether restraint or attempt to restrain exists. That this is the teaching of the Yellow Cab case is indicated by the following quotation: 'And so in this case, the common ownership and control of the various corporate appellees are impotent to liberate the alleged combination and conspiracy from the impact of the Act. The complaint charges that the restraint of interstate trade was not only effected by the combination of the appellees but was the primary object of the combination. The theory of the complaint, to borrow language from United States v. Reading Co., 253 U.S. 26, 57, 40 S.Ct. 425, 432, 64 L.Ed. 760, is that 'dominating power' over the cab operating companies 'was not obtained by normal expansion to meet the demands of a business growing as a result of superior and enterprising management, but by deliberate, calculated purchase for control.' If that theory is borne out in this case by the evidence, coupled with proof of an undue restraint of interstate trade, a plain violation of the Act has occurred.' 332 U.S. at pages 227, 228, 67 S.Ct. at page 1565, 91 L.Ed. 2010. That view is in accord with previous decisions of the Court.23 29 The legality of the acquisition by United States Steel of a market outlet for its rolled steel through the purchase of the manufacturing facilities of Consolidated depends not merely upon the fact of that acquired control but also upon many other factors. Exclusive dealings for rolled steel between Consolidated and United States Steel, brought about by vertical integration or otherwise, are not illegal, at any rate until the effect of such control is to unreasonably restrict the opportunities ofc ompetitors to market their product. 30 In United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, we were presented with a situation in which the government charged that vertical integration was illegal under the Sherman Act. We held that control by the major producer-distributors over nearly three-quarters of the first-run theaters in cities with population over 100,000 was not of itself illegal, and we remanded the case to the district court for further findings. In outlining the factors which we considered to be significant in determining the legality of vertical integration, we emphasized the importance of characterizing the nature of the market to be served, and the leverage on the market which the particular vertical integration creates or makes possible. A second test which we considered important in the Paramount case was the purpose or intent with which the combination was conceived. When a combination through its actual operation results in an unreasonable restraint, intent or purpose may be inferred; even though no unreasonable restraint may be achieved, nevertheless a finding of specific intent to accomplish such an unreasonable restraint may render the actor liable under the Sherman Act. Compare United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941.24 31 It seems clear to us that vertical integration, as such without more, cannot be held violative of the Sherman Act. It is an indefinite term without explicit meaning. Even in the iron industry where could a line be drawn—at the end of mining the ore, the production of the pig-iron or steel ingots, when the rolling mill operation is completed, fabrication on order or at some stage of manufacture into standard merchandise? No answer would be possible and therefore the extent of permissible integration must be governed, as other factors in Sherman Act violations, by the other circumstances of individual cases. Technological advances may easily require a basic industry plant to expand its processes into semi-finished or finished goods so as to produce desired articles in greater volume and with less expense. 32 It is not for courts to determine the course of the Nation's economic development. Economists may recommend, the legislative and executive branches may chart legal courses by which the competitive forces of business can seek to reduce costs ad increase production so that a higher standard of living may be available to all. The evils and dangers of monopoly and attempts to monopolize that grow out of size and efforts to eliminate others from markets, large or small, have caused Congress and the Executive to regulate commerce and trade in many respects. But no direction has appeared of a public policy that forbids, per se, an expansion of facilities of an existing company to meet the needs of new markets of a community, whether that community is nation-wide or county-wide. On the other hand, the courts have been given by Congress wide powers in monopoly regulation. The very broadness of terms such as restraint of trade, substantial competition and purpose to monopolize have placed upon courts the responsibility to apply the Sherman Act so as to avoid the evils at which Congress aimed. The basic industries, with few exceptions, do not approach in America a cartelized form. If businesses are to be forbidden from entering into different stages of production that order must come from Congress, not the courts. 33 Applying the standards laid down in the Paramount case, we conclude that the so-called vertical integration resulting from the acquisition of Consolidated does not unreasonably restrict the opportunities of the competitor producers of rolled steel to market their product. We accept as the relevant competitive market the total demand for rolled steel products in the eleven-state area; over the past ten years Consolidated has accounted for only 3% of that demand, and if expectations as to the development of the western steel industry are realized, Consolidated's proportion may be expected to be lower than that figure in the future. Nor can we find a specific intent in the present case to accomplish an unreasonable restraint, for reasons which we discuss under heading III of this opinion. 34 C. We turn now to a discussion of the significance, as to possible violation of the Sherman Act, of the fact that Consolidated has been a competitor of United States Steel in structural steel fabrication and in the manufacture of pipe. The same tests which measure the legality of vertical integration by acquisition are also applicable to the acquisition of competitors in identical or similar lines of merchandise. It is first necessary to delimit the market in which the concerns compete and then determine the extent to which the concerns are in competition in that market. If such acquisition results in or is aimed at unreasonable restraint, then the purchase is forbidden by the Sherman Act. In determining what constitutes unreasonable restraint, we do not think the dollar volume is in itself of compelling significance; we look rather to the percentage of business controlled, the strength of the remaining competition, whether the action springs from business requirements or purpose to monopolize, the probable development of the industry, consumer demands, and other characteristics of the market. We do not undertake to prescribe any set of percentage figures by which to measure the reasonableness of a corporation's enlargement of its activities by the purchase of the assets of a competitor.25 The relative effect of percentage command of a market varies with the setting in which that factor is placed. 35 The United States makes the point that the acquisition of Consolidated would preclude and restrain substantial potential competition in the production and sale of other steel products than fabricated structural steel and pipe. Force is added to this contention by the fact, adverted to above at pages 500 and 512 of 334 U.S., at pages 1110 and 1116 of 68 S.Ct. that United States Steel does not plate fabrication while Consolidated does. By plate fabrication Consolidate produces many articles not now produced by United States Steel. We mention, as examples, boilers, gas tanks, smoke stacks, storage tanks and barges. Attention is also called to the war activities of Consolidated in steel shipbuilding as indicative of its potentialities as a competitor. We have noted, 334 U.S. 498, 68 S.Ct. 1109, supra, that this construction was under government direction and financing. We agree that any acquisition of fabricating equipment eliminates some potential competition from anyone who might own or acquire such facilities. We agree, too, with the government's position that potential competition from producers of presently non-competitive articles as well as the possibility that acquired facilities may be used in the future for the production of new articles in competition with others may be taken into consideration in weighing the effect of any acquisition of assets on restraint of trade.26 36 The government's argument, however, takes us into highly speculative situations. Steel ship construction for war purposes was an enterprise undertaken at government expense. We know of nothing from the record that would lead Consolidated or United States Steel to branch out into the peace-time steel ship industry at their own risk. The necessary yards have been sold. It is true that United States Steel might go into plate fabrication. The record shows nothing as to production or demand in the Consolidated trade area for plate fabricated articles. Nothing appears as to the number of producers of such goods in that territory. What we have said in other places in this opinion as to the growing steel industry in this area is pertinent here. Eastern fabricators will find it difficult to meet competition from western fabricators in the western market. Cheaper western rolled steel and freight rates are a handicap to eastern fabricators. Looking at the situation here presented, we are unwilling to hold that possibilities of interference with future competition are serious enough to justify us in declaring that this contract will bring about unlawful restraint. 37 We conclude that in this case the government has failed to prove that the elimination of competition between Consolidated and the structural fabricating subsidiaries of United States Steel constitutes an unreasonable restraint. If we make the doubtful assumption that the United States Steel could be expected in the future to sell 13% of the total of structural steel products in the Consolidated trade area and that Consolidated could be expected to sell 11%, we conclude that where we have the present unusual conditions of the western steel industry and in view of the facts of this case as developed at pages 511 to 516 of 334 U.S., at pages 1116 to 1118 of 68 S.Ct. it can not be said there would be an unreasonable restraint of trade. To hold this does not imply that additional acquisitions of fabricating facilities for structural steel would not become monopolistic. Notwithstanding some differences as to the business of Consolidated and United States Steel in respect to the character of structural steel products fabricated by each, there is competitionbetween the two for both light and heavy work. The western steel industry is developing. Fontana and Geneva as well as other producers are making available for fabricators larger supplies of rolled steel so that the West is becoming less dependent on eastern suppliers. We are of the opinion, moreover, in view of the number of West Coast fabricators (see 334 U.S. 501, 68 S.Ct. page 1111) and the ability of out-of-the-area fabricators to compete because of the specialized character of structural steel production in regard to orders and designs, that this acquisition is permissible. 38 We likewise conclude that the elimination of competition between Consolidated and National Tube (a United States Steel subsidiary) does not constitute an unreasonable restraint. Competition at the time of the contract was restricted to the sale of large diameter pipe for oil and gas pipelines, see 334 U.S. 516 to 518, 68 S.Ct. pages 1118 to 1119, supra, and the only indication in the record that competition in pipe would exist in a broader field in the future is contained in the suggestion, without proof or specification that Consolidated, through technological advances or business expansion might produce a wider range of pipe sizes and types. This is not enough to persuade us that the purchase will unduly restrain trade in pipe. The record does show that in three instances Consolidated and National Tube each supplied pipe for a new pipeline. It is clear that these line pipe contracts were obtained by Consolidated in a seller's market. We are given nothing as to the national production of oil and gas trunkline pipe or the relation of the pipe sold by Consolidated and National Tube to this production. The government does not contest appellees' statement that Consolidated pipe for this purpose is substantially more expensive than seamless pipe, and in the absence of a showing that welded pipe has advantages over seamless pipe to compensate for the increased cost or that Consolidated's production costs may be expected to decline with an increase in volume, it does not seem to us that it has been shown that competition in this field between the parties to this contract is so substantial that its elimination under these circumstances constitutes an unreasonable restraint. 39 The government cites four antitrust cases involving railroads to support its argument that control by one competitor over another violates the Sherman Act, even though the percentage of business for which they compete may be small.27 The appellees cite cases from this Court and lower courts in which acquisition by one competitor of another was held not to violate the antitrust laws.28 We do not stop to examine those cases to determine whether we would now approve either their language or their holdings. The factual situation in all those cases is so dissimilar from that presented here that they furnish little guidance in determining whether the competition which will be eliminated through the purchase of Consolidated is sufficient to warrant injunctive relief requested by the government.29 III. 40 We turn last to the allegation of the government that United States Steel has attempted to monopolize the production and sale of fabricated steel products in the Consolidated market. We think that the trial court applied too narrow a test to this charge; even though the restraint effected may be reasonable under § 1, it may constitute an attempt to monopolize forbidden by § 2 if a specific intent to monopolize may be shown.30 To show that specific intent the government recites the long history of acquisitions of United States Steel, and argues that the present acquisition when viewed in the light of that history demonstrates the existence of a specific intent to monopolize. Although this Court held in 192031 that United States Steel had not violated § 2 through the acquisition of 180 formerly indepn dent concerns, we may look to those acquisitions as well as to the eight acquisitions from 1924 to 1943 to determine the intent of United States Steel in acquiring Consolidated. 41 We look not only to those acquisitions, however, but also to the latest acquisition—the government-owned plant at Geneva. We think that last acquisition is of significance in ascertaining the intent of United States Steel in acquiring Consolidated.32 The bid of United States Steel for the Geneva plant emphasized the importance of erecting finishing facilities to assure a market for Geneva's production, and we think it a fact of weight that many of the other bids were conditioned upon the government lending money or making grants for erecting such facilities at no cost to the bidder. No objection was interposed when United States Steel indicated that it proposed to spend $25,000,000 to erect a cold reduction mill at Pittsburg, and it is doubtful whether objections could be raised if United States Steel proposed to build instead of to buy from a competitor fabricating facilities similar to those possessed by Consolidated. The reasons given by Consolidated and United States Steel for the purchase and sale of the assets here involved seem not to involve any action condemned by the Sherman Act. Granting that the sale will to some extent affect competition, the acquisition of a firm outlet to absorb a portion of Geneva's rolled steel production seems to reflect a normal business purpose rather than a scheme to circumvent the law. United States Steel, despite its large sales, many acquisitions and leading position in the industry, has declined in the proportion of rolled steel products it manufactures in comparison with its early days. In 1901 it produced 50.1%; in 1911, 45.7%; in 1946, 30.4%.33 For the period 1937—1946, it produced 33.2%.34 Its size is impressive. Size has significance also in an appraisal of alleged violations of the Sherman Act. But the steel industry is also of impressive size and the welcome westward extension of that industry requires that the existing companies go into production there or abandon that market to other organizations. 42 We have dealt with the objections to this purchase because of the exclusion of other rolled steel producers from supplying Consolidated's demand for that product and because of the alleged restraint of trade involved in the extension of United States Steel's fabricating and pipe commerce. It has been necessary to treat these arguments separately so as to isolate the facts and figures which convince us that these objections do not rise to the level of proving a violation of law. It only need be added that we have also considered the various items of objection in the aggregate and in the light of the charge of intent to monopolize. But even from that point of view, the government has not persuaded us that the proposed contract violates our public policy as stated in the Sherman Act. 43 The judgment of the District Court is affirmed. 44 Affirmed. 45 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK, Mr. Justice MURPHY, and Mr. Justice RUTLEDGE, concur, dissenting. 46 This is the most important antitrust case which has been before the Court in years. It is important because it reveals the way of growt of monopoly power—the precise phenomenon at which the Sherman Act was aimed. Here we have the pattern of the evolution of the great trusts. Little, independent units are gobbled up by bigger ones. At times the independent is driven to the wall and surrenders. At other times any number of 'sound business reasons' appear why the sale to or merger with the trust should be made.1 If the acquisition were the result of predatory practices or restraints of trade, the trust could be required to disgorge. Schine Chain Theatres Inc. v. United States, 334 U.S. 110, 68 S.Ct. 947. But the impact on future competition and on the economy is the same though the trust was built in more gentlemanly ways. 47 We have here the problem of bigness. Its lesson should by now have been burned into our memory by Brandeis. The Curse of Bigness shows how size can become a menace—both industrial and social. It can be an industrial menace because it creates gross inequalities against existing or putative competitors. It can be a social menace— because of its control of prices.2 Control of prices in the steel industry i powerful leverage on our economy. For the price of steel determines the price of hundreds of other articles. Our price level determines in large measure whether we have prosperity or depression—an economy of abundance or scarcity. Size in steel should therefore be jealously watched.3 In final analysis, size in steel is the measure of the power of a handful of men over our economy. That power can be utilized with lightning speed. It can be benign or it can be dangerous. The philosophy of the Sherman Act is that it should not exist. For all power tends to develop into a government in itself. Power that controls the economy should be in the hands of elected representatives of the people, not in the hands of an industrial oligarchy. Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men. The fact that they are not vicious men but respectable and social minded is irrelevant. That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it. 48 The Court forgot this lesson in United States v. United States Steel Corporation, 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121, and in United States v. International Harvester Co., 274 U.S. 693, 47 S.Ct. 748, 71 L.Ed. 1302. The Court today forgets it when it allows United States Steel to wrap its tentacles tighter around the steel industry of the West. 49 This acquisition can be dressed up (perhaps legitimately) in terms of an expansion to meet the demands of a business which is growing as a result of superior and enterprising management.4 But the test under the Sherman Act strikes deeper. However the acquisition may be rationalized, the effect is plain. It is a purchase for control, a purchase for control of a market for which United States Steel has in the past had to compete but which it no longer wants left to the uncertainties that competition in the West may engender. This in effect it concedes. It states that its purpose in acquiring Consolidated is to insure itself of a market for part of Geneva's production of rolled steel products when demand falls off. 50 But competition is never more irrevocably eliminated than by buying the customer for whose business the industry has been competing. The business of Consolidated amounts to around $22,000,000 annually. The competitive purchases by Consolidated are over $5,000,000 a year. I do not see how it is possible to say that $5,000,000 of commerce is immaterial. It plainly is not de minimis. And it is the character of the restraint which § 1 of the Act brands as illegal, not the amount of commerce affected. Montague & Co. v. Lowry, 193 U.S. 38, 24 S.Ct. 307, 48 L.Ed. 608; United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 225, n. 59, 60 S.Ct. 811, 846, 84 L.Ed. 1129; United States v. Yellow Cab Co., 332 U.S. 218, 225, 67 S.Ct. 1560, 1564, 91 L.Ed. 2010. At least it can be said here, as it was in International Salt Co. v. United States, 332 U.S. 392, 396, 68 S.Ct. 12, 15, that the volume of business restrained by this contract is not insignificant or insubstantial. United States Steel does not consider it insignificant, for the aim of this well-conceived r oject is to monopolize it. If it is not insubstantial as a market for United States Steel, it certainly is not from the point of view of the struggling western units of the steel industry. 51 It is unrealistic to measure Consolidated's part of the market by determining its proportion of the national market. There is no safeguarding of competition in the theory that the bigger the national market the less protection will be given those selling to the smaller components thereof. That theory would allow a producer to absorb outlets upon which small enterprises with restricted marketing facilities depend. Those outlets, though statistically unimportant from the point of view of the national market, could be a matter of life and death to small, local enterprises. 52 The largest market which must be taken for comparison is the market actually reached by the company which is being absorbed. In this case Consolidated's purchases of rolled steel products are a little over 3 per cent of that market. By no standard—United States Steel's or its western competitors—can that percentage be deemed immaterial. Yet consideration of the case from that viewpoint puts the public interest phase of the acquisition in the least favorable light. A surer test of the impact of the acquisition on competition is to be determined not only by consideration of the actual markets reached by Consolidated but also by the actual purchases which it makes. Its purchases were predominantly of plates and shapes—76 per cent from 1937—1941. This was in 1937 13 per cent of the total in the Consolidated market. That comparison is rejected by the Court or at least discounted on the theory that competitors presently selling to Consolidated can probably convert from plates and shapes to other forms of rolled steel products. But a surer test of the effect on competition is the actual business of which competitors will be deprived. We do not know whether they can be sufficiently resourceful to recover from this strengthening of the hold which this giant of the industry now has on their markets. It would be more in keeping with the spirit of the Sherman Act to give the benefits of any doubts to the struggling competitors. 53 It is, of course, immaterial that a purpose or intent to achieve the result may not have been present. The holding of the cases from United States v. Patten, 226 U.S. 525, 543, 33 S.Ct. 141, 145, 57 L.Ed. 333, 44 L.R.A.,N.S., 325, to United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, is that the requisite purpose or intent is present if monopoly or restraint of trade results as a direct and necessary consequence of what was done. We need not hold that vertical integration is per se unlawful in order to strike down what is accomplished here. The consequence of the deliberate, calculated purchase for purpose of control over this substantial share of the market can no more be avoided here than it was in United States v. Reading Co., 253 U.S. 26, 57, 40 S.Ct. 425, 432, 64 L.Ed. 760, and in United States v. Yellow Cab Co., supra. I do not stop to consider the effect of the acquisition on competition in the sale of fabricated steel products. The monopoly of this substantial market for rolled steel products is in itself an unreasonable restraint of trade under § 1 of the Act. 54 The result might well be different if Consolidated were merging with or being acquired by an independent west coast producer for the purpose of developing an integrated operation. The purchase might then be part of an intensely practical plan to put together an independent western unit of the industry with sufficient resources and strength to compete with the gaints of the industry. Approval of this acquisition works in precisely the opposite direction. It makes dim the prospects that the western steel industry will be free from the control of the eastern giants. United States Steel, now that it owns the Geneva plant, has over 51 per cent of the rolled steel or ingot capacity of the Pacific Coast area. Thi acquisition gives it unquestioned domination there and protects it against growth of the independents in that developing region. That alone is sufficient to condemn the purchase. Its serious impact on competition and the economy is emphasized when it is recalled that United States Steel has one-third of the rolled steel production of the entire country.5 The least I can say is that a company that has that tremendous leverage on our economy is big enough.6 1 Sections 1, 2 and 4, 15 U.S.C., 15 U.S.C.A. §§ 1, 2, 4, read, so far as applicable, as follows: § 1. 'Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal: * * * Every person who shall make any contract or engage in any combination or conspiracy declared by sections 1—7 of this title to be illegal shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.' § 2. 'Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.' § 4. 'The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1—7 of this title; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. * * *' 2 An uncontested statement of Consolidated's ship building activities during the war years appears in Consolidated's brief: 'During the war years, acting under Government sponsorship, Consolidated constructed ships for defense and war purposes for various Government procurement agencies but it is no longer engaged in this field. Consolidated's war work was confined to ship and ordnance construction with Government furnished facilities, all of which have now been abandoned. Consolidated Shipyards, Inc., a Consolidated subsidiary operating a small boat yard, has disposed of its plant to a group of real estate speculators. There is, therefore, no competition between U.S. Steel and Consolidated in the shipbuilding business.' 3 Louisiana and Texas, which ar included in the Consolidated market, are not listed in the census grouping, whereas Colorado and Wyoming, which are listed in the census, are excluded from the Consolidated market. Sixteenth Census of the United States, 1940, Areas of the United States 1940, Bureau of the Census, p. 3. 4 In 1924, the Federal Trade Commission entered an order which concluded that United States Steel had violated § 2 of the Clayton Act, 15 U.S.C.A. § 13, and § 5 of the Federal Trade Commission Act, 15 U.S.C.A. § 45, by its so-called 'Pittsburgh plus' method of pricing, according to which all rolled steel products were sold at a delivered price including freight from Pittsburgh to the destination, regardless of the actual point of shipment. Matter of United States Steel Corp., 8 F.T.C. 1. United States Steel was ordered to cease and desist from selling its products on that basis, or from employing any basing point other than the point of manufacture or shipment. In 1938 United States Steel filed a petition to review that order in the Third Circuit Court of Appeals admitting that United States Steel had never complied with the latter part of the order. No decision has yet been reached in that proceeding. 5 Cold rolling is the name given to the process of rolling steel products at temperatures ranging from 50 degrees F. to 240 degrees F. Coils which have been produced by the hot rolling process are fed into a cold reduction mill and rolled into strip and sheets which are of much higher quality than hot rolled strip and sheets. See Camp and Francis, The Making, Shaping and Treating of Steel, 5th Ed., 1940, pp. 1227—1245. 6 The bid of Colorado Fuel & Iron Corp. proposed that the government spend $47,935,000 for the erection of additional facilities, including over $25,000,000 for the erection of a sheet and tin-plate mill. The bid of Pacific-American Steel Iron Corp. proposed that the government lend the bidder $25,000,000 for the erection of a tin-plate mill. The bid of Riley Steel Co. proposed that the government lend the bidder $28,844,000 for the construction of a sheet mill, tube mill, and additions to the structural mill. 7 This was not a purchase of stock of a competing company. See § 7, Clayton Act, 38 Stat. 730, 731, 15 U.S.C.A. § 18; Federal Trade Comm. v. Western Meat Co., 272 U.S. 554, 47 S.Ct. 175, 71 L.Ed. 405. It must be assumed, however, that the public policy announced by § 7 of the Clayton Act is to be taken into consideration in determining whether acquisition of assets of Consolidated by United States Steel with the same economic results as the purchase of the stock violates the prohibitions of the Sherman Act against unreasonable restraints. See Handler, Industrial Mergers and the Anti-Trust Laws, 32 Col.L.Rev. 179, 266. In 1941 the Temporary National Economic Committee proposed that § 7 be amended to apply to acquisition of assets and to require prior approval by the Federal Trade Commission. See Comment, 57 Yale L.J. 613, for a description of the bills which have been introduced before Congress to carry out these recommendations. 8 The following table was accepted by the trial court as correct: U.S. Steel subsidiaries Industry U.S. Steel Estimated shipment of production subsidiaries consumption all rolled Consolidated's all rolled production all rolled steel purchases all steel products all rolled steel products production into rolled steel Year steel products 11 states into 11 states products 1937 38,345,158 14,097,666 4,362,900 1,556,085 103,286 1938 21,356,398 7,315,506 2,670,000 1,046,287 44,050 1939 34,955,175 11,707,251 3,630,000 1,434,383 69,862 1940 45,965,971 15,013,749 4,337,990 1,686,129 117,644 1941 60,942,979 20,416,604 6,008,757 2,441,840 163,428 1942 60,591,052 20,615,137 8,489,204 3,181,358 339,711 1943 62,210,261 20,147,616 10,124,831 3,706,886 404,180 1944 63,250,519 21,052,179 9,587,503 3,495,231 390,532 1945 56,602,322 18,410,264 7,232,590 2,378,112 225,273 1946 48,993,777 15,181,719 6,000,000 1,810,982 178,669 --------------- --------------- ------------- ------------- ------------ Total 493,213,612 163,957,691 62,443,775 22,737,293 2,036,635 9 The government notes that United States Steel in its bid for the Geneva plant estimated that the postwar market in seven Western states would be 227,000 tons of plates and 213,000 tons of shapes per year, and compares with these figures the 1946 purchases of Consolidated of 107,128 tons of plates and 43,770 tons of shapes. Apart from the fact that the figures for estimated consumption included only seven states as against eleven in the Consolidated market, Consolidated's purchases in 1946 were principally devoted to finishing up war contracts. The figures for estimated consumption were based on the assumption that the level of activity would be considerably lower than during the war. 10 The table from which the government derives this figure of 80% is inconclusive. It refers to 'Purchases from West Coast Producers' and does not indicate whether the producers themselves produced the rolled steel products or were acting as agents of eastern producers. There is no challenge to Consolidated's statement that during the years 1937—41 and 1946 deliveries to it from the rolled steel production of the West Coast totaled 208,093 tons as against 495,848 tons from eastern producers. 11 10 largest structural steel fabricators in the 11 Western States, 1946. Company Location Bookings Percent (net tons) of total All companies............. 336,717. 100.0 United States Steel Corp.. Pittsburgh, Pa.. 44,083 12.9 Consolidated Steel Corp.. Los Angeles, Calif.. 36,142 10.6 Bethlehem Steel Co...... Bethlehem, Pa.. 36,047 10.6 Mosher Steel Co......... Houston, Tex.. 29,814 8.7 Chicago Bridge & Iron Co.. Chicago, Ill.. 21,588 6.3 Isaacson Iron Works..... Seattle, Wash.. 10,656 3.1 Kansas City Structural Co.. Kansas City, Kans. 10,051 2.9 Midwest Steel & Iron Works Co.. Denver, Colo.. 9,306 2.7 Northwest Steel Rolling Mills, Inc.. Seattle, Wash. 9,000 2.6 Structural Steel & Forge Co.. Salt Lake City, Utah 8,300 2.4 . -------- ------ Total 10 companies....... 214,987. 63.0 Remaining 80 companies... 121,730. 37.0 The table quoted includes a correction as to Consolidated's bookings which was made after the exhibit was introduced. 12 The trial court found that the fabricating subsidiaries of United States Steel would be eliminated from the West Coast market in the future except for specialized products which they are equipped to fabricate economically and which sell at higher prices per ton of product. Since the record was made up in this case, United States Steel has announced that the mill price for Geneva steel products has been reduced $3 per ton, effective May 1, 1948. That amount represented the previously existing mill price differential of Geneva steel products over products produced at Pittsburgh, Chicago, Gary, and Birmingham. U.S. Steel Quarterly, Vol. 2, No. 2, May 1948, p. 6. 13 During the ten-year period ending in 1946 United States Steel bid on 2,409 jobs in the Consolidated area and was successful in 839. Consolidated bid on 6,377 jobs and was successful in 2,390. There were only 166 jobs, however, on which both companies bid. Forty of these jobs on which both companies bid were awarded to United States Steel, 35 were awarded to Consolidated, and 91 were awarded to competitors. Reducing these figures to a tonnage basis, United States Steel was awarded bids covering 499,605 tons out of a total tonnage on which bids were submitted of 1,273,152 tons. Consolidated bid on jobs involving 578,847 tons and was awarded 157,997 tons. The tonnage involved in the 166 common bids was 122,353 tons, of which United States Steel's share was 38,920, Consolidated's 24,162, and other competitors 59,271. The above figures indicate that Consolidated customarily bid on lighter types of work; the average tonnage for Consolidated's bids was 90 tons, whereas the average tonnage for United States Steel was 528 tons. The 166 jobs on which both companies submitted bids were considerably larger in volume, averaging 737 tons. 14 The following extract from the record summarizes the evidence on this question: 'A. The type of pipe made by Consolidated is electric weld pipe known as fusion weld or arc weld pipe in sizes from 4-inch up to say 30-inch. We don't make any electric weld pipe. The pipe that Consolidated make other than the pipe larger than 26-inch is made primarily for and sold to the water works industry, and our pipe is sold primarily to the oil and gas industry. We don't make the same type of pipe, and the sizes which we manufacture and the gages and the lengths are in general quite different from those made by Consolidated Steel. They only overlap at a very small part of the field insofar as the physical dimensions of the pipe are concerned. 'Q. You have spoken of pipe made by Consolidated for water conveyance. Are those what have been referred to as penstocks? A. No, sir. Well, yes, to a certain extent penstocks, and many other types of low-pressure water pipe. It is true that penstocks are included in that as far as Consolidated is concerned. National Tube Company do not make any penstock pipe. They have not made any for ten years. 'Q. And none of what you term light-pressure pipe? A. We don't compete with that. We make high-pressure pipe only.' 15 Roach testified that the first order which Consolidated had filled for such pipe was for the Southern Counties and Southern California gas line, but he did not indicate the size or date of the order. The president of National Tube testified that Consolidated contracted in 1946 to furnish 100 miles of 26-inch pipe for the El Paso Natural Gas Co., National Tube contracted to supply 230 miles, and a third competitor 400 miles. The same witness also testified that National Tube contracted in 1946 to supply a small amount of 24-inch pipe to the Pacific Gas and Electric Co., and that Consolidated in 1947 also agreed to furnish a quantity of pipe for the same pipeline. As of November 30, 1946, Consolidated had unfilled orders for 'heavy pipe' of $9,830,079, a figure which does not include the Pacific Gas and Electric or Trans-Arabian order. 16 E.g., Republic Steel Corp., A. O. Smith Corp., Youngstown Sheet and Tube Co. There are other producers in the West. 17 332 U.S. at page 226, 67 S.Ct. at page 1564, 91 L.Ed. 2010: 'Likewise irrelevant is the importance of the interstate commerce affected in relation to the entire amount of that type of commerce in the United States. The Sherman Act is concerned with more than the large, nation-wide obstacles in the channels of interstate trade. It is designed to sweep away all appreciable obstructions so that the statutory policy of free trade might be effectively achieved. As this Court stated in Indiana Farmer's Guide Co. v. Prairie Farmer Pub. Co., 293 U.S. 268, 279, 55 S.Ct. 182, 185, 79 L.Ed. 356, 'The provisions of §§ 1 and 2 have both a geographical and distributive significance and apply to any part of the United States as distinguished from the whole and to any part of the classes of things forming a part of interstate commerce.' It follows that the complaint in this case is not defective for failure to allege that CCM has a monopoly with reference to the total number of taxicabs manufactured and sold in the United States. Its relative position in the field of cab production has no necessary relation to the ability of the appellees to conspire to monopolize or restrain, in violation of the Act, an appreciable segment of interstate cab sales. An allegation that such a segmenth as been or may be monopolized or restrained is sufficient.' 18 The government relies particularly on the following excerpt, 332 U.S. at pages 226, 227, 67 S.Ct. at pages 1564, 1565, 91 L.Ed. 2010: 'Nor can it be doubted that combinations and conspiracies of the type alleged in this case fall within the ban of the Sherman Act. By excluding all cab manufacturers other than CCM from that part of the market represented by the cab operating companies under their control, the appellees effectively limit the outlets through which cabs may be sold in interstate commerce. Limitations of that nature have been condemned time and again as violative of the Act. * * * In addition, by preventing the cab operating companies under their control from purchasing cabs from manufacturers other than CCM, the appellees deny those companies the opportunity to purchase cabs in a free, competitive market. The Sherman Act has never been thought to sanction such a conspiracy to restrain the free purchase of goods in interstate commerce.' 19 The general language of §§ 1 and 2 of the Sherman Act has been construed as prohibiting only unreasonable restraints, not all possible restraints of trade. StandardO il Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734. In this it differs somewhat from the more specific language of the Clayton Act, 38 Stat. 730, or the Federal Trade Commission Act, 38 Stat. 717, 15 U.S.C.A. § 41 et seq. See Federal Trade Comm. v. Morton Salt Co., 334 U.S. 37, 68 S.Ct. 822, at page 828, and Standard Fashion Co. v. Magrane-Houston Co., 258 U.S. 346, 356, 42 S.Ct. 360, 362, 66 L.Ed. 653. 20 United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. 21 Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013; Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 34 S.Ct. 951, 58 L.Ed. 1490, L.R.A.1915A, 788; W. W. Montague & Co. v. Lowry, 193 U.S. 38, 24 S.Ct. 307, 48 L.Ed. 608. See Fashion Originators' Guild v. Federal Trade Comm., 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949. 22 International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12. 23 Compare our statement in United States v. Paramount Pictures, 334 U.S. 131, 68 S.Ct. 915, at page 937: 'Exploration of these phases of the cases would not be necessary if, as the Department of Justice argues, vertical integration of producing, distributing and exhibiting motion pictures is illegal per se. But the majority of the Court does not take that view. In the opinion of the majority the legality of vertical integration under the Sherman Act turns on (1) the purpose or intent with which it was conceived, or (2) the power it creates and the attendant purpose or intent. First, it runs afoul of the Sherman Act if it was a calculated scheme to gain control over an appreciable segment of the market and to restrain or suppress competition, rather than an expansion to meet legitimate business needs.' The legality of contractual arrangements for exclusive dealing was sustained in United States v. Bausch & Lomb Co., 321 U.S. 707, 728, 729, 64 S.Ct. 805, 816, 88 L.Ed. 1024. Compare Federal Trade Comm. v. Curtis Publishing Co., 260 U.S. 568, 43 S.Ct. 210, 67 L.Ed. 408. 24 334 U.S. 100, 68 S.Ct. 941, at page 945: 'Anyone who owns and operates the single theatre in a town, or who acquires the exclusive right to exhibit a film, has a monopoly in the popular sense. But he usually does not violate § 2 of the Sherman Act unless he has acquired or maintained his strategic position, or sought to expand his monopoly, or expanded it by means of those restraints of trade which are cognizable under § 1. For those things which are condemned by § 2 are in large measure merely the end products of conduct which violates § 1. Standard Oil Co. v. United States, 221 U.S. 1, 61, 31 S.Ct. 502, 516, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734. But that is not always true. Section 1 covers contracts, combinations, or conspiracies in restraint of trade. Section 2 is not restricted to conspiracies or combinations to monopolize but also makes it a crime for any person to monopolize or to attempt to monopolize any part of interstate or foreign trade or commerce. So it is that monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains unexercised. For § 2 of the Act is aimed, inter alia, at the acquisition or retention of effective market control. See United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 428, 429. Hence the existence of power 'to exclude competition when it is desired to do so' is itself a violation of § 2, provided it is coupled with the purpose or intent to exercise that power. American Tobacco Co. v. United States, 328 U.S. 781, 809, 811, 814, 66 S.Ct. 1125 (1138), 1139, 1140, 1141, 90 L.Ed. 1575.' 25 Compare United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 424; Handler, supra, note 7, tables, p. 245. See also Rostow, The New Sherman Act: A Positive Instrument of Progress, 14 U. of Chicago L.Rev. 567, 575—586. 26 United States v. Southern Pac. Co., 259 U.S. 214, 42 S.Ct. 496, 66 L.Ed. 907; United States v. Reading Co., 253 U.S. 26, 40 S.Ct. 425, 64 L.Ed. 760. 27 United States v. Southern Pac. Co., 259 U.S. 214, 42 S.Ct. 496, 66 L.Ed. 907; United States v. Union Pac. R. Co., 226 U.S. 61, 33 S.Ct. 53, 57 L.Ed. 124; United States v. Reading Co., 253 U.S. 26, 40 S.Ct. 425, 64 L.Ed. 760; Northern Securities Co. v. United States, 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679. 28 International Shoe Co. v. Federal Trade Comm., 280 U.S. 291, 50 S.Ct. 89, 74 L.Ed. 431; United States v. United States Steel Corporation, 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121; United States v. United Shoe Machinery Co., 247 U.S. 32, 38 S.Ct. 473, 62 L.Ed. 968; United States v. Standard Oil Co. of New Jersey, D.C., 47 F.2d 288; United States v. Republic Steel Corporation, D.C., 11 F.Supp. 117. 29 See Handler, supra, note 7, at 269—271. 30 United States v. Griffith, supra, note 24. 31 United States v. United States Steel Corporation, 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343. 32 251 U.S. at page 446, 40 S.Ct. at page 297, 64 L.Ed. 343. 33 The figures for 1901 and 1911 are taken from United States v. United States Steel Corp., D.C., 223 F. 55, 67. 34 The record includes an unchallenged table showing the proportion of total national production of steel ingots and steel for casting attributable to United States Steel from 1901 through 1946. It is taken from the statistical reports of the American Iron and Steel Institute and United States Steel. It may be summarized by saying it shows an irregular reduction from over 60% to less than 33 1/3%. 1 The most frequent reasons given for mergers are that they prevent waste and promote efficiency, reduce overhead, dilute sales and advertising costs, spread risks, etc. Compare, New Mergers, New Motives, Business Week, Nov. 10, 1945, p. 68; Growth of Business Units: Effect of War and Shortages, United States News, May 10, 1946, p. 48. But that these advantages are largely illusory has long been recognized. See, e.g., Relative Efficiency of Large, Mediumsized, and Small Business (TNEC Monagraph 13, 1941) pp. 111, 128, 132, 398. The theory was never more forcefully exploded than by Brandeis in The Curse of Bigness: 'The only argument that has been seriously advanced in favor of private monopoly is that competition involves waste, while the monopoly prevents waste and leads to efficiency. This argument is essentially unsound. The wastes of competition are negligible. The economies of monopoly are superficial and delusive. The efficiency of monopoly is at the best temporary. 'Undoubtedly competition involves waste. What human activity does not? The wastes of democracy are among the greatest obvious wastes, but we have compensations in democracy which far outweigh that waste and make it more efficient than absolutism. So it is with competition. The waste is relatively insignificant. There are wastes of competition which do not develop, but kill. These the law can and should eliminate, by regulating competition. 'It is true that the unit in business may be too small to be efficient. It is also true that the unit may be too large to be efficient, and this is no uncommon incident of monopoly.' P. 105. '* * * no monopoly in private industry in America has yet been attained by efficiency alone. No business has been so superior to its competitors in the processes of manufacture or of distribution as to enable it to control the market solely by reason of its superiority.' P. 114—15. 'The Steel Trust, while apparently free from the coarser forms of suppressing competition, acquired control of the market not through greater efficiency, but by buying up existing plants and particularly ore supplies at fabulous prices, and by controlling strategic transportation systems.' P. 115. 'But the efficiency of monopolies, even if established, would not justify their existence unless the community should reap benefit from the efficiency; experience teaches us that whenever trusts have efficiency, their fruits have been absorbed almost wholly by the trusts themselves. From such efficiency as they have developed the community has gained substantially nothing. For instance: * * * The Steel Trust, a corporation of reputed efficiency. The high prices maintained by it in the industry are matters of common knowledge. In less than ten years it accumulated for its shareholders or paid out as dividends on stock representing merely water, over $650,000,000.' Pp. 120, 121. 2 See Relative Efficiency of Large, Medium-sized, and Small Business (TNEC Monograph 13, 1941) p. 132. 3 In 1911 when the original antitrust suit against United States Steel was instituted, the company had already absorbed 180 formerly independent concerns. See United States v. United States Steel Corporation, 223 F. 55, 162. Since then it has absorbed at least 8 additional independent companies, including Columbia which prior to 1930 was operated by an independent producer and maintained the only integrated steel operation west of the Rockies. 4 See note 1, supra. 5 See note 8 of the Court's opinion. 6 'United States Steel is the giant of the industry. Its manufacturing capacity is 'greater than that of all German producers combined. It is more than twice that of the entire British steel industry and more than twice that of all the French mills combined.' In addition to its facilities for producing pig iron, steel ingots, and all forms of finished and semifinished steel products, the corporation owned and operated through some 150 subsidiaries, in 1937, nearly 2,000 oil and natural gas wells, 89 iron ore mines, 79 coal mines, some 40 limestone, dolomite, cement rock, and clay quarries, a number of gypsum and fluorspar mines, 2 zinc mines, a manganese ore mine in Brazil, over 5,000 coking ovens, several water-supply systems with reservoirs, filtration plants, and pumping stations, over 100 ocean, lake and river steamers, 500 barges and tugs, railroads, fire brick plants, and mills producing 12,000,000 barrels of cement. By virtue of its tremendous size and its high degree of integration, the corporation is in a position to dominate the field.' Wilcox, Competition and Monopoly in American Industry (TNEC Monograph 21, 1940) p. 120.
78
334 U.S. 343 68 S.Ct. 1097 92 L.Ed. 1429 SHERRERv.SHERRER. COE v. COE. Nos. 36, 37. Supreme Court of the United States Argued Oct. 13, 14, 1947. June 7, 1948 Mr. Frederick M. Myers, of Pittsfield, Mass., for petitioner. Messrs. Lincoln S. Cain and Robert T. Capeless, both of Pittsfield, Mass., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 We granted certiorari in this case and in Coe v. Coe, 334 U.S. 378, 68 S.Ct. 1094, to consider the contention of petitioners that Massachusetts has failed to accord full faith and credit to decrees of divorce rendered by courts of sister States.1 2 Petitioner Margaret E. Sherrer and the respondent, Edward C. Sherrer, were married in New Jersey in 1930, and from 1932 until April 3, 1944, lived together in Monterey, Massachusetts. Following a long period of marital discord, petitioner, accompanied by the two children of the marriage, left Massachusetts on the latter date, ostensibly for the purpose of spending a vacation in the State of Florida. Shortly after her arrival in Florida, however, petitioner informed her husband that she did not intend to return to him. Petitioner obtained housing accommodations in Florida, placed her older child in school, and secured employment for herself. 3 On July 6, 1944, a bill of complaint for divorce was filed at petitioner's direction in the Circuit Court of the Sixth Judicial Circuit of the State of Florida.2 The bill alleged extreme cruelty as grounds for divorce and also alleged that petitioner was a 'bona fide resident of the State of Florida.'3 The respondentr eceived notice by mail of the pendency of the divorce proceedings. He retained Florida counsel who entered a general appearance and filed an answer denying the allegations of petitioner's complaint, including the allegation as to petitioner's Florida residence.4 4 On November 14, 1944, hearings were held in the divorce proceedings. Respondent appeared personally to testify with respect to a stipulation entered into by the parties relating to the custody of the children.5 Throughout the entire proceedings respondent was represented by counsel.6 Petitioner introduced evidence to establish her Florida residence and testified generally to the allegations of her complaint. Counsel for respondent failed to cross-examine or to introduce evidence in rebuttal. 5 The Florida court on November 29, 1944, entered a decree of divorce after specifically finding 'that petitioner is a bona fide resident of the State of Florida, and that this court has jurisdiction of the parties and the subject matter in said cause; * * *' Respondent failed to challenge the decree by appeal to the Florida Supreme Court.7 6 On December 1, 1944, petitioner was married in Florida to one Henry A. Phelps, whom petitioner had known while both were residing in Massachusetts and wno had come to Florida shortly after petitioner's arrival in that State. Phelps and petitioner lived together as husband and wife in Florida, where they were both employed, until February 5, 1945, when they returned to Massachusetts. 7 In June, 1945, respondent instituted an action in the Probate Court of Berkshire County, Massachusetts, which has given rise to the issues of this case. Respondent alleged that he is the lawful husband of petitioner, that the Florida decree of divorce is invalid, and that petitioner's subsequent marriage is void. Respondet prayed that he might be permitted to convey his real estate as if he were sole and that the court declare that he was living apart from his wife for justifiable cause.8 Petitioner joined issue on respondent's allegations. 8 In the proceedings which followed, petitioner gave testimony in defense of the validity of the Florida divorce decree.9 The Probate Court, however, resolved the issues of fact adversely to petitioner's contentions, found that she was never domiciled in Florida, and granted respondent the relief he had requested. The Supreme Judicial Court of Massachusetts affirmed the decree on the grounds that it was supported by the evidence and that the requirements of full faith and credit did not preclude the Massachusetts courts from reexamining the finding of domicile made by the Florida court.10 9 At the outset, it should be observed that the proceedings in the Florida court prior to the entry of the decree of divorce were in no way inconsistent with the requirements of procedural due process. We do not understand respondent to urge the contrary. The respondent personally appeared in the Florida proceedings. Though his attorney he filed pleadings denying the substantial allegations of petitioner's complaint. It is not suggested that his rights to introduce evidence and otherwise to conduct his defense were in any degree impaired; nor is it suggested that there was not available to him the right to seek review of the decree by appeal to the Florida Supreme Court. It is clear that respondent was afforded his day in court with respect to every issue involved in the litigation, including the jurisdictional issue of petitioner's domicile. Under such circumstances, there is nothing in the concept of due process which demands that a defendant be afforded a second opportunity to litigate the existence of jurisdictional facts. Chicago Life Insurance Co. v. Cherry, 1917, 244 U.S. 25, 37 S.Ct. 492, 61 L.Ed. 966; Baldwin v. Iowa State Traveling Men's Association, 1931, 283 U.S. 522, 51 S.Ct. 517, 75 L.Ed. 1244. 10 It should also be observed that there has been no suggestion that under the law of Florida, the decree of divorce in question is in any respect invalid or could successfully be subjected to the type of attack permitted by the Massachusetts court. The implicit assumption underlying the position taken by respondent and the Massachusetts court is that this case involves a decree of divorce valid and final in the State which rendered it; and we so assume.11 11 That the jurisdiction of the Florida court to enter a valid decree of divorce was dependent upon petitioner's domicile in that State is not disputed.12 This requirement was recognized by the Florida court which rendered the divorce decree, and the principle has been given frequent application in decisions of the State Supreme Court.13 But whether or not petitioner was domiciled in Florida at the time the divorce was granted was a matter to be resolved by judicial determination. Here, unlike the situation presented in Williams v. North Carolina, 1945, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, 157 A.L.R. 1366, the finding of the requisite jurisdictional facts was made in proceedings in which the defendant appeared and participated. The question with which we are confronted, therefore, is whether such a finding made under the circumstances presented by this case may, consistent with the requirements of full faith and credit, be subjected to collateral attack in the courts of a sister State in a suit brought by the defendant in the original proceedings. 12 The question of what effect is to be given to an adjudication by a court that it possesses requisite jurisdiction in a case, where the judgment of that court is subsequently subjected to collateral attack on jurisdictional grounds, has been given frequent consideration by this Court over a period of many years. Insofar as cases originating in the federal courts are concerned, the rule has evolved that the doctrine of res judicata applies to adjudications relating either to jurisdiction of the person or of the subject matter where such adjudications have been made in proceedings in which those questions were in issue and in which the parties were given full opportunity to litigate.14 The reasons for this doctrine have frequently been stated. Thus in Stoll v. Gottlieb, 1938, 305 U.S. 165, 172, 59 S.Ct. 134, 138, it was said: 'Courts to determine the rights of parties are an integral part of our system of government. It is just as important that there should be a place to end as that there should be a place to begin litigation. After a party has his day in court, with opportunity to present his evidence and his view of the law, a collateral attack upon the decision as to jurisdiction there rendered merely retries the issue previously determined. There is no reason to expect that the second decision will be more satisfactory than the first.' 13 This Court has also held that the doctrine of res judicata must be applied to questions of jurisdiction in cases arising in state courts involving the application of the full faith and credit clause where, under the law of the state in which the original judgment was rendered, such adjudications are not susceptible to collateral attack.15 14 In Davis v. Davis, 1938, 305 U.S. 32, 59 S.Ct. 3, 83 L.Ed. 26, 118 A.L.R. 1518, the courts of the District of Columbia had refused to give effect to a decree of absolute divorce rendered in Virginia, on the ground that the Virginia court had lacked jurisdiction despite the fact that the defendant had appeared in the Virginia proceedings and had fully litigated the issue of the plaintiff's domicile. This Court held that in failing to give recognition to the Virginia decree, the courts of the District had failed to accord the full faith and credit required by the Constitution. During the course of the opinion, this Court stated: 'As to petitioner's domicil for divorce and his standing to invoke jurisdiction of the Virginia court, its finding that he was a bona fide resident of that State for the required time is binding upon respondent in the courts of the District. She may not say that he was not entitled to sue for divorce in the state court, for she appeared there and by plea put in issue his allegation as to domicil, introduced evidence to show it false, took exceptions to the commissioner's report, and sought to have the court sustain them and uphold her plea. Plainly, the determination of the decree upon that point is effective for all purposes in this litigation.'16 15 We believe that the decision of this Court in the Davis case and those in related situations17 are clearly indicative of the result to be reached here. Those cases stand for the proposition that the requirements of full faith and credit bar a defendant from collaterally attacking a divorce decree on jurisdictional grounds in the courts of a sister State where there has been participation by the defendant in the divorce proceedings, where the defendant has been accorded full opportunity to contest the jurisdictional issues, and where the decree is not susceptible to such collateral attack in the courts of the State which rendered the decree.18 16 Applying these principles to this case, we hold that the Massachusetts courts erred in permitting the Florida divorce decree to be subjected to attack on the ground that petitioner was not domiciled in Florida at the time the decree was entered. Respondent participated in the Florida proceedings by entering a general appearance, filing pleadings placing in issue the very matters he sought subsequently to contest in the Massachusetts courts, personally appearing before the Florida court and giving testimony in the case, and by retaining attorneys who represented him throughout the entire proceedings. It has not been contended that respondent was given less than a full opportunity to contest the issue of petitioner's domicile or any other issue relevant to the litigation. There is nothing to indicate that the Florida court would not have evaluated fairly and in good faith all relevant evidence submitted to it. Respondent does not even contend that on the basis of the evidence introduced in the Florida proceedings, that court reached an erroneous result on the issue of petitioner's domicile. If respondent failed to take advantage of the opportunities afforded him, the responsibility is his own. We do not believe that the dereliction of a defendant under such circumstances should be permitted to provide a basis for subsequent attack in the courts of a sister State on a decree valid in the State in which it was rendered. 17 It is suggested, however, that Andrews v. Andrews, 1903, 188 U.S. 14, 23 S.Ct. 237, 47 L.Ed. 366, militates against the result we have reached. In that case a husband, who had been domiciled in Ms sachusetts, instituted divorce proceedings in a South Dakota court after having satisfied the residence requirements of that State. The wife appeared by counsel and filed pleadings challenging the husband's South Dakota domicile. Before the decree of divorce was granted, however, the wife, pursuant to a consent agreement between the parties, withdrew her appearance from the proceedings. Following the entry of the decree, the husband returned to Massachusetts and subsequently remarried. After his death a contest developed between his first and second wives as to the administration of the husband's estate. The Massachusetts court concluded that the South Dakota decree of divorce was void on the ground that the husband had not been domiciled in that State and that under the applicable statutes of Massachusetts, the Massachusetts courts were not required to give recognition to such a decree. This Court affirmed on writ of error by a divided vote.19 18 On its facts, the Andrews case presents variations from the present situation.20 But insofar as the rule of that case may be said to be inconsistent with judgment herein announced, it must be regarded as having been superseded by subsequent decisions of this Court. The Andrews case was decided prior to the considerable modern development of the law with respect to finality of jurisdictional findings.21 One of the decisions upon which the majority of the Court in that case placed primary reliance, Wisconsin v. Pelican Insurance Co., 1888, 127 U.S. 265, 8 S.Ct. 1370, 32 L.Ed. 239, was, insofar as pertinent, overruled in Milwaukee County v. M. E. White Co., 1935, 296 U.S. 268, 56 S.Ct. 229, 80 L.Ed. 220. The Andrews case, therefore, may not be regarded as determinative of the issues before us. 19 It is urged further, however, that because we are dealing with litigation involving the dissolution of the marital relation, a different result is demanded from that which might properly be reached if this case were concerned with other types of litigation. It is pointed out that under the Constitution, the regulation and control of marital and family relationships are reserved to the States. It is urged, and properly so, that the regulation of the incidents of the marital relation involves the exercise by the States of powers of the most vital importance. Finally, it is contended that a recognition of the importance to the States of such powers demands that the requirements of full faith and credit be viewed in such a light as to permit an attack upon a divorce decree granted by a court of a sister State under the circumstances of this case even where the attack is initiated in a suit brought by the defendant in the original proceedings.22 20 But the recognition of the importance of a State's power to determine the incidents of basic social relationships into which its domiciliaries enter does not resolve the issues of this case. This is not a situation in which a State has merely sought to exert such power over a domiciliary. This is, rather, a case involving inconsistent assertions of power by courts of two States of the Federal Union and thus presents considerations which go beyond the interests of local policy, however vital. In resolving the issues here presented, we do not conceive it to be a part of our function to weigh the relative merits of the policies of Florida and Massachusetts with respect to divorce and related matters. Nor do we understand the decisions of this Court to support the proposition that the obligation imposed by Article IV, § 1 of the Constitution and the Act of Congress passed thereunde, amounts to something less than the duty to accord full faith and credit to decrees of divorce entered by courts of sister States.23 The full faith and credit clause is one of the provisions incorporated into the Constitution by its framers for the purpose of transforming an aggregation of independent, sovereign States into a nation.24 If in its application local policy must at times be required to give way, such 'is part of the price of our federal system.' Williams v. North Carolina, 1942, 317 U.S. 287, 302, 63 S.Ct. 207, 215.25 21 This is not to say that in no case may an area be recognized in which reasonable accommodations of interest may properly be made. But as this Court has heretofore made clear, that area is of limited extent.26 We believe that in permitting an attack on the Florida divorce decree which again put in issue petitioner's Florida domicile and in refusing to recognize the validity of that decree, the Massachusetts courts have asserted a power which cannot be reconciled with the requirements of due faith and credit. We believe that assurances that such a power will be exercised sparingly and wisely render it no less repugnant to the constitutional commands. 22 It is one thing to recognize as permissible the judicial reesamination of findings of jurisdictional fact where such findings have been made by a court of a sister State which has entered a divorce decree in ex parte proceedings.27 It is quite another thing to hold that the vital rights and interests involved in divorce litigation may be held in suspense pending the scrutiny by courts of sister States of findings of jurisdictional fact made by a competent court in proceedings conducted in a manner consistent with the highest requirements of due process and in which the defendant has participated. We do not conceive it to be in accord with the purposes of the full faith and credit requirement to hold that a judgment rendered under the circumstances of this case may be required to run the gantlet of such collateral attack in the courts of sister States before its validity outside of the State which rendered it is established or rejected. That vital interests are involved in divorce litigation indicates to us that it is a matter of greater rather than lesser importance that there should be a place to end such litigation.28 And where a decree of divorce is rendered by a competent court under the circumstances of this case, the obligation of full faith and credit requires that such litigation should end in the courts of the State in which the judgment was rendered. 23 Reversed. 24 Mr. Justice FRANKFURTER and Mr. Justice MURPHY dissenting. For dissenting opinion, see 334 U.S.3 43, 68 S.Ct. 1097. 25 What Mr. Justice Holmes said of the illstarred Haddock v. Haddock may equally be said here: 'I do not suppose that civilization will come to an end whichever way this case is decided.' 201 U.S. 562, 628, 26 S.Ct. 525, 551, 50 L.Ed. 867, 5 Ann.Cas. 1. But, believing as I do that the decision just announced is calculated, however unwittingly, to promote perjury without otherwise appreciably affecting the existing disharmonies among the forty-eight States in relation to divorce, I deem it appropriate to state my views. 26 Not only is today's decision fraught with the likelihood of untoward consequences. It disregards a law that for a century has expressed the social policy of Massachusetts, and latterly of other States, in a domain which under our Constitution is peculiarly the concern of the States and not of the Nation. 27 If all that were necessary in order to decide the validity in one State of a divorce granted in another was to read the Full Faith and Credit Clause of the Constitution, art. 4, § 1, generations of judges would not have found the problem so troublesome as they have, nor would a divided Court have successively pronounced a series of discordant decisions. 'Full faith and credit' must be given to a judgment of a sister State. But a 'judgment' implies the power of the State to deal with the subject-matter in controversy. A State court which has entered what professes to be a judgment must have had something on which to act. That something is what is conveyed by the word 'jurisdiction,' and, when it comes to dissolving a marriage status, throughout the English-speaking world the basis of power to act is domicile. Whether or not in a particular situation a person is domiciled in a given State depends on circumstances, and circumstances have myriad diversities. But there is a consensus of opinion among English-speaking courts the world over that domicile requires some sense of permanence of connection between the individual who claims it and the State which he asks to recognize it. 28 It would certainly have been easier if from the beginning the Full Faith and Credit Clause had been construed to mean that the assumption of jurisdiction by the courts of a State would be conclusive, so that every other State would have to respect it. But such certainly has not been the law since 1873. Thompson v. Whitman, 18 Wall. 457, 21 L.Ed. 897. Nor was it the law when this Court last considered the divorce problem, in 1945. Williams v. North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, 157 A.L.R. 1366. A State that is asked to enforce the action of another State may appropriately ascertain whether that other State had power to do what it purported to do. And if the enforcing State has an interest under our Constitution in regard to the subject-matter that is vital and intimate, it should not be within the power of private parties to foreclose that interest by their private arrangement. Andrews v. Andrews, 188 U.S. 14, 23 S.Ct. 237, 47 L.Ed. 366; cf. Fall v. Eastin, 215 U.S. 1, 30 S.Ct. 3, 54 L.Ed. 65, 23 L.R.A.,N.S., 924, 17 Ann.Cas. 853; Alaska Packers Association v. Industrial Accident Commission, 294 U.S. 532, 55 S.Ct. 518, 79 L.Ed. 1044. 29 If the marriage contract were no different from a contract to sell an automobile, the parties thereto might well be permitted to bargain away all interests involved, in or out of court. But the State has an interest in the family relations of its citizens vastly different from the interest it has in an ordinary commercial transaction. That interest cannot be bartered or bargained away by the immediate parties to the controversy by a default or an arranged contest n a proceeding for divorce in a State to which the parties are strangers. Therefore, the constitutional power of a State to determine the marriage status of two of its citizens should not be deemed foreclosed by a proceeding between the parties in another State, even though in other types of controversy considerations making it desirable to put an end to litigation might foreclose the parties themselves from reopening the dispute.1 I cannot agree that the Constitution forbids a state from insisting that it is not bound by any such proceedings in a distant State wanting in the power that domicile alone gives, and that its courts need not honor such an intrinsically sham proceeding, no matter who brings the issue to their attention. 30 That society has a vital interest in the domestic relations of its members will be almost impatiently conceded.2 But it is not enough to pay lip-service to the commonplace as an abstraction. Its implications must be respected. They define our problems. Nowhere in the United States, not even in the States which grant divorces most freely, may a husband and wife rescind ther marriage at will as they might a commercial contract. Even if one thought that such a view of the institution of marriage was socially desirable, it could scarcely be held that such a personal view was incorporated into the Constitution or into the law for the enforcement of the Full Faith and Credit Clause enacted by the First Congress. 1 Stat. 122, 28 U.S.C. § 687, 28 U.S.C.A. § 687. That when the Constitution was ordained divorce was a matter of the deepest public concern, rather than deemed a personal dispute between private parties, is shown by the fact that it could be secured almost exclusively only by special enactments of the several legislatures and not through litigation in court. See Ireland and Galindez, Divorce in the Americas (1947) p. 1. 31 As a contract, the marriage contract is unique in the law. To assimilate it to an ordinary private contract can only mislead. See Maynard v. Hill, 125 U.S. 190, 210—214, 8 S.Ct. 723, 729—731, 31 L.Ed. 654; Restatement of the Law, Contracts, §§ 584, 586; cf. Trustees of Dartmouth College v. Woodward, 4 Wheat. 518, 627—629, 4 L.Ed. 629. The parties to a marriage do not comprehend between them all the interests that the relation contains. Society sanctions the institution and creates and enforces its benefits and duties. As a matter of law, society is represented by the permanent home State of the parties, in other words, that of their domicile. In these cases that State was Massachusetts. 32 Massachusetts has seen fit to subject its citizens to the following law: 33 'A divorce decreed in another jurisdiction according to the laws thero f by a court having jurisdiction of the cause and of both the parties shall be valid and effectual in this commonwealth; but if an inhabitant of this commonwealth goes into another jurisdiction to obtain a divorce for a cause occurring here while the parties resided here, or for a cause which would not authorize a divorce by the laws of this commonwealth, a divorce so obtained shall be of no force or effect in this commonwealth.' Mass.Gen.Laws, c. 208, § 39 (1932). 34 This statute, in substance,3 was first enacted in 1935, and even then merely formalized a prior rule of judicial origin. Cf. Hanover v. Turner, 14 Mass. 227, 7 Am.Dec. 203; Report of the Commissioners Appointed to Revise the General Statutes of the Commonwealth, pt. II, p. 123; 2 Kent, Commentaries, Lect. 27, *108 *109. The Uniform Annulment of Marriages and Divorce Act,4 passed by Delaware,5 New Jersey,6 and Wisconsin,7 is almost identical, as is a Maine statute8 on the same subject. 35 Massachusetts says through this statute that a peron who enjoys its other institutions but is irked by its laws concerning the severance of the marriage tie, must either move his home to some other State with more congenial laws, or remain and abide by the laws of Massachusetts. He cannot play ducks and drakes with the State, by leaving it just long enough to take advantage of a proceeding elsewhere, devised in the interests of a quick divorce, intending all the time to retain Massachusetts as his home, and then return there, resume taking advantage of such of its institutions as he finds congenial but assert his freedom from the restraints of its policies concerning severance of the marriage tie. Massachusetts has a right to define the terms on which it will grant divorces, and to refuse to recognize divorces granted by other States to parties who at the time are still Massachusetts domiciliaries. Has it not also the right to frustrate evasion of its policies by those of its permanent residents who leave the State to change their spouses rather than to change their homes, merely because they go through a lukewarm or feigned contest over jurisdiction? 36 The nub of the Williams decision was that the State of domicile has an independent interest in the martial status of its citizens that neither they nor any other State with which they may have a transitory connection may abrogate against its will. Its interest is not less because both parties to the marital relationship instead of one sought to evade its laws. In the Williams case, it was not the interest of Mrs. Williams, or that of Mr. Hendryx, that North Carolina asserted. It was the interest of the people of North Carolina. The same is true here of the interest of Massachusetts.9 While the State's interest may be expressed in criminal prosecutions, with itself formally a party as in the Williams case, the State also expresses its sovereign power when it speaks through its courts in a civil litigation between private parties. Cf. Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836. 37 Surely there is involved here an exercise by Massachusetts of its policy concerning the termination of marriage by its own citizens. The Framers left that power over domestic relations in the several States, and every effort to withdraw it from the States within the past sixty years has failed.10 An American citizen may change his domicile from one State to another. And so, a State must respect another State's valid divorce decree even though it concerns its former citizens. But the real question here is whether the Full Faith and Credit Clause can be used as a limitation on the power of a State over its citizens who do not change their domicile, who do not remove to another State, but who leave the State only long enough to escape the rigors of its laws, obtain a divorce, and then scurry back. To hold that this Massachusetts statute contravenes the Full Faith and Credit Clause is to say that that State has so slight a concern in the continuance or termination of the marital relationships of its domiciliaries that its interest may be foreclosed by an arranged litigation between the parties in which it was not represented.11 38 Today's decision may stir hope of contributing toward greater certainty of status of those divorced. But when people choose to avail themselves of laws laxer than those of the State in which they permanently abide, and where, barring only the interlude necessary to get a divorce, they choose to continue to abide, doubts and conflicts are inevitable, so long as the divorce laws of the forty-eight States remain diverse, and so long as we respect the law that a judgment without jurisdictional foundation is not constitutionally entitled to recognition everywhere. These are difficulties, as this Court has often reminded, inherent in our federal system, in which governmental power over domestic relations is not given to the central government. Uniformity regarding divorce is not within the power of this Court to achieve so long as 'the domestic relations of husband and wife * * * were matters reserved to the States.' State of Ohio ex rel. Popovici v. Agler, 280 U.S. 379, 384, 50 S.Ct. 154, 155, 74 L.Ed. 489; In re Burrus, 136 U.S. 586, 593, 594, 10 S.Ct. 850, 852, 853, 34 L.Ed. 500.12 And so long as the Congress has not exercised its powers under the Full Faith and Credit Clause to meet the special problems raised by divorce decrees, this Court cannot through its adjudications achieve the result sought to be accomplished by a long train of abortive efforts at legislative and constitutional reform.13 To attempt to shape policy so as to avoid disharmonies in our divorce laws was not a power entrusted to us, nor is the judiciary competent to x ercise it. Courts are not equipped to pursue the paths for discovering wise policy. A court is confined within the bounds of a particular record, and it cannot even shape the record. Only fragments of a social problem are seen through the narrow windows of a litigation. Had we innate or acquired understanding of a social problem in its entirety, we would not have at our disposal adequate means for constructive solution. The answer to so tangled a problem as that of our conflicting divorce laws is not to be achieved by the simple judicial resources of either/or—this decree is good and must be respected, that one is bad and may be disregarded. We cannot draw on the available power for social invention afforded by the Constitution for dealing adequately with the problem, because the power belongs to the Congress and not to the Court. The only way in which this Court can achieve uniformity, in the absence of Congressional action or constitutional amendment, is by permitting the States with the laxest divorce laws to impose their policies upon all other States. We cannot as judges be ignorant of that which is common knowledge to all men. We cannot close our eyes to the fact that certain States make an industry of their easy divorce laws, and encourage inhabitants of other States to obtain 'quickie' divorces which their home States deny them.14 To permit such States to bind all others to their decrees would endow with constitutional sanctity a Gresham's Law of domestic relations. 39 Fortunately, today's decision does not go that far. But its practical result will be to offer new inducements for conduct by parties and counsel, which, in any other type of litigation, would be regarded as perjury, but which is not so regarded where divorce is involved because ladies and gentlemen indulge in it. But if the doctrine of res judicata as to jurisdictional facts in controversies involving exclusively private interests as infused into the Full Faith and Credit Clause is applied to divorce decrees so as to foreclose subsequent inquiry into jurisdiction, there is neither logic nor reason nor practical desirability in not taking the entire doctrine over. Res judicata forecloses relitigation if there has been an opportunity to litigate once, whether or not it has been availed of, or carried as far as possible. Cromwell v. County of Sac, 94 U.S. 351, 24 L.Ed. 195; Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329.15 And it applies to questions of jurisdiction of subject matter as well as to that of persons. Stol v. Gottlieb, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104; Treinies v. Sunshine Mining Co., 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 85. Why should it not apply where there has been a wasted opportunity to litigate, but should apply where the form of a contest has been gone through?16 Or if more than form is required, how much of a contest must it be? Must the contest be bellicose or may it be pacific? Must it be fierce or may it be tepid? Must there be a cloud of witnesses to negative the testimony of the plaintiff, or may a single doubter be enough? Certainly if the considerations that establish res judicata as between private litigants in the ordinary situations apply to the validity of a divorce against the public policy of the State of domicile, it cannot make a rational difference that the question of domicile is contested with bad feeling rather than amicably adjusted. The essence of the matter is that through the device of a consent decree a policy of vital concern to States should not be allowed to be defied with the sanction of this Court. If perchance the Court leaves open the right of a State to prove fraud in the ordinary sense—namely, that a mock contest was won by prearrangement—the claim falls that today's decision will substantially restrict the area of uncertainty as to the validity of divorces. If the Court seeks to avoid this result by holding that a party to a feigned legal contest cannot question in his home State the good faith behind an adjudication of domicile in another State, such holding is bound to encourage fraud and collusion still further. 40 In considering whether the importance of the asserted uncertainties of marital status under existing law is sufficient to justify this result, it is important to think quantitatively, not dramatically. One would suppose that the diversity in the divorce laws of the forty-eight States, and the unwillingness of most of them to allow the few which make an industry out of granting divorce to impose their policies upon the others, undermines the structure of the family and renders insecure all marriages of previously divorced persons in the United States. The proportion of divorced people who have cause to worry is small n deed. Those who were divorced at home have no problem. Those whose desire to be rid of a spouse coincided with an unrelated shift of domicile will hardly be suspect where, as is usually true, the State to which they moved did not afford easy divorces or required a long residence period. Actually, there are but five States, Arkansas, Florida, Idaho, Nevada, and Wyoming, in which divorces may be easily obtained on less than one year's residence.17 Indovina and Dalton, Statutes of All States and Territories with Annotations on Marriage-Annulment-Divorce (Santa Monica, 1945). These five States accounted for only 24,370 divorces in 1940, but 9% of the national total. Dept. of Commerce, Statistical Abstract of the United States (1946) p. 94. The number of divorces granted in Arkansas, Idaho, and Wyoming is small enough to indicate the normal incidence of divorce among their permanent population, with only few transients taking advantage of their divorce laws. Nevada and Florida thus attract virtually all the non-resident divorce business. Yet, between them, only 16,375 divorces were granted in 1940, 6% of the total. Ibid. Some of these people were undoubtedly permanently settled in those States, and have nothing to fear. Others may have moved to those States, intending to make their permanent homes there, and have since remained. They were amply protected by the Full Faith and Credit Clause even before today's decision. The only persons at all insecure are that small minority who temporarily left their home States for a State—one of the few—offering quick and easy divorce, obtained one, and departed. Is their security so important to the Nation that we must safeguard it even at the price of depriving the great majority of States which do not offer bargain-counter divorces of the right to determine the laws of domestic relations applicable to their citizens? 41 Even to a believer in the desirability of easier divorce—an issue that is not our concern—this decision should bring little solace. It offers a way out only to that small portion of those unhappily married who are sufficiently wealthy to be able to afford a trip to Nevada or Florida, and a six-week or three-month stay there.18 42 Of course, Massachusetts may not determine the question of domicile in disregard of what her sister States have found. A trial de novo of this issue would not satisfy the requirements which we laid down in the second Williams case, 325 U.S. at page 236, 65 S.Ct. at page 1098. Nor can Massachusetts make findings on this issue which preclude reexamination by this Court, nor may it, through prejudice in favor of its own policies, strain the facts to find continuance of the tie between the parties and itself. But the records in these cases do not justify the conclusion that Massachusetts has been remiss in its duty of respect. It is true that its courts did not employ a formal legal jargon and say that there was a presumption in favor of the findings of Florida or Nevada and that this presumption had been overcome by the evidence. But the Constitution demands compliance, not a form of words. To ascertain whether in fact there is a real basis for saying that Massachusetts did not accord proper recognitin to Nevada's and Florida's findings, we must turn to the records and discover for ourselves just how much warrant there was for their findings of domicile. 43 The petitioner and respondent in Sherrer v. Sherrer were married in New Jersey in 1930, and moved to Nonterey, Massachusetts, in 1932, where they lived together until 1944. They had two children. There was evidence that their relationship became less than harmonious towards the end of this period, that Mrs. Sherrer was troubled by a sinus infection and had been advised by a physician to go to Florida, and that she consulted a Massachusetts attorney about divorce before leaving. In March, 1944, she told Sherrer that she wished to take a trip to Florida for a month's rest and wanted to take the children along. She later testified that she had intended even then to go to Florida to stay, but had lied in order to obtain her husband's consent. His consent and the necessary funds were forthcoming. On April 3, 1944, Mrs. Sherrer and the children left for Florida, taking along a suitcase and a small bag, but leaving behind a trunk, some housedresses, and much of the children's clothing. They arrived the following day. She rented an apartment in St. Petersburg, which they occupied for about three weeks, then moved into a furnished cottage and later into another furnished cottage. 44 About a week after Mrs. Sherrer's departure, one Phelps, who had previously been at least an acquaintance of hers, knowing that she had gone to St. Petersburg, went there, met her soon after, and saw her frequently. On April 20, she wrote to her husband that she did not care to go back to him, and returned the money for train fare which he had sent. She sent her older daughter to school and took a job as a waitress. Phelps found employment in a lumber yard. 45 Florida law permits institution of proceedings for divorce after ninety days' bona fide residence in the State. On July 6, ninety-three days after her arrival in the State, Mrs. Sherrer consulted a Florida attorney, had the necessary papers drawn up, and filed a libel for divorce the same day. Sherrer, receiving notice by mail, retained Florida counsel, who entered a general appearance and filed an answer, which denied Mrs. Sherrer's allegations as to residence. The case was set for hearing on November 14. On November 9, Sherrer arrived on the scene. He and his wife entered into a stipulation, subject to the approval of the court, providing for custody of the children in him during the school year and in her during summer vacations. At the hearing, Sherrer's attorney was present, and Sherrer remained in a side room. The attorney did not cross-examine Mrs. Sherrer or offer evidence as to either jurisdiction or the merits, other than the stipulation regarding custody of the children. Sherrer was called into the court-room and questioned as to his ability to look after the children during the school year. The hearing was closed, the decree being held up pending filing of a deposition by Mrs. Sherrer. On November 19, Sherrer returned to Massachusetts with the children. On November 29, the deposition was filed and the decree entered. On December 1, the petitioner married Phelps and the couple took up residence in the cottage which she and the children had previously occupied. 46 There they remained until early in February, 1945, when they returned to Massachusetts, staying for a few days at Westfield and then returning to Monterey. Phelps' father lived in Westfield, and Phelps testified that his father's critical illness occasioned their return. A few days later, Phelps was served with papers in a $15,000 alienation of affections action brought by Sherrer. He testified that the pendency of this action was the reason for his remaining in Massachusetts even after his father's health had become less critical. The trial was set many months ahead, but Phelps and the petitioner did not return to Florida. Rent on the Florida cottage for a month following their departure was paid,b ut this may have been required, as it was paid on a monthly basis. Some personal belongings were left behind there. Later, the landlord was informed that Phelps and the petitioner would not continue renting the cottage, and still later they asked that their belongings be sent to Monterey. 47 Sherrer had meanwhile moved out of the house which he and the petitioner had formerly lived in, which they owned together. Phelps and the petitioner moved in, and did not return to Florida. On June 28, 1945, a petition was filed by Sherrer in the Berkshire County Probate Court for a decree setting forth that his wife had deserted him and that he was living apart from her for justifiable cause. A statute provided that such a decree would empower a husband to convey realty free of dower rights. Mass. Gen. Laws c. 209, § 36 (1932). The Probate Court found that Mrs. Sherrer had not gone to Florida to make it her permanent home but with the intention of meeting Phelps, divorcing Sherrer, marrying Phelps, and returning to Massachusetts. These findings were upheld by the Supreme Judicial Court of the State. 48 The parties in Coe v. Coe were married in 1934 in New York City. Until 1939, they spent a large part of each year in travel, but had only one home, owned by Coe, in Worcester, Massachusetts. Coe also owned other land, maintained bank accounts, paid taxes, registered his automobile, etc., all in Worcester. 49 Beginning in 1940, Coe also maintained an apartment in New York City, where much of his business was conducted. He usually lived there during the week, returning to Worcester on week ends. In New York City there also lived one Dawn Allen, his secretary and friend. His relations with Mrs. Coe deteriorated. It appears that during this period as well, his principal domicile was in Worcester. His own testimony as to where he intended to make his home at this time was contradictory. He kept bank accounts and most of his funds in New York and did jury duty there. He used his Worcester address in correspondence and when incorporating a personal corporation.19 The trial judge found that his domicile remained in Worcester. 50 In January, 1942, Mrs. Coe filed a petition for separate support in the Worcester County Probate Court. Coe cross-petitioned for divorce. On March 25, Coe's petition was dismissed, and Mrs. Coe's granted; she was awarded $35 per week. She appealed, complaining of the amount. While the appeal was pending, Coe left Worcester for New York, and accompanied by Dawn Allen and her mother, left New York on May 31, for Reno, Nevada, arriving there on June 10. He lived at the Del Monte Ranch. He testified that he went there to relieve his asthma and because of Nevada's liberal tax laws. He also gave conflicting testimony as to whether he went there in order to get a divorce. On June 11, he consulted a lawyer for whom his Worcester attorney had prepared a divorce memorandum. He opened a bank account and rented a safe deposit box, registered his automobile and took out a driver's license, all in Nevada. He did not sever his other ties with New York or Massachusetts. 51 Nevada law permits institution of proceedings for divorce after six weeks' residence. Forty-seven days after his arrival in the State, Coe filed a complaint for divorce, alleging six weeks' bona fide residence. Notice was mailed to Mrs. Coe, who followed to Reno, engaged an attorney, and demurred to the complaint. Subsequently, however, she and Coe entered into a written agreement, providing for a lump sum payment to Mrs. Coe of $7,500, and $35 per week. On September 19, she filed an answer in which she admitted Coe's residence as alleged in his complaint, and a cross-complaint. On the same day, a divorce was granted to Mrs. Coe, and the court adopted the agreement. Also on the same day, Coe married Dawn Allen. Two days later they left Reno, returned to New York, where Coe gave up his apartment, and returned to Worcester on October 1, residing at a house owned by him there. 52 On February 25, 1943, the Supreme Judicial Court of Massachusetts affirmed the separate maintenance decree of the Worcester County Probate Court. Coe made no payments to the respondent under either that decree or that of the Nevada court, other than the $7,500 lump sum. On May 22, 1943, respondent filed a petition in the Probate Court to have him cited for contempt. Coe petitioned to have the decree revoked because of the supervening Nevada divorce decree. 53 While this was pending, Coe and Dawn spent a part of the summer of 1943 at the Del Monte Ranch, near Reno, to confer with Coe's Nevada divorce lawyer and to negotiate for the purchase of the Ranch. Apparently, the purchase was not made. With the exception of this period, he and Dawn have resided at Worcester continuously since their marriage. Coe kept his bank accounts and post office box there, and paid his poll tax and other local taxes. In February, 1944, he purchased a more expensive house, into which they moved. In various formal papers, he noted Worcester as his residence. 54 On October 21, 1943, the Probate Court, on the basis of the Nevada divorce, revoked its separate maintenance decree. The respondent's proffer of evidence to show lack of jurisdiction in the Nevada court was rejected. This ruling was reversed by the Supreme Judicial Court, which sent the case back to allow evidence contradicting the Nevada finding of domicile. On remand, such evidence was taken, the gist of which has been summarized. The Probate Court found that the parties had been domiciled in Massachusetts throughout, and that Coe's trip to Nevada was made in order to obtain a divorce and not to change his domicile. These findings were upheld by the Supreme Judicial Court. 55 Conceding that matters of credibility were for the triers of fact, the evidence appears to me to have been ample to justify the findings that were made, even giving every weight to the contrary Nevada and Florida determinations and treating the burden on the party contradicting those determinations as most heavy. Judges, as well as jurors, naturally enough may differ as to the meaning of testimony and the weight to be given evidence. I would not deem it profitable to dissent on such an issue touching the unique circumstances of a particular case. My disagreement with the decision of the Court is not as to the weight of the evidence, but concerns what I take to be its holding, that the opportunity of the parties of litigate the question of jurisdiction in Nevada and Florida foreclosed Massachusetts from raising the question later. If the Court had merely held that the evidence was not sufficient to justify Massachusetts' findings contrary to what was recited in the decrees of Nevada and Florida, or as an added assurance that obligations of recognition be honored, had required of the Massachusetts court explicit avowal of the presumption in favor of the Florida and Nevada decrees, I should have remained silent. But the crux of today's decision is that regardless of how overwhelming the evidence may have been that the asserted domicile in the State offering bargain-counter divorces was a sham, the home State of the parties is not permitted to question the matter if the form of a controversy has been gone through. To such a proposition I cannot assent. Decisions of this Court that have not stood the test of time have been due not to want of foresight by the prescient Framers of the Constitution, but to misconceptions regarding its requirements. I cannot bring myself to believe that the Full Faith and Credit Clause gave to the few States which offer bargain-counter divorces constitutional power to control the social policy governing domestic relations of the many States which do not. 1 U.S.Const. Art. IV, § 1, provides: 'Full Faith and Credit shall be given in each State to the public Acts, Records, and Judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.' The Act of May 26, 1790, 1 Stat. 122, as amended, R.S. § 905, 28 U.S.C. § 687, 28 U.S.CA. § 687, provides in part: '* * * And the said records and judicial proceedings * * * shall have such faith and credit given to them in every court within the United States as they have by law or usage in the courts of the State from which they are taken.' 2 By statute, the Circuit Courts, as courts of equity, have jurisdiction of divorce causes. Florida Stat.Ann. § 65.01. Meloche v. Meloche, 1931, 101 Fla. 659, 662, 133 So. 339, 340, 140 So. 319. 3 Section 65.02 of Florida Stat.Ann. provides: 'In order to obtain a divorce the complainant must have resided ninety days in the State of Florida before the filing of the bill of complaint.' The Florida courts have construed the statutory requirement of residence to be that of domicile. Respondent does not contend nor do we find any evidence that the requirements of 'domicile' as defined by the Florida cases are other than those generally applied or differ from the tests employed by the Massachusetts courts. Wade v. Wade, 1927, 93 Fla. 1004, 113 So. 374; Evans v. Evans, 1940, 141 Fla. 860, 194 So. 215; Fowler v. Fowler, 1945, 156 Fla. 316, 22 So.2d 817. 4 The first allegation of respondent's answer stated: 'That the Plaintiff is not a bona-fide legal resident of the State of Florida and has not been such continuously for more than the ninety days immediately preceding the filing of the bill of complaint. That on or about April 3, 1944, while the parties were living together as residents of Monterey, Massachusetts, the Plaintiff came to Florida with the children of the parties for a visit and without any expressed intention of establishing a separate residence from the Defendant and has remained in Florida ever since, but without any intention of becoming a bona-fide resident of Florida.' 5 The agreement provided that respondent should have custody of the children during the school term of each year and that petitioner should be given custody throughout the rest of the year, subject to the right of both parents to visit at reasonable times. Before the final decree of divorce was entered, respondent returned to Massachusetts accompanied by the two children. 6 It is said that throughout most of the proceedings respondent did not appear in the courtroom but remained 'in a side room.' 7 Appeals lie to the Florida Supreme Court from final decrees of divorce. Fla.Const. Art. V, § 5. And see e.g., Homan v. Homan, 1940, 144 Fla. 371, 198 So. 20. 8 The action was brought pursuant to the provisions of Mass.Gen.Laws (Ter. Ed.) c. 209, § 36. 9 Petitioner testified that for many years prior to her departure for Florida, respondent had made frequent allusions to the fact that petitioner's mother had been committed to a mental institution and had suggested that petitioner was revealing the same traits of mental instability. Petitioner testified that as a result of these remarks and other acts of cruelty, her health had been undermined and that it had therefore become necessary for her to leave respondent. In order to insure her departure, she had represented that her stay in Florida was to be only temporary, but from the outset she had in fact intended not to return. Petitioner testified further that both before and after the Florida decree of divorce had been entered, she had intended to reside permanently in Florida and that she and Phelps had returned to Massachusetts only after receiving a letter stating that Phelps' father was in poor health. 10 1946, 320 Mass. 351, 69 N.E.2d 801. 11 See Williams v. North Carolina, 1945, 325 U.S. 226, 233, 234, 65 S.Ct. 1092, 1096, 1097, 89 L.Ed. 1577, 157 A.L.R. 1366; cf. Treinies v. Sunshine Mining Co., 1939, 308 U.S. 66, 78, note 26, 60 S.Ct. 44, 50, 84 L.Ed. 85. No Florida case has been called to our attention involving a collateral attack on a divorce decree questioning the domicile of the parties, and hence the jurisdiction of the court which entered the decree, where both parties appeae d in the divorce proceedings. See generally Everette v. Petteway, 1938, 131 Fla. 516, 528, 529, 179 So. 666, 671, 672; State ex rel. Goodrich Co. v. Trammell, 1939, 140 Fla. 500, 505, 192 So. 175, 177. But cf. Chisholm v. Chisholm, 1929, 98 Fla. 1196, 125 So. 694; Dye v. Dolbeck, 1934, 114 Fla. 866, 154 So. 847, involving attacks on jurisdictional findings made in ex parte divorce proceedings. 12 Bell v. Bell, 1901, 181 U.S. 175, 21 S.Ct. 551, 45 L.Ed. 804. 13 See note 3 supra. 14 Baldwin v. Iowa State Traveling Men's Association, 1931, 283 U.S. 522, 51 S.Ct. 517, 75 L.Ed. 1244; Stoll v. Gottlieb, 1938, 305 U.S. 165, 59 S.Ct. 134, 83 L.Ed. 104; Chicot County Drainage District v. Baxter State Bank, 1940, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329; Sunshine Anthracite Coal Co. v. Adkins, 1940, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263; Jackson v. Irving Trust Co., 1941, 311 U.S. 494, 61 S.Ct. 326, 85 L.Ed. 297. And see Forsyth v. Hammond, 1897, 166 U.S. 506, 17 S.Ct. 665, 41 L.Ed. 1095; Heiser v. Woodruff, 1946, 327 U.S. 726, 66 S.Ct. 853, 90 L.Ed. 970. 15 American Surety Co. v. Baldwin, 1932, 287 U.S. 156, 53 S.Ct. 98, 77 L.Ed. 231, 86 A.L.R. 298; Treinies v. Sunshine Mining Co., 1939, 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 8. And see Chicago Life Insurance Co. v. Cherry, 1917, 244 U.S. 25, 37 S.Ct. 492, 61 L.Ed. 966. 16 Davis v. Davis, 1938, 305 U.S. 32, 40, 59 S.Ct. 3, 6. And see Stoll v. Gottlieb, 1938, 305 U.S. 165, 172, note 13, 59 S.Ct. 134, 137. 17 See cases discussed supra. 18 We, of course, intimate no opinion as to the scope of Congressional power to legislate under Article IV, § 1 of the Constitution. See note 1 supra. 19 Justices Brewer, Shiras, and Peckham dissented. Mr. Justice Holmes took no part in the case. 20 Thus, in the Andrews case, before the divorce decree was entered by the South Dakota court, the defendant withdrew her appearance in accordance with a consent agreement. 21 See note 14 supra. 22 But cf. Williams v. North Carolina, 1945, 325 U.S. 226, 230, 65 S.Ct. 1092, 1095. 23 Davis v. Davis, 1938, 305 U.S. 32, 40, 59 S.Ct. 3, 6; Williams v. North Carolina, 1942, 317 U.S. 287, 294, 63 S.Ct. 207, 210, 211, 87 L.Ed. 279, 143 A.L.R. 1273. 24 Milwaukee County v. M. E. White Co., 1935, 296 U.S. 268, 276, 277, 56 S.Ct. 229, 233, 234; Magnolia Petroleum Co. v. Hunt, 1943, 320 U.S. 430, 439, 64 S.Ct. 208, 213, 88 L.Ed. 149, 150 A.L.R. 413. 25 But we may well doubt that the judgment which we herein announce will amount to substantial interference with state policy with respect to divorce. Many States which have had occasion to consider the matter have already recognized the impropriety of permitting a collateral attack on an out-of-state divorce decree where the defendant appeared and participated in the divorce proceedings. See, e.g., Norris v. Norris, 1937, 200 Minn. 246, 273 N.W. 708; Miller v. Miller, Sup., 1946, 65 N.Y.S.2d 696, affirmed, 1947, 271 App.Div. 974, 67 N.Y.S.2d 379; Cole v. Cole, 1924, 96 N.J.Eq. 206, 124 A. 359. 26 Broderick v. Rosner, 1935, 294 U.S. 629, 642, 55 S.Ct. 589, 592, 79 L.Ed. 1100, 100 A.L.R. 1133; Williams v. North Carolina, 1942, 317 U.S. 287, 294, 295, 63 S.Ct. 207, 210, 211. 27 Williams v. North Carolina, 1945, 325 U.S. 226, 65 S.Ct. 1092. 28 Cf. Stoll v. Gottlieb, 1938, 305 U.S. 165, 172, 59 S.Ct. 134, 137. 1 Nor do I regard Davis v. Davis, 305 U.S. 32, 59 S.Ct. 3, 83 L.Ed. 26, 118 A.L.R. 1518, as contrary authority. That case did not depend for its result on the fact that there had been an adjudication of the jurisdiction of the court rendering the divorce enforced, inasmuch as this Court found that the State granting the divorce was in fact that of the domicile. 305 U.S. at page 41, 59 S.Ct. at pages 6, 7. Moreover this Court's citation therein of Andrews v. Andrews, supra, indicates an absence of intention to overrule the holding of that case that opportunity to litigate the issue of domicile does not foreclose inquiry as to the true facts. Andrews v. Andrews has since been cited with respect, as recently as Williams v. North Carolina, 317 U.S. 287, 309, 320, n. 7, 63 S.Ct. 207, 218, 223, 87 L.Ed. 279, 143 A.L.R. 1273, and Id., 325 U.S. 226, 229, 240, 242, 65 S.Ct. 1092, 1094, 1095, 1100. 2 Compare the English laws providing for a King's Proctor to represent the interests of the Crown in divorce proceedings. Sections 5—7, Matrimonial Causes Act, 1860, 23 & 24 Vict., c. 44; § 1, Matrimonial Causes Act, 1873, 36 & 37 Vict., c. 31; § 181, The Supreme Court of Judicature (Consolidation) Act, 1925, 15 § 16 Geo. 5, c. 49, 9 Halsbury's Statutes of England 393, 394. 3 Rev.L. 1835, c. 76: § 39. When any inhabitant of this state shall go into any other state or country, in order to obtain a divorce for any cause which had occurred here, and whilst the parties resided here, or for any cause which would not authorize a divorce by the laws of this state, a divorce so obtained shall be of no force or effect in this state. § 40. In all other cases, a divorce decreed in any other state or country, according to the law of the place, by a court having jurisdiction of the cause and of both of the parties, shall be valid and effectual in this state.' 4 See note 13, infra. 5 Del.Rev.Code c. 86, § 29 (1935). 6 N.J.S.A. § 2:50—35 (1939). 7 Wis.Stat. § 247.21 (1945). 8 Me.Rev.Stat. c. 73, § 12 (1930). 9 The result of the assertion of the State's interest may be a windfall to a party who has sought to bargain his or her rights away and now seeks to renege on the agreement. This fact, however, should scarcely be allowed to stand in the way of the assertion by the State of its paramount concern in the matter. Such an unexpected windfall to a party, who by ethical standards may be regarded as undeserving, is a frequent consequence of findings of lack of jurisdiction. See Holmes, C.J., in Andrews v. Andrews, 176 Mass. 92, 96, 57 N.E. 333. 10 See note 13, infra. 11 Today's decision would also seem to render invalid, under the Full Faith and Credit Clause, a large proportion of the commonly encountered injunctions against a domiciliary prosecuting an out-of-State divorce action. Cf. Kempson v. Kempson, 58 N.J.Eq. 94, 43 A. 97, Id., 61 N.J.Eq. 303, 48 A. 244 Id., 63 N.J.Eq. 783, 52 A. 360, 625, 58 L.R.A. 484, 92 Am.St.Rep. 682; Pound, The Progress of the Law-Equity, 33 Harv.L.Rev. 420, 425—28; Jacobs, The Utility of Injunctions and Declaratory Judgments in Migratory Divorce, 2 Law & Contemp.Prob. 370; Note, 13 Bklyn.L.Rev. 148. Since no State may enjoin its inhabitants from changing their domiciles in order to procure divorces, it would seem that henceforth a recital of domicile in the out-of-State divorce decree will render the injunction retroactively invalid if there has been any semblance of a contest in the divorce proceeding. 12 The Massachusetts law is surely legislation within the field regulating the domestic relations of husband and wife, and, as such, within the scope of 'matters reserved to the States.' It can scarcely be doubted that if a constitutional amendment withdrew this field from the States and gave it to the Federal Government, an Act of Congress, making the same provision substantively as did Massachusetts, regarding divorces granted in countries other than the United States to citizens of this country, would be held constitutional. Such a law is not less a law concerning 'the domestic relations of husband and wife,' even though incidentally it may affect the force to be given to what appears to be a judgment of a sister State. 13 Three modes of achieving uniformity have been attempted adoption of a constitutional amendment authorizing Federal domestic relations legislation; Congressional action implementing the Full Faith and Credit Clause; and uniform State legislation. Such attempts were originally fostered by those who sought legislation rendering divorce uniformly difficult to obtain. See Lichtenberger, Divorce (1931) pp. 187 et seq.; Cavers, Foreword, 2 Law & Contemp. Prob. 289. The first effort to amend he Constitution to empower Congress to enact domestic relations legislation uniform throughout the Nation was made in 1884. Since then at least seventy similar amendments have been proposed. Ames, The Proposed Amendments to the Constitution of the United States during the First Century of its History, (1896) Ann.Rep. American Historical Ass'n, reprinted as H.R.Doc. No. 353, 54th Cong., 2d Sess., pt. 2, p. 190; Sen.Dec. No. 93, 69th Cong., 1st Sess.; 'Proposed Amendments to the Constitution of the United States Introduced in Congress from the 69th Congress, 2d Session through the 78th Congress, December 6, 1926, to December 19, 1944' (U.S. Govt. Printing Office, 1946). None has been favorably acted upon. Sess, e.g., H.R.Rep. No. 1290, 52nd Cong., 1st Sess., p. 2, in which the majority of the House Judiciary Committee, reporting adversely on such a proposed amendment, pointed out that Congress might achieve a measure of uniformity, through exercise of its existing powers to implement the Full Faith and Credit Clause. Suggestions that such a statute be enacted by Congress, have not been lacking. See, e.g., 52 Rep. A.B.A. 292, 319; Corwin, The 'Full Faith and Credit' Clause, 81 U. of Pa.L.Rev. 371, 388; cf. Mr. Justice Stone, dissenting, in Yarborough v. Yarborough, 290 U.S. 202, 215, n. 2,5 4 S.Ct. 181, 186, 78 L.Ed. 269, 90 A.L.R. 924; Jackson, Full Faith and Credit—The Lawyers' Clause of the Constitution, 45 Col.L.Rev. 1, 21. And Senator McCarron of Nevada is currently seeking to have such legislation adopted. See S. 1960, 80th Cong., 2d Sess. The most vigorous efforts, however, have been made in the direction of securing uniform State legislation. President Theodore Roosevelt, in calling on Congress to provide for compilation of marriage and divorce statistics, included a suggestion of cooperation among the States in enacting uniform laws. 15 Richardson, Messages and Papers of the Presidents 6942. On the initiative of the Governor of Pennsylvania, a National Congress on Uniform Divorce Laws, in which forty-two States were represented, was called in 1906. This Congress resolved that a constitutional amendment was not feasible and drafted resolutions concerning uniform State legislation. Lichtenberger, supra, 191 96. See also Proceedings, National Congress on Uniform Divorce Laws (1906) passim; Proceedings 2d Meeting of the Governors of the States of the Union (1910) pp. 185—98. It is interesting to note that even these proponents of uniformity advocated that each State 'adopt a statute embodying the principle contained in' the very Massachusetts statute now held unconstitutional by the Court perhaps in the interests of uniformity. Lichtenberger, supra, at 194. The bill prepared by the Congress was also approved by the Commissioners on Uniform State Laws (Proceedings, 17th Ann.Conf., Commissioners on Uniform State Laws (1907) pp. 120 et seq.) but was adopted by only three States. See pp. 5—6, supra. The Commissioners eventually decided that no uniform law establishing substantive grounds for divorce could succeed, and replaced this proposal with the Uniform Divorce Jurisdiction Act, which would have accorded recognition to a wider range of decrees than were protected by Haddock v. Haddock, 201 U.S. 562, 26 S.Ct. 525, 50 L.Ed. 867, 5 Ann.Cas. 1, then in force. (1930) Handbook of the National Conference of Commissioners on Uniform State Laws, pp. 498—502. This act has been adopted only by Vermont, L.1931, No. 45, and was repealed two years later. L.1933, No. 38. Meanwhile, other organizations have not given up the attempt to have enacted uniform divorce laws, although in recent years the objective has usually been uniformly liberal rather than uniformly repressive legislation. See, e.g., Woman's Home Companion, Dec. 1947, p. 32. Even in the international field, attempts to avoid conflicts as to the extraterritorial validity of divorces have been made. See, e.g., Convention to Regulate Conflicts of Laws and of Jurisdiction in Matters of Divorce and Separation, The Hague, June 12, 1902. 14 See the interesting account of Nevada's divorce mill, written by two members of the Nevada Bar, Ingram and Ballard, The Business of Migratory Divorce in Nevada, 2 Law & Contemp.Prob. 302; cf. Bergeson, The Divorce Mill Advertises, id. at 348. 15 Quaere, whether today's decision applies to ex parte Nevada decrees by default, where the defendant later files a general appearance and the record is made to show jurisdiction nunc pro tunc. Nev.Comp.Laws § 9488. 16 It is by no means clear that the issue before the Massachusetts courts in either of these cases was or could have been litigated in Florida or Nevada. All that the Florida or Nevada courts could have determined was whether the jurisdictional requisites of State law and of the due process clause of the Constitution, Amend. 14, were met. And if a direct attack on these decrees had been made in this Court, all that we could have decided would have been the due process point. A divorce may satisfy due process requirements, and be valid where rendered, and still lack the jurisdictional requisites for full faith and credit to be mandatory. Compare Williams v. North Carolina, 317 U.S. 287, 307, 63 S.Ct. 207, 217 (concurring opinion), with Williams v. North Carolina, 325 U.S. 226, 65 S.Ct. 1092. This is true even though the Florida and Nevada courts appear to characterize the jurisdictional prerequisites under their respective laws as domicile, Wade v. Wade, 93 Fla. 1004, 1007, 113 So. 374; Latterner v. Latterner, 51 Nev. 285, 274 P. 194; since we may be unwilling to apply as loose a test of 'domicile,' in determining whether extrastate enforcement is mandatory, as those States might properly choose to use in determining what divorces might be granted and effective within their own borders. Thus, at no point in the proceedings in Florida or Nevada in the instant cases was there an opportunity to litigate whether Mrs. Sherrer or Mr. Coe had acquired Florida or Nevada domicile, respectively, sufficient to entitle their divorces to extraterritorial recognition. 17 North Carolina appears to be the only other State allowing divorce on less than a year's residence, but it does not allow divorce for many of the usual causes. The Williams cases attest that its laws are not lax. 18 The easier it is made for those who through affluence are able to exercise disproportionately large influence on legislation, to obtain migratory divorces, the less likely it is that the divorce laws of their home States will be liberalized, insofar as that is deemed desirable, so as to affect all. See Groves, Migratory Divorces, 2 Law & Contemp.Prob. 293, 298. For comparable instances, in the past, of discrimination against the poor in the actual application of divorce laws, cf. Dickens, Hard Times, c. 11; Haskins, Divorce, 5 Encyc.Soc.Sci. 177, 179. 19 For purposes of State taxation, he might well have been regarded as domiciled in either State. Cf. Worcester County Trust Co. v. Riley, 302 U.S. 292, 58 S.Ct. 185, 82 L.Ed. 268; Texas v. Florida, 306 U.S. 398, 59 S.Ct. 830, 83 L.Ed. 817.
34
334 U.S. 558 68 S.Ct. 1148 92 L.Ed. 1574 SAIAv.PEOPLE OF STATE OF NEW YORK. No. 504. Argued and Submitted March 30, 1948. Decided June 7, 1948. Appeal from the Court of Appeals of the State of New York. Mr. Hayden C. Covington, of Brooklyn, N.Y., for appellant. Mr. Alan V. Parker, of Niagara Falls, N.Y., for appellee. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This case presents the question of the validity under the Fourteenth Amendment of a penal ordinance of the City of Lockport, New York, which forbids the use of sound amplification devices except with permission of the Chief of Police.1 2 Appellant is a minister of the religious sect known as Jehovah's Witnesses. He obtained from the Chief of Police permission to use sound equipment, mounted atop his car, to amplify lectures on religious subjects. The lectures were given at a fixed place in a public park on designated Sundays. When this permit expired, he applied for another one but was refused on the ground that complaints had been made. Appellant nevertheless used his equipment as planned on four occasions, but without a permit. He was tried in Police Court for violations of the ordinance. It was undisputed that he used his equipment to amplify speeches in the park and that they were on religious subjects. Some witnesses testified that they were annoyed by the sound, though not by the content of the addresses; others were not disturbed by either. The court upheld the ordinance against the contention that i violated appellant's rights of freedom of speech, assembly, and worship under the Federal Constitution. Fines and jail sentences were imposed. His convictions were affirmed without opinion by the County Court for Niagara County and by the New York Court of Appeals, 297 N.Y. 659, 76 N.E.2d 323. The case is here on appeal. 3 We hold that § 3 of this ordinance is unconstitutional on its face, for it establishes a previous restraint on the right of free speech in violation of the First Amendment which is protected by the Fourteenth Amendment against State action. To use a loud-speaker or amplifier one has to get a permit from the Chief of Police. There are no standards prescribed for the exercise of his discretion. The statute is not narrowly drawn to regulate the hours or places of use of loud-speakers, or the volume of sound (the decibels) to which they must be adjusted. The ordinance therefore has all the vices of the ones which we struck down in Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352; Lovell v. Griffin, 303 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949; and Hague v. C.I.O., 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423. 4 In the Cantwell case a license had to be obtained in order to distribute religious literature. What was religious was left to the discretion of a public official. We held that judicial review to rectify abuses in the licensing system did not save the ordinance from condemnation on the grounds of previous restraint. Lovell v. Griffin, supra, held void on its face an ordinance requiring a license for the distribution of literature. That ordinance, like the present one, was dressed in the garb of the control of a 'nuisance.' But the Court made short shrift of the argument, saying that approval of the licensing system would institute censorship 'in its baldest form.' In Hague v. C.I.O., supra, we struck down a city ordinance which required a license from a local official for a public assembly on the streets or highways or in the public parks or public buildings. The official was empowered to refuse the permit if in his opinion the refusal would prevent 'riots, disturbances or disorderly assemblage.' We held that the ordinance was void on its face because it could be made 'the instrument of arbitrary suppression of free expression of views on national affairs.' 307 U.S. page 516, 59 S.Ct. page 964, 83 L.Ed. 1423. 5 The present ordinance has the same defects. The right to be heard is placed in the uncontrolled discretion of the Chief of Police. He stands athwart the channels of communication as an obstruction which can be removed only after criminal trial and conviction and lengthy appeal. A more effective previous restraint is difficult to imagine. Unless we are to retreat from the firm positions we have taken in the past, we must give freedom of speech in this case the same preferred treatment that we gave freedom of religion in the Cantwell case, freedom of the press in the Griffin case, and freedom of speech and assembly in the Hague case.2 6 Loud-speakers are today indispensable instruments of effective public speech. The sound truck has become an accepted method of political campaigning. It is the way people are reached. Must a candidate for governor or the Congress depend on the whim or caprice of the Chief of Police in order to use his sound truck for campaigning? Must he prove to the satisfaction of that official that his noise will not be annoying to people? 7 The present ordinance would be a dangerous weapon if it were allowed to get a hold on our public life. Noise can be regulated by regulating decibels. The hours and place of public discussion can be controlled. But to allow the police to bar the use of loud-speakers because their use can be abused is like barring radio receivers because they too make a noise. The police need not be given the power to deny a man the use of his radio in order to protect a neighbor against sleepless nights The same is true here. 8 Any abuses which loud-speakers create can be controlled by narrowly drawn statutes. When a city allows an official to ban them in his uncontrolled discretion, it sanctions a device for suppression of free communication of ideas. In this case a permit is denied because some persons were said to have found the sound annoying. In the next one a permit may be denied because some people find the ideas annoying. Annoyance at ideas can be cloaked in annoyance at sound. The power of censorship inherent in this type of ordinance reveals its vice. 9 Courts must balance the various community interests in passing on the constitutionality of local regulations of the character involved here. But in that process they should be mindful to keep the freedoms of the First Amendment in a preferred position. See Marsh v. Alabama, 326 U.S. 501, 509, 66 S.Ct. 276, 280, 90 L.Ed. 265. 10 Reversed. 11 Mr. Justice FRANKFURTER, with whom Mr. Justice REED and Mr. Justice BURTON concur, dissenting. 12 The appellant's loud speakers blared forth in a small park in a small city.1 The park was about 1,600 feet long and from 250 to 400 feet wide. It was used primarily for recreation, containing benches, picnic and athletic facilities, and a children's wading pool and playground. Estimates of the range of the sound equipment varied from about 200 to 600 feet. The attention of a large fraction of the area of the park was thus commanded. 13 The native power of human speech can interfere little with the self-protection of those who do not wish to listen. They may easily move beyond earshot, just as those who do not choose to read need not have their attention bludgeoned by undesired reading matter. And so utterances by speech or pen can neither be forbidden nor licensed, save in the familiar classes of exceptional situations. Lovell v. Griffin, 303 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949; Hague v. CIO, 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423; Schneider v. Irvington, 308 U.S. 147, 60 S.Ct. 146, 84 L.Ed. 155; Chaplinsky v. New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031. But modern devices for amplifying the range and volume of the voice, or its recording, afford easy, too easy, opportunities for aural aggression. If uncontrolled, the result is intrusion into cherished privacy. The refreshment of mere silence, or meditai on, or quiet conversation, may be disturbed or precluded by noise beyond one's personal control. 14 Municipalities have conscientiously sought to deal with the new problems to which sound equipment has given rise and have devised various methods of control to make city life endurable. See McIntyre and Rhyne, Radio and Municipal Regulations (National Institute of Municipal Law Officers, Report No. 62, 1940) pp. 28 et seq. Surely there is not a constitutional right to force unwilling people to listen. Cf. Otto, Speech and Freedom of Speech, in Freedom and Experience (Edited by Hook and Konvitz, 1947) 78, 83 et seq. And so I cannot agree that we must deny the right of a State to control these broadcasting devices so as to safeguard the rights of others not to be assailed by intrusive noise but to be free to put their freedom of mind and attention to uses of their own choice. 15 Coming to the facts of the immediate situation, I cannot say that it was beyond constitutional limits to refuse a license to the appellant for the time and place requested. The State was entitled to authorize the local authorities of Lockport to determine that the well-being of those of its inhabitants who sought quiet and other pleasures that a park affords, outweighed the appellant's right to force his message upon them. Nor did it exceed the bounds of reason for the chief of police to base his decision refusing a license upon the fact that the manner in which the license had been used in the past was distructive of the enjoyment of the park by those for whom it was maintained. That people complained about an annoyance would seem to be a pretty solid basis in experience for not sanctioning its continuance. 16 Very different considerations come into play when the free exercise of religion is subjected to a licensing system whereby a minor official determines whether a cause is religious. This was the problem presented by Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352, and of course we held that 'Such a censorship of religion as the means of determining its right to survive is a denial of liberty protected by the First Amendment and included in the liberty which is within the protection of the Fourteenth.' 310 U.S. at 305, 60 S.Ct. at 904, 84 L.Ed. 1213, 128 A.L.R. 1352. To determine whether a cause is, or is not, 'religious' opens up too wide a field of personal judgment to be left to the mere discretion of an official. As to the allowable range of judgment regarding the scope of 'religion,' see Judge Augustus N. Hand in United States v. Kauten, 2 Cir., 133 F.2d 703, 708. The matter before us is of quite a different order. It is not unconstitutional for a State to vest in a public official the determination of what is in effect a nuisance merely because such authority may be outrageously misused by trying to stifle the expression of some undesired opinion under the meretricious cloak of a nuisance. Judicial remedies are available for such abuse of authority, and courts, including this Court, exist to enforce such remedies. 17 Even the power to limit the abuse of sound equipment may not be exercised with a partiality unrelated to the nuisance. But there is here no showing of either arbitrary action or discrimination. There is no basis for finding that noisemakers similar to appellant would have obtained a license for the time and place requested. Reference is found in the testimony to the use of loud-speakers for Lutheran services in a nearby ballfield. But the ballfield was outside the park in which appellant blared to his audience, and there is nothing in the record to show that the Lutherans could have used their amplifying equipment within the park, or that the appellant would have been denied permission to use such equipment in the ballfield. See Lehon v. Atlanta, 242 U.S. 53, 37 S.Ct. 70, 61 L.Ed. 145. State action cannot be found hypothetically unconstitutional. New York ex rel. Hatch v. Reardon, 204 U.S. 152, 27 S.Ct. 188, 51 L.Ed. 41, 9 Ann.Cas. 736. 18 The men whose labors brought forth the Constitution of the United States had the street outside Independence Hall covered with earth so that their deliberations might not be disturbed by passing traffic. Our democracy presupposes the deliberative process as a condition of thought and of responsible choice by the electorate. To the Founding Fathers it would hardly seem a proof of progress in the development of our democracy that the blare of sound trucks must be treated as a necessary medium in the deliberative process. In any event, it would startle them to learn that the manner and extent of the control of the blare of the sound trucks by the States of the Union, when such control is not arbitrarily and discriminatorily exercised, must satisfy what this Court thinks is the desirable scope and manner of exercising such control. 19 We are dealing with new technological devices and with attempts to control them in order to gain their benefits while maintaining the precious freedom of privacy. These attempts, being experimental, are bound to be tentative, and the views I have expressed are directed towards the circumstances of the immediate case. Suffice it to say that the limitations by New York upon the exercise of appellant's rights of utterance did not in my view exceed the accommodation between the conflicting interests which the State was here entitled to make in view of time and place and circumstances. See Cox v. New Hampshire, 312 U.S. 569, 61 S.Ct. 762, 85 L.Ed. 1049, 133 A.L.R. 1396. 20 Mr. Justice JACKSON, dissenting. 21 I dissent from this decision, which seems to me neither judicious nor sound and to endanger the great right of free speech by making it ridiculous and obnoxious, more than the ordinance in question menaces free speech by regulating use of loud-speakers. Let us state some facts which the Court omits: 22 The City of Lockport, New York, owns and maintains a public park of some 28 acres dedicated by deed to 'Park purposes exclusively'. The scene of action in this case is an area therein set apart for the people's recreation. The City has provided it with tables, benches, and fireplaces for picnic parties, a playground and wading pool for children, and facilities for such games as horseshoe pitching, bowling and baseball. 23 The appellant, one of Jehovah's Witnesses, contends, and the Court holds, that without the permission required by city ordinance he may set up a sound truck so as to flood this area with amplified lectures on religious subjects. It must be remembered that he demands even more than the right to speak and hold a meeting in this area which is reserved for other and quite inconsistent purposes. He located his car, on which loud-speakers were mounted, either in the park itself, not open to vehicles, or in the street close by. The microphone for the speaker was located some little distance from the car and in the park, and electric wires were strung, in one or more instances apparently across the sidewalk, from the one to the other. So that what the Court is holding, is that the Constitution of the United States forbids a city to require a permit for a private person to erect, in its streets, parks and public places, a temporary public address system, which certainly has potentialities of annoyance and even injury to park patrons if carelessly handled. It was for setting up this system of microphone, wires and sound truck without a permit, that this appellant was convicted—it was not for speaking. 24 It is astonishing news to me if the Constitution prohibits a municipality from policing, controlling or forbidding erection of such equipment by a private party in a public park. Certainly precautions against annoyance or injury from operation of such devices are not only appropriate, but I should think a duty of the city in supervising such public premises. And a very appropriate means to supervision is a permit which will inform the city's police officers of the time and place when such apparatusi § to be installed in the park. I think it is a startling perversion of the Constitution to say that it wrests away from the states and their subdivisions all control of the public property so that they cannot regulate or prohibit the irresponsible introduction of contrivances of this sort into public places. 25 The Court, however, ignores the aspects of the matter that grow out of setting up the system of amplifying appliances, wires and microphones on public property, which distinguish it from the cases cited as authority. It treats the issue only as one of free speech. To my mind this is not a free speech issue.1 Lockport has in no way denied or restricted the free use, even in its park, of all of the facilities for speech with which nature has endowed the appeliant. It has not even interfered with his inviting an assemblage in a park space not set aside for that purpose.2 But can it be that society has no control of apparatus which, when put to unregulated proselyting, propaganda and commercial uses, can render life unbearable? It is intimated that the City can control the decibels; if so, why may it not prescribe zero decibels as appropriate to some places? It seems to me that society has the right to control, as to place, time and volume, the use of loud-speaking devices for any purpose, provided its regulations are not unduly arbitrary, capricious or discriminatory. 26 But the Court points out that propagation of his religion is the avowed and only purpose of appellant and holds that Lockport cannot stop the use of loud-speaker systems on its public property for that purpose. If it is to be treated as a case merely of religious teaching, I still could not agree with the decision. Only a few weeks ago we held that the Constitution prohibits a state or municipality from using taxsupported property 'to aid religious groups to spread their faith.' People of State of Illinois ex rel. McCollum v. Board of Education, 333 U.S. 203, 68 S.Ct. 461, 464. Today we say it compels them to let it be used for that purpose. In the one case the public property was appropriated to school uses; today it is public property appropriated and equipped for recreational purposes. I think Lockport had the right to allocate its public property to those purposes and to keep out of it installations of devices which would flood the area with religious appeals obnoxious to many and thereby deprive the public of the enjoyment of the property for the purposes for which it was properly set aside. And I cannot see how we can read the Constitution one day to forbid and the next day to compel use of public tax-supported property to help a religious sect spread its faith. 27 There is not the slightest evidence of discrimination or prejudice against the appellant because of his religion or his ideas. This same appellant, not a resident of Lockport but of Buffalo, by the way, was granted a permit by the Chief of Police and used this park for four successive Sundays during the same summer in question. What has been refused is his application for a second series of four more uses of the park. Lockport is in a climate which has only about three months of weather adaptable for park use. There are 256 recognized religious denominations in the United States and even if the Lockport populace supports only a few of these, it is apparent that Jehovah's Witnesses were granted more than their share of the Sunday time available on any fair allocation of it among denominations. 28 There is no evidence that any other denomination has ever been permitted to hold meetings or, for that matter, has ever sought to hold them in the recreation area. It appears that on one of the Sundays in question the Lutherans were using the ball park. This also appears to be public property. It is equipped with installed loud-speakers, a grandstand and bleachers, and surrounded by a fence six feet high. There is no indication that these facilities would not be granted to Jehovah's Witnesses on the same terms as to the Lutherans. It is evident, however, that Jehovah's Witnesses did not want an enclosed spot to which those who wanted to hear their message could resort. Appellant wanted to thrust their message upon people who were in the park for recreation, a type of conduct which invades other persons' privacy and, if it has no other control, may lead to riots and disorder. 29 The Court expresses great concern lest the loud-speakers of political candidates be controlled if Jehovah's Witnesses can be. That does not worry me. Even political candidates ought not to be allowed irresponsibly to set up sound equipment in all sorts of public places, and few of them would regard it as tactful campaigning to thrust themselves upon picnicking families who do not want to hear their message. I think the Court is over concerned about danger to political candidacies and I would deal with that problem when, and if, it arises. 30 But it is said the state or municipality may not delegate such authority to a Chief of Police. I am unable to see why a state or city may not judge for itself whether a Police Chief is the appropriate authority to control permits for setting up sound-amplifying apparatus. Cox v. New Hampshire, 312 U.S. 569, 61 S.Ct. 762, 85 L.Ed. 1049, 133 A.L.R. 1396. It also is suggested that the city fathers have not given sufficien guidance to his discretion. But I did not suppose our function was that of a council of revision. The issue before us is whether what has been done has deprived this appellant of a constitutional right. It is the law as applied that we review, not the abstract, academic questions which it might raise in some more doubtful case. 31 I disagree entirely with the idea that 'Courts must balance the various community interests in passing on the constitutionality of local regulations of the character involved here.' It is for the local communities to balance their own interests—that is politics—and what courts should keep out of. Our only function is to apply constitutional limitations. 32 I can only repeat the words of Mr. Justice Holmes, disregarded in his time and even less heeded now: 33 'I have not yet adequately expressed the more than anxiety that I feel at the ever increasing scope given to the Fourteenth Amendment in cutting down what I believe to be the constitutional rights of the States. As the decisions now stand, I see hardly and limit but the sky to the invalidating of those rights if they happen to strike a majority of this Court as for any reason unlesirable. I cannot believe that the Amendment was intended to give us carte blanche to embody our economic or moral beliefs in its prohibitions.'3 34 And even if this were a civil liberties case, I should agree with Chief Justice Hughes, writing for a unanimous Court: 35 'Civil liberties, as guaranteed by the Constitution, imply the existence of an organized society maintaining public order without which liberty itself would be lost in the excesses of unrestrained abuses.'4 36 The judgment of the Court of Appeals of New York should be affirmed. 1 The ordinance, insofar as pertinent, reads as follows: 'Section 2. Radio devices, etc.—It shall be unlawful for any person to maintain and operate in any building, or on any premises or on any automobile, motor truck or other motor vehicle, any radio device, mechanical device, or loud speaker or any device of any kind whereby the sound therefrom is cast directly upon the streets and public places and where such device is maintained for advertising purposes or for the purpose of attracting the attention of the passing public, or which is so placed and operated that the sounds coming therefrom can be heard to the annoyance or inconvenience of travelers upon any street or public places or of persons in neighboring premises. 'Section 3. Exception.—Public dissemination, through radio, loudspeakers, of items of news and matters of public concern and athletic activities shall not be deemed a violation of this section provided that the same be done under permission obtained from the Chief of Police.' Appellant's conduct was regarded throughout as falling within the types of activity enumerated in § 3. We take the ordinance as construed by the State courts. 2 Cox v. New Hampshire, 312 U.S. 569, 577, 578, 61 S.Ct. 762, 763, 85 L.Ed. 1049, 133 A.L.R. 1396, did not depart from the rule of these earlier cases but re-emphasized the vice of the type of ordinance we have here. Davis v. Massachusetts, 167 U.S. 43, 17 S.Ct. 731, 42 L.Ed. 71, was distinguished in the Hague case, 307 U.S. pages 514—516, 59 S.Ct. pages 963, 964, 83 L.Ed. 1423, which likewise involved an ordinance regulating the use of public streets and parks. It was there said, 'We have no occasion to determine whether, on the facts disclosed, the Davis Case was rightly decided, but we cannot agree that it rules the instant case. Wherever the title of streets and parks may rest, they have immemorially been held in trust for the use of the public and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions. Such use of the streets and public places has, from ancient times, beena part of the privileges, immunities, rights, and liberties of citizens. The privilege of a citizen of the United States to use the streets and parks for communication of views on national questions may be regulated in the interest of all; it is not absolute, but relative, and must be exercised in subordination to the general comfort and convenience, and in consonance with peace and good order; but it must not, in the guise of regulation, be abridged or denied.' We adhere to that view. Though the statement was that of only three Justices, it plainly indicated the route the majority followed, who on the merits did not consider the Davis case to be controlling. 1 The last census gave the population of Lockport as 24,379. 1 More than fifty years ago this Court in Davis v. Massachusetts, 167 U.S. 43, 17 S.Ct. 731, 42 L.Ed. 71, affirmed a state court decision (162 Mass. 510, 39 N.E. 113, 26 L.R.A. 712, 44 Am.St.Rep. 389) written by Mr. Justice Holmes and holding constitutional an ordinance providing that 'no person shall, in or upon any of the public grounds, make any public address * * * except in accordance with a permit from the mayor.' Mr. Justice Holmes had pointed out that the attack on the ordinance's constitutionality 'assumes that the ordinance is directed against free speech generally, * * * wheras in fact it is directed toward the modes in which Boston Common may be used.' That case, directly in point here, and approving a regulation of the right of speech itself, certainly controls this one, which involves only regulation of the use of amplifying devices, and, as applied to this appellant, forbade only unauthorized use in a park dedicated exclusively to park purposes. Moreover, the Davis case approved the requirement that a permit be obtained from a city official before 'any public address' could be made 'in or upon any of the public grounds.' The Davis case was not overruled in the cases cited by the Court. And all of those cases were considered and distinguished in Cox v. New Hampshire, 312 U.S. 569, 61 S.Ct. 762, 85 L.Ed. 1049, 133 A.L.R. 1396, written by Mr. Chief Justice Hughes for a unanimous Court, and which approved regulation and licensing of parades and processions in public streets even for admittedly religious purposes. The case of Hague v. C.I.O., 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423, cannot properly be quoted in this connection, for no opinion therein was adhered to by a majority of the Court. The quotation in the Court's opinion today had the support of only two Justices, with a possible third. The failure of six or seven Justices to subscribe to those views would seem to fatally impair the standing of that quotation as an authority. 2 Nothing in the ordinance interferes with freedom of religion, freedom of assembly or freedom of the press. Indeed, the effect of § 3 which the Court summarily strikes down as void on its face, is to authorize the Chief of Police to permit use of 'radio devices, mechanical devices, or loud speakers' where the subject matter is 'news and matters of public concern and athletic activities' even though 'the sound therefrom is cast directly upon the streets and public places' and 'the sounds coming therefrom can be heard to the annoyance or inconvenience of the travelers upon any street or public places or of persons in neigb oring premises' which would, without § 3, be barred by § 2. 3 Baldwin v. Missouri, 281 U.S. 586, 595, 50 S.Ct. 436, 439, 74 L.Ed. 1056, 72 A.L.R. 1303. 4 Cox v. New Hampshire, 312 U.S. 569, 574, 61 S.Ct. 762, 765, 85 L.Ed. 1049, 133 A.L.R. 1396.
23
334 U.S. 573 68 S.Ct. 1169 92 L.Ed. 1584 UNITED STATESv.NATIONAL CITY LINES, Inc., et al. No. 544. Argued April 28, 1948. Decided June 7, 1948. Rehearing Denied June 21, 1948. Appeal From the District Court of the United States for the Southern District of California. Mr. Charles H. Weston, of Washington, D.C., for appellant. Mr. C. Frank Reavis, of New York City, for appellees. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 In United States v. Scophony Corporation, 333 U.S. 795, 68 S.Ct. 855, we recently considered the meaning and effect of § 12 of the Clayton Act,1 providing for venue and service of process in civil antitrust proceedings against private corporations. This case brings before us another phase of the section's effect in like proceedings. The principal question, and the only one we find it necessary to consider, is whether the choice of forums given to the plaintiff by § 12 is subject to qualification by judicial application of the doctrine of forum non conveniens. 2 The suit was brought by the United States against nine corporations2 for alleged violation of §§ 1 and 2 of the Sherman Act. 26 Stat. 209, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2. The basic charge is that the appellees conspired to acquire control of local transportation companies in numerous cities located in widely different parts of the United States,3 and to restrain and monopolize interstate commerce in motorbusses, petroleum supplies, tires and tubes sold to those companies, contrary to the Act's prohibitions.4 Injunctive and other relief of an equitable nature was sought.5 3 The appellees filed various motions, including the one involved in this appeal. It sought dismissal of the complaint on the ground that the District Court for the Southern District of California was not a convenient forum for the trial. This motion was supported by a showing not only of inconvenience to the defendants of trial in the California district, but also that the District Court for the Northern District of Illinois, Eastern Division (Chicago), would be the most convenient forum for them. The showing was by affidavits, executed by officers, attorneys and employees of the corporate defendants.6 Counteraffidavitswere filed in opposition on behalf of the Government.7 4 After oral argument, h e District Court filed findings of fact and conclusions of law together with a written opinion, substantially accepting appellees' showing and sustaining the motion. 7 F.R.D. 456. Accordingly it entered judgment dismissing the complaint, but without prejudice to the institution of a similar suit against the named defendants 'in a more appropriate and convenient forum.' This decision is brought to us for review on direct appeal pursuant to the statutes applicable in such cases.8 5 It is not disputed that the District Court has jurisdiction in the basic sense of power to hear and determine the cause or that it has venue within the provisions of § 12.9 Nor can it be questioned that any of the defendants can be brought personally within that court's jurisdiction by service of process made in accordance with the provisions of either § 12, or those of § 5 of the Sherman Act.10 The only question presented concerning the court's power is whether, having jurisdiction and venue of the cause and personal jurisdiction of the defendants, the court also was authorized to decline to exercise its jurisdiction upon finding, without abuse of discretion, that the forum was not a convenient one within the scope of the non-statutory doctrine commonly, though not too accurately, labeled forum non conveniens. 6 It would serve no useful purpose to review in detail the reasoning or the authorities upon which the District Court ruled the doctrine applicable in such cases as this, or therefore the further groundings upon which it proceeded in holding the forum inconvenient. For the view has prevailed without qualification during the life of § 12, thirty-four years, that the choice of venues expressly given to the plaintiff is not to be qualified by any power of a court having venue under any of the section's alternatives to decline to exercise the jurisdiction conferred. None of the decisions on which the District Court relied suggested, much less decided, that such a power exists. This therefore is a case of first impression, seeking departure from long-established practice. Moreover, the analogies drawn from other types of cases in which the doctrine has been applied11 cannot survive in the face of the section's explicit terms and the patent intent of Congress in enacting it. 7 In the Scophony case we gave attention to the history of § 12, which as there related is as pertinent to the question now presented as it was to the issues then under consideration.12 Reference to the Scophony opinion, Part I, 333 U.S. at pages 795, 802, 68 S.Ct. 855, 859, will avoid the necessity for repeating the history here in extenso. But its present applicability will be accentuated by recalling that we reaffirmed the ruling in Eastman Kodak Co. v. Southern Photo Material Co., 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684, namely, that § 12 of the Clayton Act had enlarged h e venue provision of § 7 of the Sherman Act, 15 U.S.C.A. § 15 note, with the intent and effect to give the plaintiff the right to bring antitrust proceedings not only in the districts where the corporate defendant 'resides or is found,' as § 7 had authorized, but also 'in any district wherein it * * * transacts business.'13 8 In the Eastman case, as the Scophony opinion emphasized, the Court had rejected the argument that the addition of 'or transacts business' (333 U.S. 802, 68 S.Ct. 859) was no more than a redundant reformulation of 'is found'; instead it gave the added words broader and less technical meaning than 'is found' had acquired under prior decisions.14 This was done, as the Eastman opinion stated, because accepting the contrary view would have rendered the addition meaningless and defeated the plain remedial purpose of § 12.273 U.S. at page 373, 47 S.Ct. at page 403, 71 L.Ed. 684. That section, the Court held, supplemented 'the remedial provision of the Anti-Trust Act for the redress of injuries resulting from illegal restraints upon interstate trade, by relieving the injured person from the necessity of resorting for the redress of wrongs committed by a nonresident corporation, to a district however distant, in which it resides or may be 'found'—often an insuperable obstacle—and enabling him to institute the suit in a district, frequently that of his own residence, in which the corporation in fact transacts business, and bring it before the court by the service of process in a district in which it resides or may be 'found." (Emphasis added.) 273 U.S. at pages 373, 374, 47 S.Ct. at page 403, 71 L.Ed. 684. 9 The Scophony opinion reaffirmed this view: 'Thus, by substituting practical, business conceptions for the previous hairsplitting legal technicalities encrusted upon the 'found'-'present'-'carrying-on-business' sequence, the Court yielded to and made effective Congress' remedial purpose. Thereby it relieved persons injured through corporate violations of the antitrust laws from the 'often insuperable obstacle' of resorting to distant forums for redress of wrongs done in the places of their business or residence. A foreign corporation no longer could come to a district, perpetrate there the injuries outlawed, and then by retreating or even without retreating to its headquarters defeat or delay the retribution due.' 333 U.S. at page 808, 68 S.Ct. at page 862. 10 These conclusions concerning the section's intent and effect are altogether inconsistent with any idea that the defendant corporation can defeat the plaintiff's choice of venue as given, by asking for and securing dismissal of the suit, either on the ground that the venue selected within the statutory limits is inconvenient for the defendant or that another authorized venue is more convenient for it. 11 No such discretionary power had been exercised by any court during the twenty years of the Sherman Act's application prior to the enactment of § 12, under the narrower range of choice afforded by § 7. None had been suggested, and uniform practice had established that the plaintiff's choice was conclusive, as was true later under § 12 until the deviation in this case. 12 When therefore Congress came to face the problem of making the nation's antitrust policy more effective through the Clayton Act's provisions, that body was not confronted with any problem of abuse by plaintiffs in selecting venue for antitrust suits; nor was it concerned with any question of providing means by which the defendants in such suits might defeat the plaintif § choice to serve their own convenience. Congress' concern was quite the opposite. It was to provide broader and more effective relief, both substantively and procedurally, for persons injured by violations of its antitrust policy.15 Insofar as convenience in bringing suit and conducting trial was involved, the purpose was to make these less inconvenient for plaintiffs or, as was said in the Eastman opinion, to remove the 'often * * * insuperable obstacle' thrown in their way by the existing venue restrictions. 13 To have broadened the choice of venue for the reasons which brought about that action, only to have it narrowed again by application of the vague and discretionary power16 comprehended by forum non conveniens would have been incongruous, to say the least. In making the change Congress did not authorize plaintiffs to institute civil antitrust suits in the newly specified districts, merely in order to have them transferred back for trial to one of the districts comprehended by § 7. It intended trial to take place in the district specified by the statute and selected by the plaintiff.17 14 This conclusion is supported as strongly by the history of the legislative proceedings relating to the enactment of § 12 as by the foregoing judicial constructions. Section 7 of the Sherman Act had limited venue, as we have noted, to districts in which the defendant 'resides or is found.' As originally introduced in the House, two sections of the Clayton Act, §§ 4 (then § 5) and 12 (then § 10)18 perpetuated those provisions.19 During discussion on the floor, however, various Representatives demanded broader choice of venue for plaintiffs. The demand related to both sections, and the discussion went forward now with reference to one, now the other, now both. 15 The basic aim of the advocates of change was to give the plaintiff the right to bring suit and have it tried in the district where the defendant had committed violations of the Act and inflicted the forbidden injuries.20 At first they were not much concerned with the exact formulation of the language to accomplish this, several formulas being propsed from time to time.21 But they were convinced that restricting the choice of venue to districts in which the defendant 'resides or is found' was not adequate to assure that the suit could be brought where the cause of action arose, and therefore insisted on change in order to assure that result.22 16 The committee sponsoring the bill had n objection to this purpose; indeed its members expressly approved it.23 But at first they opposed any amendment, because they thought the object fully achieved by the words 'is found.'24 Over this difference the discussion went forward, as well as over various formulations of the proposed addition. Some were broader than was necessary to achieve the primary aim.25 Indeed some were so broad that committee members thought their inclusion would jeopardize passage of the entire bill.26 17 To avoid this result and to satisfy those who insisted on amendment, the committee yielded and proposed a substitute amendment for one of those offered from the floor relating to § 4. The committee substitute added the words 'or has an agent' after 'is found' in the original committee version. 51 Cong.Rec. 9466. This amendment passed the House and later the Senate unchanged. Id. 9467. Section 4 thus became law in its present form, for the limited class of cases covered by its terms. Cf. note 18. 18 Since however the amendment affected only § 4, the problem concerning § 12 remained unresolved. Suggestions therefore were made at once for amending § 12 to bring it into conformity with § 4. Id. 9467, 9607. Although other proposals were again put forward, id. 9607, the conforming amendment was adopted by the House. Ibid. 19 After the bill passed the House, it was referred to the Senate Committee on the Judiciary. That committee reported it out with § 12 altered by the substitution of 'or transacts business' in place of 'or has an agent,' but leaving the latter clause in § 4 untouched.27 The Senate committee reports and the debated in that body throw little light upon the reasons underlying the committee's alteration of § 12 and its failure to alter § 4 so as to make them uniform, except for the general statement that § 12 as reported 'concerns venue or the place where suits to enforce that antitrust laws against corporations may be brought and liberalizes the Sherman law to some extent upon this subject.'28 The bill finally passed the Senate with § 12 substantially as it was reported by the Committee on the Judiciary,29 and went to conference in that form. In conference the Senate version of § 12 prevailed over that of the House, and the bill was so enacted.30 20 The short outcome was that Congress expanded the venue provisions of the Sherman Act, § 7, in two ways, viz.: (1) by adding to 'resides or is found,' in § 4 of the Clayton Act, the words 'or has an agent'; (2) in § 12 by adding 'or transacts business.' Thus strict uniformity in the two sections' venue provisions was not achieved. But whatever their differences may be, each addition was designed to aid plaintiffs by giving them a wider choice of venues, and thereby to secure a more effective, because more convenient, enforcement of antitrust prohibitions. 21 Moreover the discussions in Congress, particularly in the House, disclose no other thought than that the choice of forums was given as a matter of right, not as one limited by judicial discretion. There was, in fact, common agreement upon this among both the advocates and the opponents of amendment.31 No one suggested that the courts would have discretionary power to decline to exercise the jurisdiction conferred. But since it was universally agreed that the choice of venue, to whatever extent it might be conferred, was to be given as a matter of right, several of the broader amendments were opposed and defeated as going too far.32 22 Congress therefore was not indifferent to possibilities of abuse involved in the various proposals for change. Exactly the opposite was true. For the broader proposals were not rejected because they gave the plaintiff the choice. They were rejected because the choice given was too wide giving plaintiffs the power to bring suit and force trial in districts far removed from the places where the company was incorporated, had its headquarters, or carried on its business. In adopting § 12 Congress was not willing to give plaintiffs free rein to haul defendants hither and yon at their caprice. 51 Cong. Rec. 9466, 9467. But neither was it willing to allow defendants to hamper or defeat effective enforcement by claiming immunity to suit in the districts where by a course of conduct they had violated the Act with the resulting outlawed consequences. In framing § 12 to include those districts at the plaintiffs' election, Congress thus had in mind not only their convenience but also the defendant company's inconvenience, and fixed the limits within which each could claim advantages in venue and beyond which neither could seek it. Moreover, in § 12, though not in § 4, the right of choice conferred was given designedly to the Government as well as to private suitors.33 23 In the face of this history we cannot say that room was left for judicial discretion to apply the doctrine of forum non conveniens so as to deprive the plaintiff of the choice given by the section. That result, as other courts have concluded, would be utterly inconsistent with the purpose of Congress in conferring the broader range of choice. Tivoli Realty v. Interstate Circuit, 5 Cir., 167 F.2d 155; Ferguson v. Ford Motor Co., D.C.S.D.N.Y., 77 F.Supp. 425. 24 In this view of Congress' action, numerous considerations of policy urged by the appellees as supporting the discretionary power's existence and applicability become irrelevant. Congress' mandate regarding venue and the exercise of jurisdiction is binding upon the federal courts. Const.Art. III, § 2. Our general power to supervise the administration of justice in the federal courts, cf. McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819, does not extend to disregarding a validly enacted and applicable statute or permitting departure from it, even in such matters as venue. 25 It is true that the appellees made a strong showing of inconvenience, albeit by interested persons, when that matter is considered on their presentation alone. On the other hand, the Government advanced strong reasons, apart from the question of power, for not applying the doctrine.34 But in the view we take of § 12, we need not consider whether the appellees' showing on the facts sufficiently outweighed that of the Government to justify dismissal.35 26 Two important policy considerations were advanced by the Government, however, which not only bear strongly upon that question but affect the question of power, if Congress had not concluded it. The first is that permitting the application of forum non conveniens to anti-trust cases inevitably would lengthen litigation already overextended in the time required for its final disposition, and thus would violate Congress' declared policy of expediting this type of litigation.36 27 The argument has merit to support the conclusion we have reached upon the statute. Antitrust suits, even with all the expedition afforded them, are notoriously though often perhaps unavoidably long drawn out. The more complex and important cases seldom require less than three to five years to conclude,37 except possibly where consent decrees are entered. Often the time necessary or taken is much longer. To inject into this overlengthened procedure what would amount to an additional preliminary r ial and review upon the convenience of the forum could not but add approximately another year or longer to the time essential for disposing of the cases, indeed for reaching the merits.38 Although some instances of inconvenience to defendants will arise from the absence of discretionary power, that will be unavoidably true in almost any event. And it may well be doubted that the sum total of inconvenience and injustice resulting will be as great as would follow, for both private plaintiffs and the public, from allowing the inescapable delay incident to the exercise of such a discretionary power. For once the power were found to exist, it is more than likely that injection of the issue would become a common incident of antitrust suits, and create the disadvantage of delay for all concerned. 28 This consideration is reinforced by another, namely, the difficulty of applying the doctrine in cases such as this, in which the violations charged are nationwide or nearly so in scope and effect, and the defendants are numerous companies widely scattered in the location of their places of incorporation, principal offices, and places of carrying on business and participating in the scheme. In such a case dismissal in one authorized district cannot reinstate or transfer the cause to another. Nor can the court, within the limits of the doctrine, specify the district in which the case shall be reinstituted and tried. It can only terminate the pending proceeding, as was done here, without prejudice to commencement of a like suit 'in a more appropriate or convenient forum,' with whatever consequences may follow from having to begin all over again. 29 Further, when that is done, the result well may be in some instances to have the action commenced again, only to precipitate the same issue and consequent delay in the second forum. Conceivably this could occur from forum to forum in succession, depending upon the number of corporations named as defendants and the variety, proximity, and degree of concentration of the locations of their principal offices, places of business, and the relative advantages of other available forums for the variously situated defendants. Accordingly, in an unknown number of such cases the practical result well might be to establish a merry-go-round of litigation upon the issue, which could be used to defer indefinitely consideration of the merits. The very possibility of such a tactic would greatly hamper the institution as well as the conclusion of antitrust proceedings. Indeed, for cases of this complex type, the uncertainty concerning the outcome of an effort to apply the doctrine might go far toward defeating the Act's effective application to the most serious and widespread offenses and offenders.39 30 Further, even if it is taken that the appellees' activities constituting the core of the violations charged were as fully concentrated in or near the Illinois district as appellees claim, such a concentration might or might not exist in other like proceedings. And in the latter event the problem of selecting the appropriate forum well might become a highly uncertain and difficult one.40 31 The appellees also strongly urge two other considerations which deserve mention. One is that a criminal prosecution against the appellees (together with seven individuals, officers of some of them), pending in the California district simultaneously with this cause and growing out of substantially the same transactions, had been transferred to the Illinois district shortly before the District Court entered its judgment of dismissal.41 The transfer was ordered pursuant to Rule 21(b) of the Federal Rules of Criminal Procedure.42 That action was taken after the District Court had made findings of fact and conclusions of law founded upon and substantially adopting the appellees' showing, which was practically identical with their showing in this case. Consequently, as the cases now stand, the criminal cause is to be tried in the Illinois district while this civil suit founded upon practically the same transactions and affecting the same corporate defendants is to be tried in the California district. 32 Great emphasis is placed upon this as an impelling reason for holding forum non conveniens applicable here, and then sustaining the order of dismissal under that doctrine and the District Court's finding. But, for the reasons above stated, we think the matter has been concluded by the terms and intent of § 12. Moreover, it is at least doubtful whether the Government had a right to appeal from the order of transfer in the criminal case.43 In any event, the validity of that order is not before us. We therefore express no opinion upon either of those questions. But the fact that we cannot do so goes far to nullify the effect of appellee's argument of hardship arising from the transfer. For that argument comes down, in the peculiar circumstances, to one that because the District Court on appellees' application has transferred the criminal cause by a dubiously reviewable order, perforce of that action is should also dismiss this civil cause and we should sustain the dismissal. 33 In practical effect the outcome of accepting such an argument as ground for sustaining both the power and the dismissal would be to make Rule 21(b) controlling in civil as well as criminal cases involving the same transactions and parties, thus overriding § 12, and at the same time depriving the plaintiff in the civil cause of anything more than perfunctory review of the District Court's order of dismissal.44 34 Hardly can it be taken that Rule 21(b) was intended so to override the provisions of § 12, to confer power on the District Courts to do so, or to nullify the plaintiff's right of appeal from an order depriving it of the statutory privilege of choosing the venue. Yet these would be the practical results, if the consideration that the court has ordered transfer of the criminal case is to be controlling or highly influential, as it undoubtedly would be in most cases, in applying the doctrine of forum non conveniens in the civil cause. If matters of policy were material, these possible consequences would add force to the view that the doctrine is not applicable. 35 Moreover, if the transfer should result in hardship to the appellees,45 insofar as the hardship arises from that cause it is one which was avoidable by them and will be incurred as a result of their own action in applying for it. That they have volut arily incurred it is no good reason for depriving the plaintiff of its statutory right of choice under the terms and policy of § 12 in the entirely distinct civil suit. 36 Finally, both appellees and the District Court have placed much emphasis upon this Court's recent decisions applying the doctrine of forum non conveniens and in some instances extending the scope of its application.46 Whatever may be the scope of its previous application or of its appropriate extension, the doctrine is not a principle of universal applicability, as those decisions uniformly recognize. At least one invariable, limiting principle may be stated. It is that whenever Congress has vested courts with jurisdiction to hear and determine causes and has invested complaining litigants with a right of choice among them which is inconsistent with the exercise by those courts of discretionary power to defeat the choice so made, the doctrine can have no effect. Baltimore & O.R. Co. v. Kepner, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central R. Co., 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104. The question whether such a right has been given is usually the crux of the problem. It is one not to be answered by such indecisive inquiries as whether the venue or jurisdictional statute is labeled a 'special' or a 'general' one. Nor is it to be determined merely by the court's view that applicability of the doctrine would serve the ends of justice in the particular case. It is rather to be decided, upon consideration of all the relevant materials, by whether the legislative purpose and the effect of the language used to achieve it were to vest the power of choice in the plaintiff or to confer power upon the courts to qualify his selection. 37 This is a case in which the pertinent factors make clear that the courts were given no such power. Accordingly thej udgment is reversed. 38 Reversed. 39 Mr. Justice JACKSON, concurring. 40 I agree with the conclusion of the Court but arrive at it by a shorter and different route. 41 We have just had occasion to review and to decide, by a divided Court, cases involving the doctrine of forum non conveniens. Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055, Koster v. (American) Lumbermens Mutual Casualty Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067. We there held that, in cases where the plaintiff was in court in an ordinary civil suit only by reason of the venue statutes that apply generally, the court could exercise discretion in dismissing complaints to prevent imposition on its jurisdiction if the circumstances of the particular case showed an abuse of the option vested in plaintiff by the general venue statutes. But we also pointed out that, where the choice of forum was authorized by a special venue statute, this discretion to dismiss would not be implied. The distinctions there made between general and special venue statutes may have been overly simple from the viewpoint of the dialectician. But as working tools of everyday craftsmen they do serve to point out a difference that I think governs here. 42 Congress made some rather unusual provisions as to venue in antitrust cases. Had it stopped there, it might have been permissible for the courts to devise their own limitations to prevent abuse of their process. But Congress did not stop there. Not only once but three times it has enacted almost identical provisions which check any abuse or oppression from compelling defendants to defend in places remote from their habitat. 15 U.S.C. § 5, 15 U.S.C.A. § 5 (1890), 15 U.S.C. § 10, 15 U.S.C.A. § 10 (1894), 15 U.S.C. § 25, 15 U.S.C.A. § 25 (1914). 43 The scheme of the statutes, as I see it, is that the Attorney General may lay the venue in any district where he may properly serve one or more of his defendants. He may go ahead with his action against them, whether he is allowed to bring in others or not. Before he can bring in other parties than those properly served in the district, i.e., those 'inhabitant,' 'transacting business,' or 'found' there, it must be made to appear to the court that the ends of justice require that they be brought before the court, in which case they may be summoned from any district. 44 Congress has here provided a practice by which any defendant, who has not subjected himself to suit in the district, may obtain the same protections which the forum non conveniens doctrine would afford. 45 In this case, the defendants, who might be entitled to urge the doctrine, have not resisted or contested the order bringing them into the suit. It was by so doing that they could have shown that the ends of justice would not be served by such action. Instead, they desire to submit to being brought in and then use their position to throw the whole case out. This, I think, cannot be done. 46 The special provision Congress has made, both to establish venue and to protect against its abuse, whether the exact equivalent of forum non conveniens or not, seem to me to preclude its application by the courts to this class of cases. 47 For this reason I concur in the result. 48 Mr. Justice FRANKFURTER, dissenting. 49 This is an equity suit for violation of §§ 1 and 2 of the Sherman Law, 15 U.S.C.A. §§ 1, 2, brought in the United States District Court for the Southern District of California. The same defendants were indicted in the same court for the same transactions under the criminal provisions of the Sherman Law. That court transferred the criminal proceedings from the Southern District of California to the District Court for the Northern District of Illinois because it was 'in the interest of justice' to order the transfer. In doing so, the court below was obedient to Rule 21(b)1 of the Federal Rules of Criminal Procedure, 18 U.S.C.A. following section 687, formulated by this Court and having the force of law. 327 U.S. 823 et seq With convincing particularity the District Court set forth its reasons for making this transfer.2 After the transfer of the criminal case, the court granted the motion now before us, dismissing the equity suit 'in the interest of justice, just as the same facts in the companion criminal prosecution required its transfer to another district.' D.C., 7 F.R.D. 456, 465. 50 Is it not incongruous that that which 'the interest of justice' demanded in the criminal prosecution is beyond the power of a court in a civil suit against the same defendants on the same transactions?3 51 Of course Congress may leave no choice to a court to entertain a suit even though it is vexatious and oppressive for the plaintiff to choose the particular district in which he pursues his claim. But such limitation upon the power of courts to administer justice ought not to be lightly drawn from language merely conferring jurisdiction. The manner in which jurisdictional provisions are appropriately to be read is illustrated by our decision in Commonwealth of Massachusetts v. State of Missouri, 308 U.S. 1, 60 S.Ct. 39, 84 L.Ed. 3, where this Court recognized 'considerations of convenience, efficiency and justice' even when a State invoked the Court's original jurisdiction in what was concededly a justiciable controversy. 308 U.S. at page 19, 60 S.Ct. at page 43, 84 L.Ed. 3. I do not find in the scheme of the anti-trust acts and of their relevant legislative history the duty to exercise jurisdiction so imperative as to preclude judicial discretion in refusing to entertain a suit where 'the interest of justice' commands it. 52 Defendants in an anti-trust suit may no doubt attempt to resort to delay tactics by motions claiming unfairness of a particular forum. Neither must we be indifferent to the potentialities of unfairness in giving the Government a wholly free hand in selecting its forum so long as technical requirements of venue are met. See, e.g., The Railway Shopmen's Strike Case (United States v. Railway Employees' Department of American Federation of Labor) D.C., 283 F. 479. All parties to a litigation tend to become partisans, and confidence in the fair administration of justice had better be rested on exacting standards in the quality of the federal judiciary. Federal judges ought to be of a calibre to be able to thwart obstructive tactics by defendants and not be denied all power to check attempted unfairness by a too zealous Government. 53 I find nothing in the anti-trust acts comparable to the considerations which led this Court to conclude that the provisions of the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., were designed to give railroad employees a privileged position n bringing suits under that Act. See, especially, concurring opinion in Miles v. Illinois Cent. R. Co., 315 U.S. 698, 705, 62 S.Ct. 827, 831, 86 L.Ed. 1129, 146 A.L.R. 1104. 54 I am of opinion that the District Court had power to entertain the motion on the basis of which it entered the judgment. 55 Mr. Justice BURTON joins this dissent. 1 'Sec. 12. That any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.' 38 Stat. 736, 15 U.S.C. § 22, 15 U.S.C.A. § 22. 2 These, with the states of their incorporation and their principal places of business are as follows: State of Principal place of Corporation incorporation business National City Lines, Inc. Delaware Chicago American City Lines, Inc. " " Pacific City Lines, Inc. " Oakland, Calif. Standard Oil Co. of California " San Francisco Federal Engineering Corp. California " Phillips Petroleum Co. Delaware Bartlesville, Okla. General Motors Corp. " Detroit, Mich. Firestone Tire & Rubber Co. Ohio Akron, Ohio Mack Manufacturing Corp. Delaware New York 3 Forty-four cities in sixteen states are included. The states are as widely scattered as California, Florida, Maryland, Michigan, Nebraska, Texas and Washington. The larger local transpora tion systems include those of Baltimore, St. Louis, Salt Lake City, Los Angeles and Oakland. The largest concentrations of smaller systems are in Illinois, with eleven cities; California with nine (excluding Los Angeles); and Michigan with four. The local operating companies were not named as parties defendant. 4 The appellee companies fall into two groups. The largest, which may be called the supplier group, includes the six last named in note 2 above. Except Federal, they are engaged in producing and distributing the commodities purchased by the local operating companies, the sale of which is charged to be monopolized and restrained. Federal is a wholly owned subsidiary of Standard, engaged in managing investments for Standard. The other group, including the first three companies listed in note 2, is collectively called City Lines. National is a holding company with operations directed from Chicago. American and Pacific are its subsidiaries. The three own, control or have substantial interests in the operating companies. The complaint charges that the supplier appellees furnish capital to the City Lines for acquiring control of the local operating systems, upon the understanding that the City Lines cause all requirements of the local systems in busses, petroleum products, tires and tubes to be purchased from the supplier appellees and no other sellers. 5 The prayer of the complaint sought complete divestiture of the supplier appellees' financial interests in City Lines; partial divestiture of City Lines' interests in local transportation companies; voiding of existing contracts between the supplier appellees and City Lines; and an injunction against purchases from those suppliers by City Lines or their operating companies, except in accordance with a competitive bidding plan to be included in the decree. 6 In highly attenuated summary the showing was that the transactions creating the core of the charged conspiracy took place chiefly in or near Chicago; appellees' chief witnesses and documentary evidence are located there; their transportation to Los Angeles and extended presence there will cause great hardship; no defendant 'resides' or has its principal office or place of business in the California district (cf. note 2); and two trials in distant cities, see text infra at note 41, will greatly magnify the hardship. See 7 F.R.D. 456, 465. 7 The Government stresses that three of the five supplier defendants transact business and are 'found,' cf. note 1, in the California district; the volume of sales allegedly restrained is much greater on the Pacific Coast than elsewhere; substantial portions of the evidence, oral and documentary, will be produced from California, etc. Cf. D.C., 7 F.R.D. 456, 465. 8 32 Stat. 823, 36 Stat. 1167, 15 U.S.C. § 29, 15 U.S.C.A. § 29; 43 Stat. 938, 28 U.S.C. § 345, 28 U.S.C.A. § 345. 9 It is conceded that three of the defendants, Standard, General Motors, and Firestone, transact business within the Southern District of California. The others apparently were served either pursuant to the concluding clause of § 12 or pursuant to § 5 of the Sherman Act. See note 10 infra. 10 'Sec. 5. Whenever it shall appear to the court before which any proceeding under section 4 of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.' 26 Stat. 210, 15 U.S.C. § 5, 15 U.S.C.A. § 5. Section 4 of the Sherman Act, 15 U.S.C.A. § 4 (i.e., 'this act') refers specifically to civil actions brought by the Government. Cf. Eastman Kodak Co. v. Southern Photo Material Co., 273 U.S. 359, 374, 47 S.Ct. 400, 403, 71 L.Ed. 684. 11 See note 46 infra. 12 In the Scophony case we were concerned, not as here with any question of discretion to decline the exercise of jurisdiction, but in presently pertinent part with the tests of venue prescribed by the section and whether, on the facts presented, those tests had been met, so as to establish venue in the district of suit. 13 See note 1. 14 See United States v. Scophony Corporation, 333 U.S. 795, 802, 68 S.Ct. 855, 859, Part I. 15 The Clayton Act hardly can be regarded as a statute for the relief of corporate defendants in antitrust proceedings from either procedural or substantive abuses. See Levy, The Clayton Law An Imperfect Supplement to the Sherman Law, 3 Va.L.Rev. 411. 16 'Wisely, it has not been attempted to catalogue the circumstances which will justify or require either grant to denial of remedy. The doctrine leaves much to the discretion of the court to which plaintiff resorts, and experience has not shown a judicial tendency to renounce one's own jurisdiction so strong as to result in many abuses. 'If the combination and weight of factors requisite to given results are difficult to forecast or state, those to be considered are not difficult to name. An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. * * * The court will weigh relative advantages and obstacles to fair trial.' Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055. 17 The Eastman opinion referred to the disadvantages suffered by plaintiffs under § 7 of the Sherman Act who were injured where they resided or conducted their business, only to be forced to seek out the wrongdoing company in a distant forum to secure venue and service of process, and therefore also to transport witnesses and incur other disadvantages in trial. 273 U.S. 359, 373, 374, 47 S.Ct. 400, 403, 71 L.Ed. 684. Likewise the legislative discussions hereinafter cited uniformly treat the problem as one involving both instituting the suit and trying it. There is no hint that it was contemplated the two phases of the litigation might be separated and conducted in different places. See, e.g., notes 31 and 32 infra. 18 Section 12 began as § 10, became § 11 in the Senate, and finally § 12 in conference. Similarly, § 4 began as § 5, changed first to § 3, and finally to § 4. Section 4 provides for recovery of treble damages in private antitrust proceedings and its venue provisions apply in terms only to such suits. Section 12 applies to 'any suit, action, or proceeding under the antitrust laws against a corporation.' This literally is broad enough to include the suits compe hended by § 4. 19 The original wording of the two sections in respect to venue was slightly different but the substance was identical, both following the preexisting provisions of § 7 of the Sherman Act. 20 E.g., Representative Dickinson urged that the language 'be extended sufficiently to reach every contingency, so that these concerns may be sued in that jurisdiction where they commit the wrong, where the acts complained of may be committed, where the officers, agents, or employees, acting for their master corporation, may be found setting aside the law, and where the witnesses are easily obtainable * * *.' 51 Cong.Rec. 9190. Later he stated that he wanted to 'give the widest liberty of bringing suits where the damage is done and where the action arose.' 51 Cong.Rec. 9417. Representative Summers spoke to the same effect: 'Mr. Chairman, I believe this matter of venue is one of the most important connected with the whole subject of antitrust legislation. * * * The philosophy of legislation with regard to this subject should give the venue at the place wherein the cause of action arises.' Id. 9467. See also id. 9414, 9415, 9608. 21 'Why not at the end of the section, after the word 'found,' add other words, such as 'doing business, or violating the provisions of this law, or wherever it may do business or where its agents, officers, or employees may be found,' or other appropriate language. A dozen suggestions may be made in the way of amendment.' Id. 9190. See also id. 9414—9417, 9466, 9607, 9663, 9682. 22 'Mr. Scott. What is the gentleman's understanding of the word 'found'; what is its import as used in this section? 'Mr. Dickinson. I understand that there is some decision by some court that I am not very familiar with that may possibly cover the very thought suggested by my proposed amendment. I do not believe that it meets the situation, and if there be any doubt about it, in order that the Government may prosecute successfully and institute suits and actions and have trials the language ought to be clear and definite, and so plain that he who runs may read, so that there can not be two constructions.' Id. 9415. 'Mr. Cullop. May I suggest * * * that every suit which has arisen under the Sherman antitrust law has been brought at the home of the corporation itself, or at its principal place of business, and therefore there was no occasion to construe this language, 'is found,' which is ambiguous and uncertain. If you are to construe 'is found,' you will have to construe that as the place of the residence of the corporation, because it is not migratory. You can not get service upon some person traveling throughout the country and hold your jurisdiction throughout that territory. 'Mr. Carlin. Why should not the suit be brought in the habitat of the corporation? We have been successful so far in that matter. 'Mr. Cullop. In this case for the very best reason, I think. The gentleman from Virginia (Mr. Carlin) now has disclosed the purpose of this language, and that is why I am combating it, and for the best of reasons, I think. I do not want to make a resident of California come to Trenton, N.J., to bring a suit for violation of this law, but I want him to sue at home in the jurisdiction where the cause of action arose.' Id. 9416. See also id. 9466 9467, 9607—9608, 9663—9664. 23 E.g., Representative Floyd stated that the provisions were designed 'to give the Government the widest possible scope in getting service in these cases, and the provision is right as it is written and ought not to be changed.' Id. 9416. 24 'Mr. Floyd. * * * The very broadest language that can be used in a statute of this kind conferring jurisdiction is to give the jurisdiction where the corporation resides or is found.' Id. 9415. And 'I think the provisions relating to service properly drafted as they appear in the bill, and that the proposed amendment and others suggested in the debate would narrow the scope of the provisions as drawn.' Id. 9417. And see id. 9608. 25 See, e.g., Representative Cullop's suggestion to confer jurisdiction on state courts without a right of removal to the federal courts. Id. 9662—9664. 26 In opposing the suggestion to confer jurisdiction on the state courts, Representative Floyd argued, inter alia, that 'any friend of this legislation, as I am sure the gentleman from Indiana (Representative Cullop) is, ought not to aid those who are fighting this legislation—the trusts and the combines of this country—by loading it down with questionable amendments that will tend to defeat it and destroy it in the end.' Id. 9663. 27 In place of the House amendment to § 12 of 'or has an agent,' the Senate committee substituted this language: 'Or transacts any business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.' Sen.Rep. No. 698, 63d Cong., 2d Sess. 73. 28 51 Cong.Rec. 14214. See id. 14596, 15943, 16048—16052. 29 An amendment providing for stockholder suits against officers of corporation violating the antitrust laws was added by the Senate but deleted in conference. See the references cited in note 28. 30 Sen.Doc. No. 583, 63d Cong., 2d Sess. 9. Sen.Doc. No. 584, 63d Cong., 2d Sess. 18. 31 See notes 25, 26. The following are examples of the discussion on the plaintiff's right to choose: 'Mr. Dickinson. * * * I do not ask to strike out any language of the committee, but simply to add to it, to make clear and definite and certain so that any person and any corporation may be sued not only where it has its residence as a corporation or individual, but that it can be sued wherever it is found doing business and the cause of action may arise. 'Mr. Stephens of Texas. * * * I thoroughly agree * * *.' 51 Cong.Rec. 9414. 'I will say to my friend from Wisconsin (Mr. Stafford) that we are liberalizing the procedure in the courts in order to give the individual who is damaged the right to get his damages anywhere—anywhere you can catch the offender, as is suggested by a friend sitting near by.' The quoted language is that of Representative Webb. 51 Cong.Rec. 16274. See id. 9467, 9607; also note 32. 32 'Mr. Scott. I could not conceive that anything would deprive the plaintiff of his right to choose the place of trial if he so desired, either in the district where found or where the corporation resides.' Id. 9417. 'Mr. Scott. * * * The amendment enlarges the present interpretation of the word 'found' as applied to the corporate jurisdiction, and permits suit to be brought, with absolute discretion on the part of the plaintiff, in any district in which the defendant may have an agent, without defining the character of that agent.' (Emphasis added.) Id. 9467. 33 Representative Floyd remarked that the committee 'language was used to make this section conform to the existing law and enable him (the Attorney General) to have greater liberty in bringing these suits.' Id. 9415. And see note 23, supra. 34 See notes 6 and 7. 35 It should be noted, however, that 'the mere balance of convenience' in favor of defendants would be insufficient to justify application of the doctrine of forum non conveniens. This has been true since the earliest Scottish and English cases applying the doctrine, although the test has been variously formulated. For example, dismissal has been authorized if suit is 'vexatious and oppressive and an abuse of the process of the Court,' or 'only brought to annoy the defendant.' See Braucher, The Inconvenient Federal Forum, 60 Harv.L.Rev. 908, 909—911. Cf. also note 16 supra. 36 Congress has provided that the trial of these actions may, upon request of the Attorney General, 'be given precedence over others and in every way expedited, and be assigned for hearing at the earliest practicable day * * *.' 32 Stat. 823, 15 U.S.C. § 28, 15 U.S.C.A. § 28. The policy of expediting final decision of these cases is further implemented by authorizing direct appeals to this Court. 32 Stat. 823, 15 U.S.C. § 29, 15 U.S.C.A. § 29. 37 See, e.g., Schine Chain Theatres, Inc., v. United States, 334 U.S. 110, 68 S.Ct. 947; United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, which were instituted in 1939 and have recently been remanded for further proceedings in the trial courts. And the Eastman case, 273 U.S. 359, 47 S.Ct. 400, 71 L.Ed. 684, though begun in 1915, was not decided by this Court until 1927. 38 In this case, although the proceedings have advanced without unwarranted delay at any one stage, more than a year has been consumed solely on the issue of forum non conveniens. The complaint was filed on April 10, 1947. Motions to dismiss, supported by affidavits to show inconvenience, were filed in August and September. The trial court made findings and entered judgment of dismissal on October 15 and allowed an appeal on December 3. The Government filed its statement as to jurisdiction in this Court on January 20, 1948; we noted probable jurisdiction on February 9, heard oral argument on April 28, and today we resolve the issue. But for the intervention of the motions, the consequent dismissal and appeal, the case with appropriate expedition might now be well on the way to final decision on the merits. 39 In this case these possibilities have beend iscounted, largely upon the basis that the appellees had joined in stipulating that all regarded the Illinois forum 'as the proper forum for the above action' and that, in case of dismissal in the California district and filing of a like suit in the Illinois district, the defendants would not move for dismissal of the new suit on the ground of forum non conveniens. The stipulation perhaps would be effective in this case to avoid the complexities of repeated motions if suit were reinstituted in Chicago, but not if the Government should select any of the other venues open to it under § 12. In any event the stipulation is wholly irrelevant to any question of the general effect of the doctrine's applicability upon antitrust proceedings. For once that were established, no defendant or group of defendants in subsequent cases would be bound, or perhaps likely, to execute such a stipulation. 40 As the Government points out, in practically all of the more complex types of antitrust proceedings, the principal defendants are corporations doing a multistate business, and the combination or conspiracy charged seldom has a defined locus. In such situations, it is generally true that, whatever the forum chosen by the plaintiff, it will be inconvenient for some of the defendants and often for most of them. When there is such diffusion of possible venue, that fact of course would be basis for declining to apply the doctrine of forum non conveniens, even if applicable. It is also reason for declining to accept the view that the doctrine was intended to be applicable. Thus, in this case, all but two of the appellees were incorporated and hence 'reside' in Delaware. None are incorporated in Illinois, and only two have their principal places of business or headquarters in Chicago. The invariable practice for fifty-four years, first under § 7, then under § 12, has been that suit may be maintained and trial had at the plaintiff's election where the corporation 'resides' or where it 'is found.' But if this suit had been brought in Delaware or at any of the principal places of business except Chicago, under the application of forum non conveniens made here the trial could not have proceeded in any of those other places. Cf. Tivoli Realty v. Interstate Circuit, 5 Cir., 167 F.2d 155. The statute, § 12, does not require trial to be had where the agreement in conspiracy takes place. Locus of coming to agreement is not the gist of the offenses proscribed. 41 The indictment was returned on April 9, 1947; on August 14, 1947, defendants' motion to transfer the cause was grante. The civil complaint was filed on April 10, 1947, and dismissed on October 15, 1947. 42 Rule 21(b) provides: 'Offense Committed in Two or More Districts or Divisions. The court upon motion of the defendant shall transfer the proceeding as to him to another district or division, if it appears from the indictment or information or from a bill of particulars that the offense was committed in more than one district or division and if the court is satisfied that in the interest of justice the proceeding should be transferred to another district or division in which the commission of the offense is charged.' 18 U.S.C.A. following section 687. Cf. note 43 and text. In addition to the questions there reserved, we express no opinion on whether Rule 21(b) applies to criminal antitrust prosecutions. The Federal Rules of Criminal Procedure became effective March 21, 1946. It would be stretching very far the idea of utilizing legislative history, if criminal rules adopted twenty-two years after a civil statute was enacted were given any significance upon the meaning or effect of the statute. 43 The precise point apparently has not arisen since the adoption of Rule 21(b), but there would seem to be no statutory basis for appeal from an order of this type. See 18 U.S.C. § 682, 18 U.S.C.A. § 682. See also Semel v. United States, 5 Cir., 158 F.2d 231, 232. 44 All that defendants would have to do, in any practical sense, in order to secure dismissal, would be to convince the District Court that transfer of the criminal cause should be made, and then demonstrate the self-evident fact that trial of the two causes in different districts would be inconvenient. 45 In view of our decision in this civil case, there would be nothing to prevent appellees from making a motion under Rule 21(b) of the Criminal Rules to have the criminal cause retransferred to the Southern District of California, if in the changed outlook arising from this decision that should be their pleasure. The Government argues further that as a practical matter there is little likelihood that appellees will be forced to defend both actions. For its distinctly footnote value we quote from its brief: 'When the Government believes that there has been a violation of the Sherman Act, it sometimes seeks corrective relief by way of a civil suit filed after, or simultaneously with, the return of a criminal indictment, but when companion proceedings are thus instituted it is only rarely that both are ultimately brought to trial. If it is held on the present appeal that dismissal of the civil complaint was erroneous, the Government will not seek to bring the criminal and the civil cases to trial simultaneously and, in any event, it is highly unlikely that it will be found necessary to bring both cases to trial. 'If the Government obtains a decree in a civil suit, the defendants in a related criminal case usually file pleas of nolo contendere. If the criminal case is tried first and verdicts of guilty are returned, there is nothing left for trial in the civil case except the question of relief (Local 167 (of International Brotherhood of Teamsters, etc.,) v. United States, 291 U.S. 293, 298, 299 (54 S.Ct. 396, 399, 78 L.Ed. 804)), and the parties are customarily able to reach an agreement on this question and dispose of the civil case by the entry of a consent decree.' 46 Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055; Koster v. (American) Lumbermens Mutual Co., 330 U.S. 518, 67 S.Ct. 828, 91 L.Ed. 1067. See also Baltimore & Ohio R. Co. v. Kepner, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Miles v. Illinois Central R. Co., 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104; Williams v. Green Bay & W.R. Co., 326 U.S. 549, 66 S.Ct. 284, 90 L.Ed. 311. 1 'The court upon motion of the defendant shall transfer the proceeding as to him to another district or division, if it appears from the indictment or information or from a bill of particulars that the offense was committed in more than one district or division and if the court is satisfied that in the interest of justice the proceeding should be transferred to another district or division in which the commission of the offense is charged.' 2 'I do not question the motive of the Government in instituting the prosecution in this district. 'But I am satisfied that a trial here would impose unnecessary hardships on the defendants and entail unjustifiable expense which it is the object of the new rules of criminal procedure, and especially of the rule under discussion, to avoid. Altogether the facts spell out the vexatiousness and oppressiveness which the Supreme Court has warned us to eschew in matters of this character.' 7 F.R.D. 393, 402, 403. 3 Cf. L. Hand, J., in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, 429: 'In United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788, a later statute in pari materia was considered to throw a cross light upon the Anti-trust Acts, illuminating enough even to override an earlier ruling of the court.'
89
334 U.S. 431 68 S.Ct. 1131 92 L.Ed. 1494 PHYLEv.DUFFY. No. 655. Argued April 20, 21, 1948. Decided June 7, 1948. Rehearing Denied June 21, 1948. Mr. Morris Lavine, of Los Angeles, Cal., for petitioner. Mr. Clarence Alinn, of San Francisco, Cal., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The petitioner is under sentence of death for murder in the first degree imposed by a California superior court and affirmed by the State Supreme Court. People v. Phyle, 28 Cal.2d 671, 171 P.2d 428. The validity of that sentence is not here challenged.1 But § 1367 of the California Penal Code provides that 'A person cannot be tried, adjudged to punishment, or punished for a public offense, while he is insane.' Thus if petitioner is insane, California law prohibits his execution under the death sentence which he received. The legal questions here presented relate to the procedures adopted by California to determine whether petitioner is sane or insane as a matter of fact. 2 It is petitioner's contention that, though having been pronounced insane in a judicial proceeding after his conviction, and though he in fact is still insane, he is about to be execute because a state doctor, acting under authority of state statutes, has declared him restored to sanity. The doctor reached his determination without notice or hearings, and without any opportunity on petitioner's part to obtain an orginal court hearing and adjudication of his sanity, or even to obtain a court review of the doctor's conclusion that he is sane. This procedure it is argued constitutes a denial to petitioner of that due process of law guaranteed him by the Fourteenth Amendment. 3 This contention was urged upon the California Supreme Court in habeas corpus proceedings there instituted. That court entertained and considered the petition, but, with two judges dissenting, denied relief, sustaining the validity of the power of the state's executive agents to follow the prescribed statutory procedures. In re Phyle, 30 Cal.2d 838, 843, 186 P.2d 134. We granted certiorari because of the serious nature of the due process contentions presented in the petition. 333 U.S. 841, 68 S.Ct. 656. Here the California attorney general, while supporting the State Supreme Court's denial of habeas corpus, asserts that California affords petitioner an adequate judicial remedy by way of mandamus, a procedure which has not yet been sought by petitioner. 4 The California procedure may perhaps be better understood by explaining the application of the controlling California statutes to petitioner's case. While he was in prison awaiting execution of the death sentence a question arose concerning the petitioner's sanity at that time. Section 3701 of the State Penal Code2 prescribes that if 'there is good reason to believe' that a defendant under sentence of death 'has become insane, the warden must call such fact to the attention of the district attorney.' It is the district attorney's 'duty' immediately to institute proceedings in an appropriate trial court to determine the sanity of the defendant, and the court 'must at once' summon a jury of twelve to 'hear such inquiry.' In petitioner's case this prescribed course was followed, a judicial hearing was held as provided by § 3702,3 and petitioner was adjudged insane. In accordance with § 37034 the court then ordered that petitioner 'be taken to a state hospital for the insane and be there kept in safe confinement until his reason is restored.' It will be noted that the petitioner obtained a judicial hearing as to sanity only because the warden instituted proceedings after determining that there was 'good reason to believe' that the petitioner was insane. Thus, the opportunity for a person under sentence of death to have a hearing before judge and jury on the question of his sanity depends in the first instance solely on the warden. 5 After adjudication of insanity the petitioner was taken to a state hospital for the insane in compliance with the trial court's order of commitment. In accordance with § 37045 the warden then suspended the death sentence and delivered certified copies of the court's order to the governor and to the medical superintendent of the state hospital to which petitioner was sent. As § 3704 provides, the superintendent was directed that when petitioner 'recovers his reason,' the superintendent 'must certify that fact' to the governor, who is then required to issue to the warden his warrant appointing a day for the execution of the judgment. The warden then returns the defendant to the State prison pending the execution of the judgment. This course was followed with reference to the petitioner. Eighteen days after his admission to the state hospital the medical superintendent certified to the governor that the petitioner was then sane. He was returned to the custody of the prison warden, and the governor set a new date for his execution. 6 The medical superintendent's determination of petitioner's sanity was based on his own ex parte investigation, no notice or hearings having been afforded petitioner or any person on his behalf. It is thus clear that the California statutory scheme here challenged provides neither an administrative nor a judicial hearing as a prerequisite to a determination that a condemned defendant judicially adjudicated to be insane has been restored to sanity; one man in an ex parte investigation decides the question upon which hangs the defendant's life, in the absence of a later request by the prison warden for a judicial hearing on the ground that there is then 'reason to believe' the defendant has become insane. 7 The holding of the State Supreme Court in habeas corpus proceeding was: 'There is no authority * * * for the proposition that defendant has a right to habeas corpus or other judicial proceeding to determine the question of his sanity after his release from the state hospital. In fact section 3700 of the Penal Code6 expressly prohibits such a proceeding. Once the superintendent certifies that defendant is sane, he is remanded to the custody of the warden for execution and 'No judge, court, or officer other than the Governor' can then suspend the execution of the judgment, 'except the warden of the State prison to whom he is delivered * * *." In re Phyle, 30 Cal.2d at page 842, 843, 186 P.2d at page 137. 8 For the statements in its opinion that the due process clause of the Fourteenth Amendment conferred no right on a condemned defendant to any kind of judicial adjudication or review on the question of sanity, the State Supreme Court primarily relied on Nobles v. Georgia, 168 U.. 398, 18 S.Ct. 87, 42 L.Ed. 515. We do not think that either the actual holding or what was said in the opinion in that case would necessarily require a rejection of the contentions made here against the California procedures. 9 The Georgia law under scrutiny in the Nobles case provided that the sanity of a person previously condemned to death should be determined by a tribunal formed in the following manner: 'The Sheriff of the county, with concurrence and assistance of the Ordinary thereof, (emphasis added) shall summon a jury of twelve men to inquire into such insanity * * *.' Code 1882, § 4666. If this tribunal found insanity the sheriff was required to suspend execution of sentence and report his action to the presiding judge. Restoration of sanity so as to justify execution was to be determined by the presiding judge 'by inquisition or otherwise.' Thus 'the only question' in the Nobles case, as the Court there said, was 'whether * * * in order to constitute due process of law' the question of insanity of a condemned defendant must 'be tried by a jury in a judicial proceeding surrounded by all the safeguards and requirements of a commonlaw jury trial, and even although by the state law full and adequate administrative and quasi judicial process is created for the purpose of investigating the suggestion.' 168 U.S. at page 405, 18 S.Ct. at page 90, 42 L.Ed. 515. This agency for a hearing to inquire into the prisoner's sanity, composed as it was of sheriff, county judge and jury, was referred to as an 'apt and special tribunal.' There is provision in the California statutes for a hearing before a judge and jury when, but only when, the warden is of opinion that there 'is reason to believe' a defendant is insane. 10 The Nobles case does stand for the proposition that a condemned defendant has no 'absolute right' to a hearing on the question of his sanity on his mere 'suggestion.' Such an absolute right, this Court thought, would make the punishment of a defendant 'depend solely upon his fecundity in making suggestion after suggestion of insanity, to be followed by trial upon trial.' 168 U.S. at page 406, 18 S.Ct. at page 90, 42 L.Ed. 515. For this reason, the Court in the Nobles opinion cited and quoted from legal commentators and from judicial opinions which emphasized, as the opinion in the Nobles case itself emphasized, the importance of leaving to the 'discretion of a judge' the most appropriate procedure for determining the sanity of a defendant already sentenced to death. It was in this connection that the Court made the statemen in the Nobles case upon which the California Supreme Court particularly relied, that 'the manner in which such question should be determined was purely a matter of legislative regulation.' 11 Reading this statement in its context and in relation to the Georgia procedure, we do not understand that the Court in the Nobles case passed upon the question here urged: whether a state which bars the execution of insane persons can submit to a single individual this question, crucial to life, to be decided by that individual ex parte, with or without notice and hearings as the individual may choose, and without any judicial supervision, control or review whatever. The Nobles case we do understand to be an authority for the principle that a condemned defendant cannot automatically block execution by suggestions of insanity, and that a state tribunal, particularly a judge, must be left free to exercise a reasonable discretion in determining whether the facts warrant a full inquiry and hearing upon the sanity of a person sentenced to death.7 12 What has been said previously indicates the gravity of the questions here raised under the due process clause as heretofore construed by this Court, both the contention that execution of an insane man is offensive to the fundamental principles of liberty and justice which lie at the base of all our civil and political institutions, d amson v. California, 332 U.S. 46, 54, 67 S.Ct. 1672, 1677, 91 L.Ed. 1903, 171 A.L.R. 1223; Carter v. Illinois, 329 U.S. 173, 175, 179, 67 S.Ct. 216, 218, 220, 91 L.Ed. 172, and the different contention that life shall not be taken by a state as the result of the unreviewable ex parte determination of a crucial fact made by a single excutive officer. See Ng Fung Ho v. White, 259 U.S. 276, 42 S.Ct. 492, 66 L.Ed. 938.8 It is not appropriate for us to pass on such constitutional questions in this habeas corpus case if, as the California attorney general contends, there is a state remedy by mandamus available to petitioner under which he can invoke judicial action to compel the warden to initiate judicial proceedings, and in which mandamus proceedings the court will hear and consider evidence to determine whether there is 'reason to believe' that the petitioner is insane. State of New York ex rel. Whitman v. Wilson, Warden, 318 U.S. 688, 63 S.Ct. 840, 87 L.Ed. 1083; Woods v. Nierstheimer, 328 U.S. 211, 66 S.Ct. 996, 90 L.Ed. 1177; Carter v. Illinois, 329 U.S. 173, 67 S.Ct. 216, 91 L.Ed. 172. See also Simon v. Craft, 182 U.S. 427, 437, 21 S.Ct. 836, 840, 45 L.Ed. 1165. 13 The State Supreme Court in denying habeas corpus said that the state statutes made 'no provision for a judicial determination of the question of the sanity of a defendant delivered to the warden of a state prison for execution except as set forth in section 3701.' That is the section which requires a judicial inquiry with a court and jury only when and if the warden certifies that 'there is good reason to believe' that a person sentenced to death has 'become insane.' But it does not necessarily follow from the fact that petitioner cannot obtain a full-fledged judicial hearing as to sanity on his own motion made directly to a state court that he is without some other adequate state remedy. And the state attorney general asserts here that the petitioner does have an 'ample remedy, if the facts support him, by application to the California courts for a writ of mandamus' to compel the warden to institute proceedings under § 3701. 14 Thus we have an unequivocal declaration by the state attorney general that petitioner has not attempted to take advantage of an available state remedy. The attorney general is the highest non-judicial legal officer of California, and is particularly charged with the duty of supervising administration of the criminal laws.9 His statement on this question is entitled to great weight in the absence of controlling state statutes and court decisions.10 Nor is there anything in the State Supreme Court's opinion in this case that need be considered in conflict with the attorney general's opinion. While that court held that there was no statutory provision for petitioner to obtain a sanity hearing except through action by the warden as prescribed in § 3701, it did not hold or even considerwhether there was judicial power under state law to compel the warden to do his duty under § 3701. It did declare, clearly and emphatically, that the statute imposed a mandatory obligation on the warden to initiate judicial proceedings if there was good reason to believe a condemned defendant insane, an obligation that continued to rest upon the warden even after e rtification of restoration to sanity by the medical superintendent. The Supreme Court also declared that this duty would continue up to the very time of execution. Failure of the warden to perform this obligation, so the court said, would be a 'violation of Penal Code section 1367,' which section prohibits execution of an insane man. In view of this mandatory obligation upon the warden to initiate proceedings if 'there is good reason to believe' a defendant sentenced to death is insane, it would be somewhat anomalous, to say the least, if California courts were wholly without power to correct an executive agent's abuse of authority in a matter of such great significance as the execution of insane persons. 15 The jurisdiction of California courts to issue mandamus has its source in art. VI, §§ 4, 4b, 5 of the state constitution. The writ can issue to any inferior tribunal or person to compel an act which the law specifically enjoins. Code of Civil Procedure of California, § 1085. It has been held that the writ may issue against the secretary of state, Hutchinson v. Brown, 122 Cal. 189, 54 P. 738, 42 L.R.A. 232, or even against the governor. Elliott v. Pardee, Governor, 149 Cal. 516, 520, 86 P. 1087, 1089. 16 Petitioner contends, however, that mandamus would not be available under California law if there is another adequate remedy, see Kahn v. Smith, 23 Cal.2d 12, 142 P.2d 13, that here habeas corpus is available, and hence mandamus is not. This contention is fully answered by the State Supreme Court's opinion in this case, holding that neither habeas corpus nor any other remedy is available to test sanity of a condemned defendant, except that remedy under § 3701 which only the warden can institute. Hence, so far as it here appears, mandamus to compel action by the warden is the only available remedy. 17 Petitioner contends that this remedy is inadequate because under California law no relief could be hoped for in a mandamus proceeding without a showing that the warden's non-action was arbitrary and capricious. We cannot know, of course, just what precise standards the State Supreme Court may hold must be met by petitioner in order to obtain the judicial inquiry provided in § 3701. We are persuaded by the attorney general's statements and brief, and by the state constitution, state statutes, and state decisions to which he referred, that mandamus is probably available, and that in a mandamus proceeding some issues of fact concerning petitioner's sanity can be drawn by the parties, resolved by the courts, and provide support for relief. Different language has been used in different opinions concerning the conditions upon which the writ will issue in California. Although it has been said that generally the writ will issue only to correct an abuse of discretion, Bank of Italy v. Johnson, 200 Cal. 1, 31—33, 251 P. 784, 795, 796 and cases cited, it has also been pointed out that in some circumstances writs can issue to compel action in a particular way. Wood v. Strother, 76 Cal. 545, 549, 18 P. 766, 769, 9 Am.St.Rep. 249; Landsborough v. Kelly, 1 Cal.2d 739, 744, 37 P.2d 93, 95, 96 A.L.R. 707. 18 In considering what the issues may be in a mandamus proceeding, it must be borne in mind that the warden is under a mandatory duty to initiate judicial proceedings, not when a defendant is insane, but when 'there is good reason to believe' he is insane. We cannot say at this time that California's remedy by mandamus will be less than a substantial equivalent11 of one which authorized him to apply directly to a court for a full hearing. For this Court held in Nobles v. Georgia, supra, that in the absence of sufficient reasons for holding a full hearing into the sanit of a defendant sentenced to death, a state judge may deny such a hearing consistently with due process. As previously pointed out, the decision in the Nobles case emphasized that due process of law had never necessarily envisioned a full court hearing every time the insanity of a condemned defendant was suggested. Applications for inquiries into sanity made by a defendant sentenced to death, unsupported by facts, and buttressed by no good reasons for believing that the defendant has lost his sanity, cannot, with any appropriate regard for society and for the judicial process, call for the delays in execution incident to full judicial inquiry. And a court can just as satisfactorily determine by mandamus as by direct application whether there are good reasons to have a full-fledged judicial inquiry into a defendant's sanity. 19 In this situation we find no federal constitutional question presented which is ripe for decision here. So here, as in Woods v. Nierstheimer, supra, being unable to say that the judgment denying habeas corpus may not rest on an adequate non-federal ground, the writ of certiorari is 20 Dismissed. 21 Mr. Justice FRANKFURTER, whom Mr. Justice DOUGLAS, Mr. Justice MURPHY, and Mr. Justice RUTLEDGE join, concurring. 22 Where life is at stake one cannot be too careful. I's had better be dotted and t's crossed. And so I deem it proper to state my understanding of the opinion of the Court, on the basis of which I concur in it. 23 We granted certiorari to review a decision of the Supreme Court of California which dismissed habeas corpus proceedings brought in that court. We did so on the assumption that the case raised questions under the Fourteenth Amendment—more particularly, whether an unreviewable determination by the superintendent of a State hospital, that one convicted of murder and found to have become insane after conviction had been restored to sanity and therefore was subject to execution, was consistent with the due process which the Fourteenth Amendment secures. The Court now finds that all that the California Supreme Court did was to hold that as a matter of California procedure the petitioner's claim could not be passed on by the direct remedy of habeas corpus, but that there is available a special local remedy, labeled mandamus, whereby the petitioner can judicially test his present sanity. In short, the Court dismisses the writ of certiorari because the decision of the court below rests on a purely State ground in that there is a State remedy available, which has not been pursued, by means of which he can secure the rights he claims under the United States Constitution. 24 Of course I recognize the weight to be attached to the Attorney General's views regarding the law of California. But the controlling voice on California law is that of the Supreme Court of California. Whatever may be the elegancies of procedure by which the matter is to be determined, our decision declining to consider the grave constitutional issues which we thought we had before us, is contingent upon a determination by the Supreme Court of California that the law of that State is what our decision presupposes it to be, namely, that California by a remedy which California chooses to call mandamus enables the present petitioner to secure a judicial determination of his present sanity. This means, of course, not the very restricted scope of relief which is normally associated with the traditional remedy of mandamus. It presupposes that California affords petitioner the means of challenging in a substantial way the ex parte finding of the Superintendent of the State Hospital for the Insane and enables him to secure judicial determination of the claims he has made in his petition for habeas corpus which, so the Court now holds, is not the proper way to proceed. 25 Upon thi view I concur in the decision and opinion of the Court. 1 The opinion of the State Supreme Court affirming petitioner's sentence shows: Upon arraignment in the Superior Court counsel was appointed for petitioner at his request. His pleas were 'Not guilty' and 'Not guilty by reason of insanity.' Later petitioner informed his counsel that he wished to withdraw these pleas and enter a plea of guilty. The trial judge then examined petitioner at length, satisfied himself that the change of plea was voluntarily entered by petitioner with full knowedge of his legal rights, and then accepted it. Evidence was then taken by the court to determine the degree of the murder and to fix the punishment. Two physicians appointed by the court testified that in their judgment petitioner was sane. Other witnesses testified to the facts of the crime. The murder was committed by petitioner while he was in the act of perpetrating a robbery. During the entire proceedings, so the State Supreme Court found from the record, the appointed counsel participated and represented petitioner 'with fidelity and proficiency.' People v. Phyle, 28 Cal.2d 671, 171 P.2d 428, 429. 2 '3701. Insanity of defendant, how determined. If, after his delivery to the warden for execution, there is good reason to believe that a defendant, under judgment of death, has become insane, the warden must call such fact to the attention of the district attorney of the county in which the prison is situated, whose duty it is to immediately file in the superior court of such county a petition, stating the conviction and judgment, and the fact that the defendant is believed to be insane, and asking that the question of his sanity be inquired into. Thereupon the court must at once cause to be summoned and impaneled, from the regular jury list of the county, a jury of 12 persons to hear such inquiry.' 3 '3702. Duty of district attorney upon hearing. The district attorney must attend the hearing, and may produce witnesses before the jury, for which purpose he may issue process in the same manner as for witnesses to attend before the grand jury, and disobedience thereto may be punished in like manner as disobedience to process issued by the court.' 4 '3703. Convict found insane. The verdict of the jury must be entered upon the minutes, and thereupon the court must make and cause to be entered an order reciting the fact of such inquiry and the result thereof, and when it is found that the defena nt is insane, the order must direct that he be taken to a State hospital for the insane, and there kept in safe confinement until his reason is restored.' 5 '3704. Convict found sane: Duties of warden. If it is found that the defendant is sane, the warden must proceed to execute the judgment as specified in the warrant; if it is found that the defendant is insane, the warden must suspend the execution and transmit a certified copy of the order mentioned in the last section to the Governor, and deliver the defendant, together with a certified copy of such order, to the medical superintendent of the hospital named in such order. When the defendant recovers his reason, the superintendent of such hospital must certify that fact to the Governor, who must thereupon issue to the warden his warrant appointing a day for the execution of the judgment, and the warden shall thereupon return the defendant to the State prison pending the execution of the judgment.' 6 '3700. Governor may suspend. No judge, court, or officer, other than the governor, can suspend the execution of a judgment of death, except the warden of the State prison to whom he is delivered for execution, as provided in the six succeeding sections, unless an appeal is taken.' 7 See cases collected in 49 A.L.R. 804 et seq. 8 See also Yick Wo v. Hopkins, 118 U.S. 356, 369, 370, 6 S.Ct. 1064, 1070, 1071, 30 L.Ed. 220; Regal Drug Corporation v. Wardell, 260 U.S. 386, 391, 392, 43 S.Ct. 152, 153, 67 L.Ed. 318; Duncan v. Kahanamoku, 327 U.S. 304, 322, 66 S.Ct. 606, 614, 90 L.Ed. 688; Dent v. West Virginia, 129 U.S. 114, 123, 124, 9 S.Ct. 231, 233, 234, 32 L.Ed. 623; Brown v. New Jersey, 175 U.S. 172, 176, 20 S.Ct. 77, 78, 44 L.Ed. 119; St. Joseph Stock Yards Co. v. United States, 298 U.S. 38, 49—54, 76—78, 56 S.Ct. 720, 724—727, 736, 737, 80 L.Ed. 1033, concurring opinion, Brandeis, J. Cf. United States v. Ju Toy, 198 U.S. 253, 263, 25 S.Ct. 644, 646, 49 L.Ed. 1040; Simon v. Craft, 182 U.S. 427, 436, 21 S.Ct. 836, 839, 45 L.Ed. 1165. 9 California Government Code, §§ 12510—12512, 12519, 12550 12553. 10 See Union Ins. Co. v. Hoge, 21 How. 35, 66, 16 L.Ed. 61; Fox v. Standard Oil Co., 294 U.S. 87, 96, 55 S.Ct. 333, 337, 79 L.Ed. 780; Driscoll v. Edison Light & Power Co., 307 U.S. 104, 115, 59 S.Ct. 715, 720, 83 L.Ed. 1134. 11 See Edison Co. v. N.L.R.B., 305 U.S. 197, 234, 59 S.Ct. 206, 219, 83 L.Ed. 126; Opp Cotton Mills, Inc., v. Administrator, 312 U.S. 126, 152, 153, 61 S.Ct. 524, 536, 85 L.Ed. 624.
01
334 U.S. 446 68 S.Ct. 1186 92 LE d. 1502 BAY RIDGE OPERATING CO., Inc.v.AARON et al. HURON STEVEDORING CORPORATION v. BLUE et al. Nos. 366, 367. Rehearing Denied Oct. 11, 1948. Argued Jan. 12, 1948. Decided June 7, 1948. [Syllabus from pages 446-448 intentionally omitted] Messrs. Peyton Ford and Marvin C. Taylor, both of Washington, D.C., for petitioners. Mr. Monroe Goldwater, of New York City, for respondents. Mr. Justice REED delivered the opinion of the Court. 1 These cases present another aspect of the perplexing problem of what constitutes the regular rate of pay which the Fair Labor Standards Act requires to be used in computing the proper payment for work in excess of forty hours. The applicable provisions read as follows: 2 'Sec. 7. (a) No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce— 3 (3) for a workweek longer than forty hours after the expiration of the second year from such date, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.'1 4 The problem posed is the method of computing the regular rate of pay for longshoremen who work in foreign and interstate commerce varying and irregular hours throughout the workweek under a collective bargaining agreement for handling cargo which provides contract straight time hourly rates for work done within a prescribed 44-hour time schedule and contract overtime rates for all work done outside the straight time hours.2 5 These two suits were brought as class actions on behalf of all longshoremen employed by two stevedoring companies, Bay Ridge Operating Co., and Huron Stevedoring Corp., to recover unpaid statutory excess compensation3 in accordance with § 16(b) of the Fair Labor Standards Act.4 By stipulation the claims of ten specific longshoremen in each case were severed and the two suits were consolidated for trial, leaving the claims of the other plaintiffs pending on the docket. The claims of the plaintiffs here are for the period October 1, 1943, to September 30, 1945. 6 The terms of employment for the respondents, longshoremen working in the Port of New York, were fixed for the period in question by the collective bargaining agreement between the International Longshoremens Association and the New York Shipping Association together with certain steamship and stevedore companies. It was applicable to the two petitioners. The agreement established a 'basic working day' of eight hours and a 'basic working week,' that is, workweek, of forty-four hours; hourly rates for different types of cargo were specified for work between 8 a.m. and 12 noon and between 1 p.m. and 5 p.m. during five working days of the week, Monday through Friday, and from 8 a.m. to 12 noon on Saturday, and a different schedule of rates for work during all other hours in the workweek. The first schedule was called 'straight time' rates, and the second schedule was entitled 'overtime' rates. This opinion designates these rates as contract straight time and contract overtime. For four types of cargo the overtime rates were exactly one and a half times the straight time rates; for four other types the overtime rates were slightly less than one and a half times the straight time rates. The contract straight time rates ranged from $1.25 to $2.50 an hour. The contract overtime rates were paid for all work on Sundays and legal holidays. The contract provided for no differential for work in excess of forty hours in a week.5 7 Respondents claim that their regular rate of pay under the contract for any workweek within the meaning of s 7(a), is the average hourly rate computed by dividing the total number of hours worked in any workweek for any single employer into the total compensation received from that employer during that week; and that in those workweeks in which they worked more than forty hours for any one employer they were entitled by § 7(a) to statutory excess compensation for all such excess hours computed on the basis of that rate. The petitioners claim that the straight time rates are the regular rates, and that they have, therefore, with minor exceptions not presented by this review, complied with the requirements of § 7(a). That is, no rates except straight time rates are to be taken into consideration in computing the regular rate. The petitioners contend that the contract overtime rates were intended to cover any earned statutory excess compensation and did cover it because they were substantially in an amount of one and one-half times the straight time rates. The District Court held that the contract straight time rates were the regular rates but the Circuit Court of Appeals for the Second Circuit held otherwise.6 8 Throughout all these proceedings the petitioners have been represented by the Department of Justice, since the United States under its cost-plus contracts with the petitioners is the real party in interest. Substantially all stevedoring during the war years was performed for the account of the United States. The Solicitor General notes that prior to the decision in the Circuit Court of Appeals, 118 suits had been instituted on behalf of longshoremen, and since that time approximately 100 new complaints have been filed. Contracts of the same general type are said to have been in effect in all our maritime areas. Witnesses testifying before the Wages and Hours Subcommittee of the House Committee on Education and Labor stated that liability of the Government under such suits would be large.7 The Wage and Hour Administrator has not filed a brief in the proceedings, but the Solicitor General has advised us that the Administrator of the Wage and Hour Division of the Department of Labor 'believes that proper consideration was given by the court below to his interpretation of Section 7 of the Fair Labor Standards Act and that the decision below is correct.' The Administrator and the Solicitor of the Department of Labor testified at length before the House committee as to their views on the issues presented by these cases.8 Amicus briefs have been filed by the International Longshoremens Association, the National Association of Manufacturers, and the Waterfront Employers Association of the Pacific Coast, all urging that the decision below be reversed. 9 In order to fix the legal issues in their factual setting, we summarize the findings of fact made by the District Court which were accepted by the Circuit Court of Appeals and are not challenged here. Most of these findings referred to in this opinion will be found in the Appendix at 162 F.2d 670. Employment in the longshore industry has always been casual in nature. The amount of work available depends on the number of ships in port and their length of stay and is consequently highly variable and unpredictable, from day to day, week to week, and season to season. Longshoremen are hired for a specific job at the 'shape,'9 which is normally held three times a day at each pier where work is available. The hiring stevedore selects the men he desires from the longshoremen who are present at the 'shape'; in some instances a group of longshoremen are hired together as a gang. The work may last only for a few hours or for as long as a week. Although some work is carried on at all hours, the stevedoring companies, since operations are then carried on at less cost, attempt to do as much work as possible during the straight time hours. 10 The court further found that the rate for night work and holiday work had been higher than the rate for day work since at least as far back as 1887, and that since 1916, when the first agreement was made with the International Longshoremens Association, the differential had been approximately 50%. Joseph B. Ryan, President of the Association, testified that the differential was designed to shorten the total number of hours worked and to confine the work as far as possible within the scheduled forty-four hours. Despite the differential, many longshoremen were unwilling to work at night. Although some longshore work was required at all hours, except Saturday night, the District Court found that the differential had been responsible for the high degree of concentration of longshore work to the contract straight time hours. 11 The government introduced elaborate statistical studies to show the distribution of work as between the contract straight time and contract overtime hours. From 1932 to 1937, 80% of the total hours worked were within the contract straight time hours and only 2 1/2% of the total manhours were performed by men working between 5 p.m. and 8 a.m. (exclusive of Sundays and holidays) who had worked no straight time hours earlier that day. During the war, the proportion of work in contract overtime hours was considerably higher because of the greater volume of cargo had led; 55% of the total hours fell within the contract straight time hours, and the ratio of work in contract overtime hours by men who had not previously worked in the contract straight time hours was correspondingly higher. The respondents' employment was highly irregular; in many weeks the respondents did not work at all, and in weeks in which they did work their hours of employment varied over a wide range. The trial court concluded that the 'basic working day' and 'basic working week,'10 meaning by these phrases the contract straight time hours, were not the periods 'normally, regularly, or usually' worked by the respondents. Finding 45. 12 In giving judgment for the petitioners, the trial court placed emphasis on the fact that the rates in question were arrived at through bona fide collective bargaining, and were more favorable to the longshoremen than the statutory mandate required. That is, that rates as high as contract straight time rates plus statutory excess compensation were paid to all workers for all work in contract overtime hours whether required by § 7(a) or not. The District Court opinion referred to Joseph B. Ryan's statement that the International Longshoremens Association was opposed to the suit 'as it might wipe out all of the gains we had made for our men over a period of 25 years,'11 It rejected respondents' alternative contentions that the regular rate was to be determined by the average rate during the first forty hours or by the average rate for all hours worked. It noted that shift differentials were usually five or ten cents an hour and seldom exceeded fifteen cents and were not designed to deter the employer from working employees during the period for which the differential was paid; in the present case the trial judge found that the 50% differential was designed to deter and actually did deter work outside contract straight time hours. Accordingly the trial court concluded that the 'collectively bargained agreement established a regular rate' under the Fair Labor Standards Act—the contract straight time rate. 69 F.Supp. 956, 958. 13 The Circuit Court of Appeals held that the regular rate must be determined as an 'actual fact' and could not be arranged through a collective bargaining agreement, citing 149 Madison Ave. Corp. v. Asselta, 331 U.S. 199, 67 S.t . 1178, 91 L.Ed. 1432, 169 A.L.R. 1293. That court therefore concluded that on the basis of the findings below the regular rate must be computed by dividing the total number of hours worked into the total compensation received. The court rejected the contention that the regular rate was the average rate for the first forty hours of work, citing Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17, 67 S.Ct. 1056, 91 L.Ed. 1312. The judgment of the District Court was reversed with directions to determine the amounts due plaintiffs in the light of the Portal-to-Portal Act of 1947, 61 Stat. 84. No determination of the scope or validity of that act was attempted as those matters had not been argued. 162 F.2d 673. 14 On account of the importance of the method of computing the regular rate of pay in employment contracts providing for extra pay, we granted certiorari.12 332 U.S. 814, 68 S.Ct. 155. 15 The government adopts the view of the District Court that the contract straight time rates constituted the regular rates within the meaning of § 7(a) of the Fair Labor Standards Act. The government accepts, too, the reasoning of the District Court that the contract overtime rates, as they were coercive in the sense that they were intended to exert pressure on employers to carry on their activities in the straight time hours, were not regular rates and could be credited against required statutory excess compensation in the amount that the contract overtime rates exceeded the contract straight time rates. The government argues in the alternative that the 'normal, non-overtime workweek,' said to be the hours controlling the regular rate of pay, is to be determined by reference to peacetime conditions, rather than the abnormal war-time conditions, and that the statistical studies show that the work of longshoremen is sufficiently concentrated within the scheduled hours to compel the finding that the contract straight time hours are the regular working hours. The government urges also that the contract, as thus interpreted, accords with congressional purposes in enacting the Fair Labor Standards Act. It is said to reduce working hours and spread employment and to preserve the integrity of collective bargaining. 16 We agree with the conclusion reached by the Circuit Court of Appeals. Later in this opinion, 334 U.S. 464, 469, 68 S.Ct. 1196, 1199, we set out our reasons for concluding that the extra pay for contract overtime hours is not an overtime premium. Where there are no overtime premium payments the rule for determining the regular rate of pay is to divide the wages actually paid by the hours actually worked in any workweek and adjudge additional payment to each individual on that basis for time in excess of forty hours worked for a single employer. Any statutory excess compensation so found is of course subject to enlargement under the provisions of § 16(b). Compare § 11 of Portal-to-Portal Act of 1947. This determination, we think, accords with the statute and the terms of the contract. 17 (1) The statute, § 7(a), expresses the intention of Congress 'to require extra pay for overtime work by those covered by the Act even though their hourly wages exceeded the statutory minimum.' The purpose was to compensate those who labored in excess of the statutory maximum number of hours for the wear and tear of extra work and to spread employment through inducing employers to shorten hours because of the pressure of extra cost.13 The statute by its terms protects the group of employees by protecting each individual employee from overly long hours. So although only one of a thousand works more than forty hours, that one is entitled to statutory excess compensation. That excess compensation is fixed by § 7(a) at 'one and one-half times the regular rate at which he is employed.' The regular rate of pay of the respondents under this contract must therefore be found. 18 The statute contains no definition of regular rate of pay and no rule for its determination. Contracts for pay take many forms. The rate of pay may be by the hour, by piecework, by the week, month or year, and with or without a guarantee that earnings for a period of time shall be at least a stated sum. The regular rate may vary from week to week. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 580, 62 S.Ct. 1216, 1221; Walling v. A. H. Belo Corp., 316 U.S. 624, 632, 62 S.Ct. 1223, 1227, 86 L.Ed. 1716. The employee's hours may be regular or irregular. From all such wages the regular hourly rate must be extracted. As no authority was given any agency to establish regulations, courts must apply the statute to this situation without the benefit of binding interpretations within the scope of the Act by an administrative agency.14 19 Every contract of employment, written or oral, explicitly or implicitly includes a regular rate of pay for the person employed. Walling v. A. H. Belo Corp., supra, 316 U.S. 631, 62 S.Ct. 1227; Walling v. Halliburton Oil Well Cementing Co., supra. We have said that 'the words 'regular rate' * * * obviously mean the hourly rate actually paid for the normal, non-overtime workweek.' Walling v. Helmerich & Payne, 323 U.S. 37, 40, 65 S.Ct. 11, 13. See United States v. Rosenwasser, 323 U.S. 360, 363, 65 S.Ct. 295, 296, 89 L.Ed. 301. 'Wage divided by hours equals regular rate.' Overnight Motor Transp. Co. v. Missel, supra, 316 U.S. 580, 62 S.Ct. 1221. 'The regular rate by its very nature must reflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments. It is not an arbitrary label chosen by the parties; it is an actual fact. Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary 'regular rate' in the wage contracts.' Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424, 425, 65 S.Ct. 1242, 1245, 89 L.Ed. 1705. The result is an 'actual fact.' 149 Madison Ave. Corp. v. Asselta, supra, 331 U.S. at page 204, 67 S.Ct. at page 1181. 20 In dealing with such a complex situation as wages throughout national industry, Congress necessarily had to rely upon judicial or administrative application of its standards in applying sanctions to individual situations. These standards had to be expressed in words of generality. The possible contract variations were unforeseeable. In Walling v. A. H. Belo Corp., supra, 316 U.S. at page 634, 62 S.Ct. at page 1228, this Court refrained from rigidly defining 'regular rate' in a guaranteed weekly wage contract that met the statutory requirements of § 7(a) for minimum compensation. In the Belo case the contract called for a regular or basic rate of pay above the statutory minimum and a guaranteed weekly wage of 60 times that amount. As the hourly rate was kept low in relation to the guaranteed wage, statutory overtime plus the contract hourly rate did not amount to the guaranteed weekly wage until after 54 1/2 hours were worked. 316 U.S. at page 628, 62 S.Ct. at page 1225. We refused to require division of the weekly wage actually paid by the hours actually worked to find the 'regular rate' of pay and left its determination to agreement of the parties. Where the same type of guaranteed weekly wages were involved, we have reaffirmed that decision as a narrow precedent principally because of publc reliance upon and congressional acceptance of the rule there announced. Walling v. Halliburton Oil Well Cementing Co., supra. Aside from this limitation of Belo, the case itself is not a precedent for these cases as in Belo the statutory requirements of minimum wages and statutory excess compensation were provided by the Belo contract. In these present cases no provision has been made for any statutory excess compensation and none can be earned by any respondent based on the contract overtime pay. Our assent to the Belo decision, moreover, does not imply that mere words in a contract can fix the regular rate.15 That would not be the maintenance of a flexible definition of regular rate but a refusal to apply a statutory requirement for protecting workers against excessive hours. The results on the individual of the operations under the contract must be tested by the statute.16 As Congress left the regular rate of pay undefined, we feel sure the purpose was to require judicial determination as to whether in fact an employee receives the full statutory excess compensation, rather than to impose a rule that in the absence of fraud or clear evasion employers and employees might fix a regular rate without regard to hours worked or sums actually received as pay. 21 Further, we reject the argument that under the statute, an agreement reached or administered through collective bargaining is more persuasive in defining regular rate than individual contracts. Although our public policy recognizes the effectiveness of collective bargaining and encourages its use,17 nothing to our knowledge in any act authorizes us to give decisive weight to contract declarations as to the regular rate because they are the result of collective bargaining. 149 Madison Ave. Corp. v. Asselta, supra, 331 U.S. 202 and 204, 67 S.Ct. 1180, 1181; Walling v. Harnischfeger Corp., 325 U.S. 427, 432, 65 S.Ct. 1246, 1249.18 A vigorous argument is presented for petitioners by the International Longshoremens Association that a collectively obtained and administered agreement should be effective in determining the regular rate of pay19 but we think the words of and practices under the contract are the determinative factors in finding the regular rate for each individual. 22 As the regular rate of pay cannot be left to a declaration by the parties as to what is to be treated as the regular rate for an employee, it must be drawn from what happens under the employment contract. We think the most reasonable conclusion is that Congress intended the regular rate of pay to be found by dividing the weekly compensation by the hours worked unless the compensation by the hours employee contains some amount that represents an overtime premium. If such overtime premium is included in the weekly pay check that must be deducted before the division. This deduction of overtime premium from the pay for the workweek results from the language of the statute. When the statute says that the employee shall receive for his excess hours one and one-half times the regular rate at which he is employed, it is clear to us that Congress intended to exclude overtime premium payments from the computation of the regular rate of pay. To permit overtime premium to enter into the computation of the regular rate would be to allow overtime premium on overtime premium—a pyramiding that Congress could not have intended. In order to avoid a similar double payment, we think that any overtime premium paid, even if for work during the first forty hours of the workweek, may be credited against any obligation to pay statutory excess compensation. These conclusions accord with those of the Administrator.20 23 The definition of overtime premium thus becomes crucial in determining the regular rate of pay. We need not pause to differentiate the situations that have been described by the word 'overtime.'21 Sometimes it is used to denote work after regular hours, sometimes work after hours fixed by contract at less than the statutory maximum hours and sometimes hours outside of a specified clock pattern without regard to whether previous work has been done, e.g., work on Sundays or holidays. It is not a word of art. See Premium Pay Provisions in Union Agreements, Monthly Labor Review, United States Department of Labor, October 1947, Vol. 65, No. 4. Overtime premium has been used in this opinion as defined in note 3. It is that extra pay for work because of previous work for a specified number of hours in the workweek or workday. It is extra pay of that kind which we think that Congress intended should be excluded from computation of regular pay. Otherwise the purpose of the statute to require payment to an employee for excess hours is expanded extravagantly by computing regular rate of pay upon a payment already made for the same purpose for which § 7(a) requires extra pay, to wit, extra pay because of excess working hours. Accordingly, statutory excess compensation paid for work in excess of forty hours should not be used to figure the regular rate. Neither should similar contract excess compensation for work because of prior work be used in such a calculation. Extra pay by contract because of longer hours than the standard fixed by the contract for the day or week has the same purpose as statutory excess compensation and must likewise be excluded.22 Under the definition, a mere higher rate paid as a job differential or as a shift differential, or for Sunday or holiday work, is not an overtime premium. It is immaterial in determining the character of the extra pay that an employee actually has worked at a lower rate earlier in the workweek prior to the receipt of the higher rate. The higher rate must be paid because of the hours previously worked for the extra pay to be an overtime premium. 24 The trial court refused to accept the respondents' contention that the contract overtime rate was a shift differential, partly because it was felt that such a holding would have a disruptive effect on national economy. 69 F.Supp. 958, 959. We use as examples three illustrations employed by the District Court to illustrate its understanding of the effect of respondents' contentions to employment situations. That court thought these illustrations indicated additional liability from the employer under § 7(a).23 We do not agree. Our conclusions as to the trial court's illustrations vary from those of the trial court because that court did not deduct overtime premiums, as we have defined them, actually paid from the weekly wage before dividing by the hours worked. See quotation from Walling v. Youngerman-Reynolds Hardwood Co., supra, at page 461, this opinion. (1) The employment contract calls for an overtime premium for work beyond thirty-six hours. Such extra pay should not be included as weekly wages in any computation of the regular rate at which a man works.24 (2) A contract provides for payment of time and a half for work in excess of eight hours in a single workday. An employee who works five ten-hour days would have no claim for statutory excess compensation if paid the amount due by the contract.25 Or (3) a contract provides for a rate of $1 an hour for the first 40 hours and $1.50 for all excess hours; an employee works 48 hours and receives $52. To find his regular rate of employment, the overtime premium of $4 should be deducted and the resulting sum divided by 48 hours.26 On the other hand, a man might be employed as a night watchman on an eight-hour shift at time and a half the wage rate of day watchmen. This would be extra pay for undesirable hours. It is a shift differential. It would not be overtime premium pay but would be included in the computation for determining overtime premium for any excess hours.27 25 Where an employee receives a higher wage or rate because of undesirable hours or disagreeable work, such wage represents a shift differential or higher wages because of the character of work done or the time at which he is required to labor rather than an overtime premium.28 Such payments enter into the determination of the regular rate of pay. See Cabunac v. National Terminals Corp., 7 Cir., 139 F.2d 853. 26 The trial court seemed to assume that if the contract overtime rate were a shift differential, the employee who worked on a higher paid shift would be entitled to have his higher shift rates enter into the computation of regular rate of pay. One of the reasons for not allowing the contract overtime rates in the computation of regular rate of pay was that it thought the great difference between the contract straight time and contract overtime rates showed that the premium paid by contract was not a shift differential but a true overtime premium. In this we think the trial court erred. The size of the shift differential cannot change the fact that large wages were paid for work in undesirable hours. It i like a differential for dangerous work. This contract called for $2.50 straight time hourly rate for handling explosives. The statutory excess compensation would, of course, be $3.75 per hour. If an employee receives from his employer a high hourly rate of pay for hard or disagreeable duty, he is entitled to the statutory excess compensation figured on his actual pay. 27 Nor do we find the District Court's reliance upon the fact that the overtime rates were employed in order to concentrate the work of the longshoremen in the straight time hours relevant to a determination of the respondents' rate of pay. The District Court thought the concentration was significant. It did not test whether the contract overtime rates contained overtime premium payments by considering whether the employee actually received extra compensation for excess hours. We accept the District Court's holding that this concentration was an intended effect of the overtime rates and that the higher rates did contribute to the concentration of the work in the straight time hours as set out in a preceding paragraph of this opinion. 68 S.Ct. 1192 supra. Such a concentration tends, in some respects, to the employment of more men, as there is pressure for more work to be done in the straight time hours. Overnight Motor Transp. Co. v. Missel, supra, 316 U.S. 578, 62 S.Ct. 1220. However, the pressure of the contract overtime wages is not solely toward a spread of employment. Since work is in fact done outside straight time hours, the employer can use men who have previously worked in straight time hours in contract overtime hours without additional cost. 28 But spread of employment is not the sole purpose of the forty-hour maximum provision of § 7(a). Its purpose is also to compensate an employee in a specific manner for the strain of working longer than forty hours. Overnight Motor Transp. Co. v. Missel, supra, 316 U.S. 578, 62 S.Ct. 1220. The statute commands that an employee receive time and one-half his regular rate of pay for statutory excess compensation. The contract here in question fails to give that compensation to an employee who works all or part of his time in the less desirable contract overtime hours. Looked at from the individual standpoint of respondents, the concentration of work does not have any effect upon their regular rate of pay. Because of this defect, the concentration of work brought about by the contract has no effect in the determination of the regular rate of pay. As we indicated at the beginning of this subdivision (1) a major purpose of the statute was to compensate an employee by extra pay for work done in excess of the statutory maximum hours. Thus the burdens of overly long hours are balanced by the pay of time and a half for the excess hours. 29 We therefore hold that overtime premium, deductible from extra pay to find the regular rate of pay, is any additional sum received by an employee for work because of previous work for a specified number of hours in the workweek or workday whether the hours are specified by contract or statute.29 30 (2) Since under Interpretative Bulletin No. 4, § 69, the Administrator refers to regular working hours as important in calculating the regular rate of pay under s 7(a) of the Act, a word must be said as to regular working hours in this case.30 'Regular working hours' apparently has not been defined by the Administrator. He could hardly have intended in § 69 to employ the statutory maximum hours as synonymous with regular working hours as there is no prohibition on regular working hours that are longer than the statutory maximum. His illustrations, numbers 2 and 3, show that overtime premiums may be earned within the first 40 hours of a workweek. The statutory maximum hours are significant only as requiring overtime premium pay. An employer may increase pay or decrease hours free as to those steps from statutory regulation. See article in Monthly Labor Review, supra. The trial court pointed out that 'The identifying mark of the case at bar is the absence of any norm, any regularity. Both parties have emphasized the casual, irregular character of the employment.' 69 F.Supp. 959, 960. The trial court, as we have heretofore stated, 334 U.S. 455, 68 S.Ct. 1192, also found that the 'basic working day,' defined by § 2(a) of the agreement set forth in note 5, supra, was not the day normally, regularly or usually worked by respondents. Indeed the contract, § 1, required these round-the-clock irregular hours from some individuals. We call attention to the problem only to lay it aside as inapplicable in this case. 31 However, the government contends in this case that regular working hours are important, that the contract fixed regular working hours as the straight time hours and that as an actual fact as shown by the statistics of concentration of work in straight time hours, 334 U.S. 456, 68 S.Ct. 1192 supra, the straight time hours were the regular working hours of all longshoremen. The government concludes from this that the contract straight time pay is the regular rate of pay and the contract overtime pay includes a true overtime premium. We may be mistaken in thus limiting the government's argument on this point. If the government means that any extra pay to an employee for work outside regular working hours of the group of employees is to be excluded from the computation of the regular rate, we do not think that contention sound. The defect in this argument, however the government's position is construed, is that it treats of the entire group of longshoremen instead of the individual workmen, respondents here. The straight time hours can be the regular working hours only to those who work in those hours. The work schedule of other individuals in the same general employment is of no importance in determining regular working hours of a single individual. As a matter of fact, rg ular working hours under a contract, even for an individual, has no significance in determining the rate of pay under the statute. It is not important whether pay is earned for work outside of regular working hours. The time when work is done does not control whether or not all or a part of the pay for that work is to be considered as a part of the regular pay. 32 We think, therefore, that this case presents no problems that involve determination of the regular hours of work. As an employment contract for irregular hours the rule of dividing the weekly wage by the number of hours worked to find the regular rate of pay would apply. Cf. Overnight Motor Transp. Co. v. Missel, supra, 316 U.S. at page 580, 62 S.Ct. at page 1221. 33 (3) The contract was interpreted by the Shipping Association and the Longshoremens Association as providing that the contract straight time was the regular rate. The parties to the contract indicated by their conduct that the contract overtime was the statutory excess compensation or an overtime premium. Finding 43, 162 F.2d at page 672; see note 33 infra.31 Apparently no dispute or controversy arose over this interpretation although the contract, § 19, made provision for the resolution of such disagreements. The trial court determined that the straight time hourly rate was the regular rate at which respondents were employed.32 This construction by the parties and the court's conclusion, supported by evidence, leads us to consider this agreement as though there was a paragraph which read to the effect that the straight time rate is the regular rate of pay. We should also consider that the contract provided that the contract overtime rates were intended to provide any statutory excess compensation, when men worked more than forty hours except in those situations where the entire time, including the excess, was in the straight time hours.33 This of course does not mean that respondents here were familiar with these purposes of the agreement. So far as the record shows, they worked for the pay promised under the words of the contract. It shows nothing more on this point. 34 Under the contract we are examining, the respondents' work in overtime hours was performed without any relation as to whether they had or had not worked before. Under our view of § 7(a)'s requirements their high pay was not because they had previously worked but because of the disagreeable hours they were called to labor or because the contracting parties wished to compress the regular working days into the straight time hours as much as possible. As heretofore pointed out, we need not determine what were the regular working hours of these respondents. If it were important, the trial court determined that their regular working hours were not the straight time hours. They worked at irregular times. Finding 45, 162 F.2d at page 672. The record shows that all respondents worked 5,201 straightt ime hours and 20,771 overtime hours. Four of the twenty respondents worked no straight time hours. Five others worked less than 100 straight time hours. Three worked more straight time than overtime. The record does not show the hours these respondents worked for other employers. That fact is immaterial in this case as respondents seek recovery only from petitioner employers. These round-the-clock hours were in strict accordance with the contract which allowed the Longshoremens Association to furnish all men needed and called for the men to 'work any night of the week, or on Sundays, holidays or Saturday afternoons when required.' §§ 1 and 2; see note 5. Men who worked contract overtime hours were entitled to contract overtime pay. They were given no overtime premium pay because of long hours. It is immaterial that his regular rate may greatly exceed the statutory minimum rate. This contract overtime rate, therefore, did not meet the excess pay requirements of § 7. 35 In finding the statutory excess compensation due respondents, the trial court must determine the method of computation. Each respondent is entitled to receive compensation for his hours worked in excess of forty at one and a half times his regular rate, computed as the weighted average of the rates worked during the week. In computing the amount to be paid, the petitioners may credit against the obligation to pay statutory excess compensation the amount already paid to each respondent which is allocable to work in those excess hours. The precise method for computing this credit presents the difficulty. According to the Administrator's interpretation, an employer may credit himself with an amount equal to the number of hours worked in excess of forty multiplied by the regular rate of pay for the entire week rather than an amount equal to the number of hours worked in excess of forty multiplied by the average rate of pay for those excess hours.34 Under that formula each respondent is entitled, as statutory excess compensation, to an additional sum equal to the number of hours worked for one employer in a workweek in excess of forty, multiplied by one-half the regular rate of pay. On the record before us, that interpretation seems to be a reasonable one; we leave a final determination of the point to the District Court on further proceedings. 36 The Circuit Court ordered the case remanded to the District Court for determination of the amounts due respondents in accordance with its opinion. Bya further order, it allowed the District Court to consider any matters presented to it by petitioners as a defense in whole or in part under the Portal to Portal Act. We modify these orders so as to permit the District Court to allow any amendments to the complaint or answer or any further evidence that the District Court may consider just. 37 As so modified the judgment of the Circuit Court of Appeals is affirmed. 38 Modified and affirmed. 39 Mr. Justice DOUGLAS took no part in the consideration or decision of this case. 40 Mr. Justice FRANKFURTER, with whom Mr. Justice JACKSON and Mr. Justice BURTON concur, dissenting. 41 No time is a good time needlessly to sap the principle of collective bargaining or to disturb harmonious and fruitful relations between employers and employees brought about by collective bargaining. The judgment of Congress upon another doctrinaire construction by this Court of the Fair Labor Standards Act ought to admonish against an application of that Act in disregard of industrial realities. Promptly after the Eightieth Congress convened, Congress proceeded to undo the disastrous decisions of this Court in the so-called portal-to-portal cases. Within less than a year of the decision in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515, both Houses, by overwhelming votes that cut across party lines, passed and the President signed, the Portal-to-Portal Act of 1947. What is most pertinent to the immediate problem before us is the fact that because the Fair Labor Standards Act had been 'interpreted judicially in disregard of long-established customs, practices, and contracts between employers and employees,' Congress had to undo such judicial misconstruction because it found that 'voluntary collective bargaining would be interfered with and industrial disputes between employees and employers and between employees and employees would be created.'1 Because the present decision is heedless of a long-standing and socially desirable collective agreement and is calculated to foster disputes in an industry which has been happily at peace for more than thirty years. I deem it necessary to set forth the grounds of my dissent. 42 The Court's opinion is written quite in the abstract. It treats the words of the Fair Labor Standards Act as though they were parts of a cross-word puzzle. They are, of course, the means by which Congress sought to eliminate specific industrial abuses. The Court deals with these words of Congress as though they were unrelated to the facts of industrial life, particularly the facts pertaining to the longshoremen's industry in New York. The Court's opinion could equally well have been written had the history of that industry up to 1916 not been an anarchic exploitation of the necessities of casual labor for want of a strong union to secure through equality of bargaining power fair terms of employment. See, e.g., Barnes, The Longshoremen (1915), passim. Through such bargaining power the agreement was secured which the Court now upsets. Through this agreement, the rights and duties of the industry—the members of the union on the one hand and the employers on the other hand—were defined, and the interests of the men, the employers, and, not least, the community were to be adjusted in a rational and civilized way. On behalf of a few dissident members of the union, but against the protests of the union and of the employers and of the Government, the Court dislocates this arrangement and it does so by what it conceives to be the compulsions of § 7(a) of the Fair Labor Standards Act.2 This is to attribute destructive potency to two simple English words—'regular rate'—far beyond what they deserve. 43 Employment of longshoremen has traditionally been precarious because dependent on weather, trade conditions, and other unpredictables. Decasualization of their work has been their prime objective for at least sixty years. They have sought to achieve this result by inducing concentration of work during weekday daytime hours. 44 One of the strongest influences to this end is to make it economically desirable. And so the union has sought and achieved an addition to the basic—the regular—rate sufficiently high to deter employers from assigning work outside of defined periods, except in emergencies. Since 1916, when the International Longshoremens Association made its first collective agreement with waterfront employers in New York, a 50% premium on night and weekend work has generally prevailed. In the industry, this has been colloquially called 'overtime' pay. 45 Longshoremen do not usually work continuously for one employer, but shift from one to another, wherever employment can be found. The Fair Labor Standards Act does not entitle an employee who works a total of over forty hours per week for several employers, but not more than forty hours for any one of them, to any overtime pay. In view of the peculiarities of this industry, therefore, the only effective way of promoting the aim of the Fair Labor Standards Act, to deter a long workweek, is that devised by the collective agreement, namely, to limit to approximately the statutory maximum of hours the total length of the periods in the week for which additional pay amounting to overtime rates need not be paid, regardless of the employer for whom the work is done. 46 During the period (1943—45) in controversy, the wage rates were governed by the 1943 General Cargo Agreement between the International Longshoremens Association and the employers at the Port of New York. Under its terms, the 'basic working week,' for which 'straight time' hourly rates were paid, included the hours of 8 a.m. to noon, and 1 p.m. to 5 p.m., Monday through Friday. and 8 a.m. to noon on Saturday.3 'Overtime' rates, for 'all other time,' were in almost all instances4 150% of the 'straight time' rates. The 1943 Agreement embodied the practice of the industry since 1916, whereby approximately 150% of 'straight time' rates was paid for night and weekend work. Through the years, with successive renewals of agreements between the International Longshoremens Association and the employers, the rates of pay have risen and the length of the 'basic working week' has decreased. The respondents, members of the International Longshoremens Association, did a large part of their work for the petitioners outside of the enumerated 'straight time' hours. In accordance with the collective agreement, they received, for whatever work they did during the 'basic working week,' 'straight time' pay, and for work at all other times, 'overtime' pay, drawing such 'overtime' pay regardless of whether such work was or was not part of their first forty hours of work in the week.5 They instituted this action, for double damages under § 16(b) of the Fair Labor Standards Act, 52 Stat. 1060, 1069, 29 U.S.C. § 216(b), 29 U.S.C.A. § 216(b), asserting that night and weekend work had been so frequent an incident of their employment that the contractual 'straight time' pay could not be deemed their 'regular rate' of pay, under § 7(a), but that their 'regular rate' was the average of what they received for all their work for any one employer, 'straight time' and 'overtime' together. On this theory, rejected by the union, the employers, and the Government, but now accepted by the Court, all work beyond forty hours per week for any one employer should have been paid for at one and one-half times this average. 47 The statutory phrase 'regular rate' is not a technical term. Thirteen expressions used in the Fair Labor Standards Act were defined by Congress in § 3. 'Regular rate' was left undefined. The legislative history of the phrase reveals only that it replaced 'agreed wage' in an earlier draft, but there is no indication that this modification had significance. Nor is there any indication that in the field of labor relations, 'regular rate' was a technical term meaning the arithmetic average of wages in any one week. If ordinary English words are not legislatively defined, they may rightly be used by the parties to whom they are addressed to mean what the parties through long usage have understood them to mean, when the words can bear such meaning without doing violence to English speech. The 'regular rate' can therefore be established by the parties to a labor agreement, provided only that the rate so established truly reflects the nature of the agreement and is not a subterfuge to circumvent the policy of the statute. Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424, 65 S.Ct. 1242, 1244. Thus the problem before us is whether the designation of 'straight time rates' for the 'basic working week' in the longshoremen's collective agreement was an honest reflection of the distinctive conditions of this industry. 48 We are not concerned with an abstract 'regular rate' of pay, for industry is not. The 'regular rate' in a given industry must be interpreted in the light of the customs and practices of that industry. The distinctive conditions of the longshoremen's trade, where employees frequently work during one week for several different employers, are reflected in the provisions which the industry has made in determining rates of compensation. These provisions were designed to secure for longshoremen protection not only from harmful practices common to many industries and dealt with specifically by the statute, but also from those peculiar to the longshoremen's industry, requiring special treatment. 49 The respondents' wages, as part of a comprehensive arrangement for the betterment of the longshoremen's trade—also covering health and sanitary provisions, minimum number of men in a gang doing specified types of work, 'shaping time,' minimum hours of employment for those chosen at a 'shape,' arbitration, etc.—were determined by a collective agreement entered into between the union and the employers. The Fair Labor Standards Act was 'intended to aid and not supplant the efforts of American wr kers to improve their own position by self-organization and collective bargaining.' H.Rep.No. 1452, 75th Cong., 1st Sess., p. 9. 'The right of individual or collective employees to bargain with their employers concerning wages and hours is recognized and encouraged by this bill. It is not intended that this law shall invade the right of employer and employee to fix their own contracts of employment, wherever there can be any real, genuine bargaining between them. It is only those low-wage and long-working-hour industrial workers, who are the helpless victims of their own bargaining weakness, that this bill seeks to assist to obtain a minimum wage.' Sen.Rep.No. 884, 75th Cong., 1st Sess., pp. 3—4.6 Such assurances were necessary to allay the traditional hostility of organized labor to legislative wage-fixing. The Court now holds unlawful a collective agreement entered into by a strong union, governing the wide range of the longshoremen's employment relationships, and especially designed to restrict the hours of work and to require the same premium as that given by the statute for work done outside of normal hours but within the statutory limit. The Court substitutes an arrangement rejected both by the union and the employers as inimical to the needs of their industry and subversive of the process of collective bargaining under which the industry has been carried on. But, we are told, these untoward consequences are compelled by a mere reading of what Congress has written. 50 On the question you ask depends the answer you get. If the problem is conceived of merely as a matter of arithmetic you get an arithmetical answer. If the problem is put in the context of the industry to which it relates, and meaning is derived from an understanding of the problems of the industrial community of which this is just one aspect, a totally different set of considerations must be respected. The defendants derived their rights from the entire agreement and not from a part mutilated by isolation. If the parties had written out with unambiguous explicitness that the extra wage in the scheduled periods is to be deemed a deterrent against work during those periods and is not to be deemed a basis for calculating time and a half after the forty hours, I cannot believe that this Court would say that such an agreement, made in palpable good faith, is outlawed by the Fair Labor Standards Act. 51 How is compensation for services above the limits set by the Act to be reckoned? The standard for compensation could be determined (1) by specific statutory terms; (2) by collective agreement; or (3) by judicial construction in default of either. 52 Congress could have laid down a hard and fast rule, could have expressed a purely arithmetic formula. It could have said that the rate on which time and a half is to be reckoned is to be found by dividing the total wage by the hours worked. It would not even have been necessary to spell all this out. Congress could have conveyed its thought by using the phrase 'average' instead of 'regular.' And where we have nothing else to go on, except the total wage and the hours, it is reasonable enough thus to ascertain the regular rate. But when parties to a complicated industrial agreement, with full understanding of details not peculiarly within the competence of judges, indicate what the regular rt e is for purposes of contingencies and adjustments satisfied otherwise than by a purely arithmetic determination of the rate of wages, nothing in the history of the law or its language precludes such desirable consensual arrangements, provided, of course, that the parties deal at arms length, and that the defined 'regular' rate is not an artifice for circumventing the plain commands of the law. Such an artifice would obviously not be used in a contract made by workers in their own interests represented by a union strong enough to pursue those interests. Regularity in this context implies of course a controlling norm for determining wages which, though agreed upon between the parties, is consistent with, and not hostile to, the underlying aims of the overtime provision of the Fair Labor Standards Act. Discouragement of overwork and of underemployment are the aims. The longshoremen's collective agreement serves the same purpose as does the statute. 53 The Fair Labor Standards Act is not a legislative code for the government of industry. It sets a few minimum standards, leaving the main features in the employment relation for voluntary arrangement between the parties. Where strong unions exist relatively little of the employment relation was to be enforced by law. Most of it was left to be regulated by free choice and usage as expressed and understood by the unions and employers. Congress did not provide for increase in basic rates except to the limited extent of establishing minimum wages. The inclusion of such minimum wages is in itself a recognition by Congress of the distinction between what it sought to change and what it sought to use only as the basis for the computation of an overtime percentage. 54 The claim of the few members in opposition to the union is predicated upon an amount superadded for reasons peculiar to the stevedoring industry to the wage which the parties to the agreement in perfect good faith established as the regular rate. The union members secured this extra wage as part of the entire scheme of the collective agreement.7 This premium is not to be detached from the scheme as though it were a rate fixed by law as a basis for calculating the statute's narrowly limited overtime provision. So long as its minimum wage provisions were complied with, the statute did not seek to change the true basic or 'regular' rate of pay in any industry, from which rate all statutory overtime is to be computed. There is no justification for interpreting the statutory term as including elements clearly understood in the industry to be as foreign to the 'regular rate' as any strictly overtime rates. Here the extra wage is the industry's overtime rate for work which might not be within the overtime period of the Fair Labor Standards Act, but was within the schedule of the collective agreement for extra wages, not because the work was overtime in the ordinary industrial sense but because it was at periods during which all work was sought to be discouraged by making it costly. Because the union secured for its men an extra wage even for not more than forty working hours, the scope of the Fair Labor Standards Act as to overtime is not enlarged. Only for a work-week longer than forty hours is an employee to be paid one and a half times 'the regular rate,' and nothing in the Act precludes agreement between the parties as to what the regular rate should be, provided such agreement is reached in good faith and as a fair bargain. The presupposition of the Act was that voluntary arrangements through collective bargaining should cover an area much wider, and economically more advantageous, than the minimum standards fixed by the Act. The traditional process of collective bargaining was not to be disturbed where it existed. It was to be extended by advancing the economic position of workers in non-unionized industries and in industries where unions were weak, by furthering equality in bargaining power It certainly was not the purpose of the Act to permit te weakening of a strong union by eviscerating judicial construction of the terms of a collective agreement contrary to the meaning under which the industry had long been operating and for which the union is earnestly contending. 55 There can be no quarrel with the generality that merely because the conditions of employment are arrived at through collective bargaining an arrangement which violates the statute need not be upheld. But this does not mean that in determining whether the contractual designation of certain hours as 'basic' is honest and fair, we cannot consider the fact that the contract was one entered into by a powerful union, familiar with the needs of its members and the peculiar conditions of the industry, and fully equipped to safeguard its membership. To view such a contract with a hostile eye is scarcely to carry out the purpose of Congress in enacting the Fair Labor Standards Act. 56 The Court has sustained the power of 'employer and employee * * * to establish (the) regular rate at any point and in any manner they see fit,' Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424, 65 S.Ct. 1242, 1245, provided that the regular rate is not computed 'in a wholly unrealistic and artificial manner so as to negate the statutory purposes.' Walling v. Helmerich & Payne, 323 U.S. 37, 42, 65 S.Ct. 11. If we were confronted with an agreement which did not reflect the true practice in the industry, if despite the designation of certain hours as 'basic' and others as 'overtime,' the distinction was not actually observed, but work was done at all times indiscriminately, so that what the contract designated as 'overtime' pay was in reality a 'shift differential,' designed to induce employees to work at less pleasant hours, rather than to deter employers from carrying on at such hours, the labels attached by the parties to the various periods of work would not be allowed to conceal the true facts. We have again and again pierced through such deceptive forms. See, e.g., Walling v. Helmerich & Payne, 323 U.S. 37, 65 S.Ct. 11, 89 L.Ed. 29; Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 65 S.Ct. 1242, 89 L.Ed. 1705; Walling v. Harnischfeger Corp., 325 U.S. 427, 65 S.Ct. 1246, 89 L.Ed. 1711. 149 Madison Ave. Corp. v. Asselta, 331 U.S. 199, 67 S.Ct. 1178, 91 L.Ed. 1432, 169 A.L.R. 1293. But here there is no suggestion that the agreement mislabeled the true circumstances of the employment relationship. And it is significant that in no case in which we found that the terms used had distorted the true facts did a union which had made the contract appear to defend it. 57 The fact that some work was done at odd hours does not misrepresent the regular situation, provided that such work was exceptional and was restricted in frequency by the overtime provisions of the agreement, so that what the agreement treated as regular and what as exceptional were truly just that. We turn then to the actual experience, in representative periods, of the Port of New York longshoremen. The stipulations, exhibits, and findings of the District Court, all demonstrate the exceptional nature of 'overtime' work.8 It is also apparent that such night work as was done was usually done in addition to, rather than instead of, daytime work. The increased compensation for such work therefore served principally to achieve the same result as did the statute namely, to afford a higher rate of compensation for long hours. In peacetime, night work was extremely rate for any one as a recurring experience, and even during the exigencies of war only a small minority was principally so occupied. 58 The accuracy of the designation of one period or amount of work as 'basic' is not contradicted by the fact that some work may have been done at other times as well. They very reference in any collective agreement to overtime pay for unusual hours implies that some such work is anticipated. A protective tariff need not be so high as to exclude every last item. The statistics in the margin amply justify the trial judge's conclusion that the designations in the collective agreement were not unreal or artificial when the agreement was entered into, and did not become so even at the height of the abnormal wartime effort. 59 Of course, even if most of the work of longshoremen was performed during 'straight time' hours, if the 50% increment for work at other times was not a true overtime payment, but a shift differential, this higher rate of pay would have to be taken into account in establishing the 'regular rate' of the respondents. But the District Court found that this premium constituted true overtime. As that court stated (Finding 28), a shift differential 'is an amount added to the normal rate of compensation, which is large enough to attract workers to work during what are regarded as less desirable hours of the day, and yet not so large as to inhibit an employer from the use of multiple shifts,' while a true overtime premium 'is an addition to the normal rate of compensation, designed to inhibit or discourage an employer from using his employees beyond a specified number of hours during the week of during certain specified hours of the day. A safe guide for distinguishing between the shift differential and the overtime premium is by the degree of spread between the normal rate and the penalty rate. Whereas a shift differential is usually 5 or 10 cents per hour, the overtime premium is generally 50% of the normal rate.' These findings of the District Court are amply supported by the testimony and by industrial statistics. See 65 Monthly Labor Review 183—85; Wage Structure; Machinery (Bureau of Labor Statistics 1945) p. 21; id. (1946) p. 38; Wage Structure: Foundries (Bureau of Labor Statistics 1945) Tables 32, 33; id. (1946) pp. 44—45. And compare the Directives of the Economic Stabilization Director dated March 8, 1945, and April 24, 1945, limiting the shift differentials which the National War Labor Board could approve to four cents per hour for the second shift and six or eight cents per hour for the third. CCH Labor Law Service, vol. 1A, 10,034.11, 10,462. Applying the test based on Finding 28, and finding also that the differential had in fact served to deter night and week-end work, the District Court held that the fifty per cent increment was true overtime and not a shift differential. 60 The Court purports to accept the findings of the District Court, and yet it concludes that the District Court erred in finding that the fifty per cent was by way of overtime and not a shift differential. The District Court, to be sure, and not explicitly state that the premium was not a shift differential in one of its formal Findings of Fact. It did so state, however, in its opinion and this conclusion depended on the statements quoted above from Finding 28 as to the characteristics indicativeo f true overtime and shift differentials. I fail to see how this Court can accept Finding 28 and reject the conclusion that the contractual 'overtime' was not a shift differential. 61 Findings of lower courts are to be disregarded only if not substantiated by the evidence. Here, the evidence supporting the finding was impressive, and yet the Court strains to overturn it to reach a result not urged as socially desirable but only as demanded by legal dialectic.9 62 The Court holds that even if the collective agreement accurately designated that regular and overtime work of the generality of longshoremen, it cannot apply to the respondents, because of their particular working hours for a stretch of the wartime period here in controversy. This contention expresses an attitude toward the process of collective bargaining which, if accepted, would undermine its efficacy. It subjects the collective agreement to the hazards of self-serving individualism, which must inevitably weaken the force of such agreements for improving the conditions of labor and forwarding industrial peace. Here, the very increased rates of pay which the respondents received for exceptional right and weekend work was the result of the contract which they now seek to disavow. 63 Collective bargaining between powerful combinations of employers and employees in an entire industry, each group conscious of what it seeks and having not merely responsibility for its membership but resourceful experience in discharging it, is a form of industrial government whereby self-imposed law supplants force. Cf. Feis, The Settlement of Wage Disputes (1921) c. II. This is an accurate description of the process by which the stevedoring industry has served the greatest port in the United States. Yet the Court rejects the meaning which the parties to the agreement have given it and says it means what the parties reject. Often, too often, industrial strife is engendered by conflicting views between employers and employees as to the meaning of a collective agreement. Here the industry as an entirety—the union and the employers' association—is in complete accord on the meaning of the terms under which the industry has lived for thirty years and under which alone, the parties to the agreement insist, they can continue to live peacefully. But a few members of the union assert an interest different from that of their fellows—some thirty thousand—and urge their private meaning even though this carries potential dislocation to the very agreement to which they appeal for their rights. Unless it be judicially established that union officers do not know their responsibility or have betrayed it, so that what appears to be a contract on behalf of their men is mere pretense in that it does not express the true interests of the union as an entirely, this Court had better let the union speak for its members and represent their welfare, instead of reconstructing, and thereby jeopardizing, arrangements under which the union has lived and thrived and by which it wishes to abide.10 64 Collective agreements play too valuable a part in the government of industrial relationships to be cast aside at the whim of a few union members who seek to retain their benefits but wish to disavow what they regard as their burdens. Unless the collective agreement is held to determine the incidents of the employment of the entirety for whom it was secured, it ceases to play its great role as an instrument of industrial democracy. Cf. Rice, Collective Labor Agreements in American Law, 44 Harv.L.Rev. 572; Wolf, The Enforcement of Collective Labor Agreements: A proposal, 5 Law & Contemp.Prob. 273; Hamilton, Collective Bargaining, 3 Encyc.Soc.Sci. 628, 630. 65 But furthermore, as I read the Court's opinion, it is not limited in application to those employees most or all of whose work was done at night, but extends equally to those work worked chiefly during the 'basic working week,' but also did a few hours of work at other times. Even where a longshoreman worked precisely forty hours of 'straight time,' followed by a few hours of 'overtime' in the same week, payment of the appropriate wages as determined by the collectibe agreement would not satisfy the Court's test that only such extra pay as is given 'for work because of previous work for a specified number of hours in the workday or workweek'11 can be regarded as true overtime pay. To require specification in an industry where the only thing certain is uncertainty is to command the impossible. There is no justification for such a test in the statute, its history, industrial practice, judicial decision, or administrative interpretations.12 66 In short, this is not a decision that where the predominant work of an employee is paid for at 'overtime' rates, such rates enter into computation of the 'regular rate,' but rather that where the conditions in an industry are such that the number of 'straight time' hours cannot be precisely predicted in advance, an arrangement for time and a half for all other hours cannot be legal, regardless of how unusual work outside of the 'straight time' hours may be. 67 But whether or not the Court means to go as fas as it seems to go, and even if its holding is later limited to the narrow situation now before us, I cannot agree with its conclusion. It seems to me that the 'regular rate' of pay for Port of New York longshoremen was the 'straight time' scale provided for by the union contract, and that this was true for the whole union, including the individual respondents. Far from receiving less overtime than the statute required, the respondents were, through the agreement, the recipients of much more. To call their demand one for 'overtime pyramided on overtime' is not to use a clever catchphrase, but to describe fairly the true nature of their claim. 68 I would reinstate the judgments of the District Court. 1 52 Stat. 1060, 1063, approved June 25, 1938, 29 U.S.C.A. § 201 et seq.; § 7(a) took effect 120 days later, § 7(d). No problem as to the length of time any employee worked is presented. See Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 64 S.Ct. 698, 88 L.Ed. 949, 152 A.L.R. 1014; Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515. Portal-to-Portal Act of 1947, 61 Stat. 84, 29 U.S.C.A. § 251 et seq. 2 The use of the word 'overtime' in the contract does not decide this case. The problem for solution is whether rates described as 'overtime' by the contract actually are such rates as § 7(a) provides for statutory excess hours. As will hereafter appear, we consider the contract as intending to provide statutory excess compensation and overtime premium. Consequently, we accept the word 'overtime' used in the contract to describe one wage scale as having been intended by the parties to the contract to satisfy fully the requirements of § 7(a). 3 The following phrases are used in this opinion with the following meaning. These definitions do not apply to quotations. Extra pay.—Any increased differential from a lower pay scale for work after a certain number of hours in a workday or workweek or for work at specified hours. Overtime premium.—Extra pay for work because of previous work for a specified number of hours in the workweek or workday whether the hours are specified by contract or statute. Statutory excess compensation.—Additional compensation required to be paid by § 7(a), F.L.S.A. Regular rate of pay.—Total compensation for hours worked during any workweek less overtime premium divided by total number of hours worked. The following definitions apply to the circumstances of this conr act only: Contract straight time.—Compensation paid under the longshoring contract for work during the hours defined in par. 3(a) of the contract, as follows: 8 a.m. to 12 noon and from 1 p.m. to 5 p.m., Monday to Friday, inclusive, and from 8 a.m. to 12 noon Saturday. Contract overtime.—Additional compensation which the contract requires shall be paid for work on legal holidays and for work at hours other than those specified in par. 3(a). 4 52 Stat. 1069, § 16, 29 U.S.C.A. § 216: '(b) Any employer who violates the provisions of section 6 or section 7 of this Act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. * * * The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.' 5 The Agreement contains the following provisions with respect to the hours of work and scale of wages: I. General Cargo Agreement. '1. Members of the party of the second part shall have all of the work pertaining to the rigging up of ships and the coaling of same, and the discharging and loading of all cargoes including mail, ships' stores and baggage. When the party of the second part cannot furnish a sufficient number of men to perform the work in a satisfactory manner, then the party of the first part may employ such other men as are available. '2. (a) The basic working day shall consist of 8 hours, and the basic working week shall consist of 44 hours. Men shall work any night of the week, or on Sundays, Holidays, or Saturday afternoons, when required. On Saturday night, work shall be performed only to finish a ship for sailing on Sunday, or to handle mail or baggage. '(b) Meal hours shall be form 6 A.M. to 7 A.M., from 12 Noon to 1 P.M., from 6 P.M. to 7 P.M., and from 12 midnight to 1 A.M. '(c) Legal Holidays shall be: New Year's Day, Lincoln's Birthday, Washington's Birthday, Good Friday on the New Jersey Shore, Decoration Day, Fourth of July, Labor Day, Columbus Day, Election Day, Armistice Day, Thanksgiving, Christmas, and such other National or State Holidays as may be proclaimed by Executive authority. '3. (a) Straight time rate shall be paid for any work performed from 8 A.M. to 12 Noon and from 1 P.M. to 5 P.M., Monday to Friday, inclusive, and from 8 A.M. to 12 Noon Saturday. '(b) All other time, including meal hours and the Legal Holidays specified herein, shall be coni dered overtime and shall be paid for at the overtime rate. '(c) The full meal hour rate shall be paid if any part of the meal hour is worked and shall continue to apply until the men are relieved. '4. Wage Scale: The wage scale shall be as follows: 6 Addison v. Huron Stevedoring Corp., 69 F.Supp. 956; Aaron v. Bay Ridge Operating Co., 162 F.2d 665. 7 Mr. Walter E. Maloney, representing the National Federation of American Shipping, testified that liability to the Government on stevedoring contracts might run as high as $260,000,000, although he admitted that the amount of liability was 'almost impossible to calculate.' Hearings before Subcommittee No. 4 of the House Committee on Education and Labor, 80th Cong., 1st Sess., pp. 1198—1205. Committee members referred to the amounts in question as $236,000,000, $340,000,000, and $300,000,000. Hearings, supra, pp. 1203, 2283, 2469. The basis for such figures does not appear. Nor is it made clear whether the Portal-to-Portal Act was in mind. 61 Stat. 84, Pt. IV, §§ 9 and 11, 29 U.S.C.A. §§ 258, 260. The International Longshoremens Association claims to have approi mately 80,000 members in United States and Canada. Thirty thousand are said to work in the Port of New York, and the terms adopted in the New York contract are generally followed in other ports. The Waterfront Employers Association of the Pacific Coast states that 20,000 stevedores are covered by 21 collective bargaining contracts, of which 3 are with the International Longshoremen's and Warehousemen's Union. The current New York contract with the I.L.A. and the 21 agreements between the Pacific Association and the I.L.A. and I.L.W.U. are said to contain clauses permitting cancellation if the courts sustain the claims of plaintiffs in this suit. 8 Hearings, supra, note 7, 2467—2471; 2474—2482; 2736—2762. 9 The trial court gave the following explanation of the 'shape,' Finding 16: 'At three stated hours during the day, namely at 7.55 a.m., 12.55 p.m., and 6.55 p.m., men seeking employment gather in a group or semicircle, constituting the 'shape,' at the head of a pier where work is available. The foreman stevedore then selects from the 'shape' such men as he desires to hire, to work until 'knocked off', that is, told to quit. The selection of a man from the shape carries with it no obligation on the part of the employer concerning any specified length of employment, except for work requirements of the Collective Agreement relating to minimum hours under specified conditions. The duration of employment depends entirely upon the determination of the stevedore or the steamship company.' 10 The trial court found, Finding 13, that 'The work week commenced on Monday at 7 a.m. and ended the following Monday at 7 a.m.' The 44-hour week had been in the contracts between the Shipping Association and the Longshoremens Association prior to the Fair Labor Standards Act. No adjustment of the basic workweek was made in the contract when the 42- and 40-hour provisions of § 7(a) became effective. 11 Mr. Ryan explained the Association objective as follows: 'Our objective was to de-casualize longshore work as much as possible, to have the work done in the daytime as much as possible, and make it as expensive for the employers as possible on Sunday. Before there was any union we had double time for Sunday. We wanted to work in the daytime. We figured we only live once. We want the daytime when every man who wants to work wants it done in the daytime and not during overtime. The employers would say it cannot be done in the steamship industry. I think we have proven for them that after 30 years of negotiating many of the things they said could not be done in the industry, when they found it too expensive to do it in any other way, have been done. 'Q. Do the men object to working outside of a normal day?—A. Absolutely.' Furthermore, as the Longshoremens Association's primary interest is as stated above by Mr. Ryan, it fears the effect on their employment contract of a holding that the contract overtime rate must be used in the determination of statutory excess compensation. The Shipping Association might insist on a reduction of the contract overtime rate, if payment of that rate were not to be treated as a satisfaction of the statutory requirements. 12 See note 7, supra. 13 Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 577, 578,6 2 S.Ct. 1216, 1219, 1220, 86 L.Ed. 1682; Walling v. Helmerich & Payne, 323 U.S. 37, 40, 65 S.Ct. 11, 13, 89 L.Ed. 29; Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 706, 65 S.Ct. 895, 902, 89 L.Ed. 1296; Jewell Ridge Coal Corp. v. Local No. 6167, 325 U.S. 161, 167, 65 S.Ct. 1063, 1066, 89 L.Ed. 1534. 14 Kirschbaum Co. v. Walling, 316 U.S. 517, 523, 62 S.Ct. 1116, 1120, 86 L.Ed. 1638; see § 9, Part IV, Portal-to-Portal Act, 61 Stat. 84, 29 U.S.C.A. § 258. 15 149 Madison Ave. Corp. v. Asselta, supra, 331 U.S. at page 204, 67 S.Ct. at page 1181: 'The crucial questions in this case, however, are whether the hourly rate derived from the formula here presented was, in fact, the 'regular rate' of pay within the statutory meaning and whether the wage agreement under consideration, in fact, made adequate provision for overtime compensation.' Walling v. Harnischfeger Corp., 325 U.S. 427, 432, 65 S.Ct. 1246, 89 L.Ed. 1711. 16 Walling v. Youngerman-Reynolds Hardwood Co., supra, 325 U.S. 424, 65 S.Ct. 1244; Walling v. Harnischfeger Corp., supra, 325 U.S. 430, 65 S.Ct. at page 1248. 17 National Labor Relations Act, 49 Stat. 449, 29 U.S.C.A. § 151 et seq.; Labor Management Relations Act of 1947, 61 Stat. 136, 29 U.S.C.A. § 141 et seq.; Norris-LaGuardia Act, 47 Stat. 70, § 2, 29 U.S.C.A. § 102; Portal-to-Portal Act of 1947, 61 Stat. 84, § 1, 29 U.S.C.A. § 251. 18 The contention, however, found favor with the District Court: 'Such catastrophic results are inevitable once we accept plaintiffs' underlying premise—that in determining the 'regular rate' intended by Congress, we must close our eyes to the contract in good faith negotiated between employer and employees and look only to the actual work pattern. Upon such a premise, genuine collective bargaining cannot live.' 69 F.Supp. 956, 959. 19 'Collective bargaining, to be effective, must necessarily deal with large groups—with all the workers in the industry, or its subdivision, on whose behalf the bargaining is being conducted. And when, as in the I.L.A., such collective agreements are submitted to a vote of the membership affected, and that approval of the bargain thus arrived at is voted, it would make ofc ollective bargaining a mockery if some of them could seek special terms, because, for a short period of time, their work experience has varied in some degree from that of their fellow workers.' 20 See note 30 and Walling v. Youngerman-Reynolds Hardwood Co., supra, 325 U.S. 424, 425, 65 S.Ct. 1244, 1245. 21 Cf. Finding 28(a): 'Prior to the Fair Labor Standards Act, the word overtime had a generally accepted meaning in American industry, a mely, excess time, to which a penalty rate of compensation was applied to discourage such work. The idea of excessivity, however, was not an indispensable element of the concept of overtime as understood. Overtime was also understood to cover hours outside of a specified clock pattern.' 22 The holding in Walling v. Helmerich & Payne, supra, is not to the contrary of this position. The facts of that case indicated a palpable evasion of the statutory purposes. See 69 F.Supp. at page 958, note 1. Nor is the decision in 149 Madison Ave. Corp. v. Asselta, supra, opposed to this position. In that case weekly wage contracts calling for a workweek of 46 and 54 hours provided the following formula for determining the regular hourly rate of pay: 'The hourly rates for those regularly employed more than forty (40) hours per week shall be determined by dividing their weekly earnings by the number of hours employed plus one-half the number of hours actually employed in excess of forty (40) hours.' 331 U.S. at page 202, 67 S.Ct. at page 1180. Under that method of computation an employee who worked 46 hours received a sum equal to what he would have received if he had been paid for 40 hours' work at the formula hourly rate and 6 hours of work at one and a half times the formula rate. As so construed, the extra pay for work in excess of 40 hours would be an overtime premium which could be excluded from the computation of the regular rate, and the regular rate would be the formula rate. The Court did not reach the question of the legality of that method of computation as it held that since the formula rate was not consistently employed in determining compensation, the formula rate could not be considered the regular rate for those who worked more that 40 hours. Accordingly the regular rate was held to be the average of all wages actually paid during the entire week. See Asselta v. 149 Madison Ave. Corp., 2 Cir., 156 F.2d 139, 141. 23 The opinion stated: 'This controversy requires for its resolution a delicate adjustment to accommodate the harmonious application of three national policies. A heavy handed meshing of these three policies with the industrial machine which fails to minimize the friction at their points of contact can generate enough heat to impair one or more of the policies or severely injure the machine itself. 'In chronological order we have (1) the National Labor Relations Act, July 5, 1935, 49 Stat. 449, * * * to encourage the practice of collective bargaining; (2) the Fair Labor Standards Act, June 25, 1938, 52 Stat. 1060, * * * to correct and eliminate the labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well being of workers; (3) the national need during the war for the maximum of production as illustrated by Executive Order 9301, February 9, 1943 (29 U.S.C.A. § 207 note), 8 Fed.Reg. 1825, establishing the 48 hour week for the duration of the war.' 69 F.Supp. 956, 958. 24 36 hours $1 14 hours $1.50=total wages $57. Regular rate=$57, less overtime premium of $7, 50 hours=$1 per hour. 25 5 days 8 hours at $1 per hour 5 days 2 hours at $1.50 per hour=$55 total wage. Regular rate=$55—$5 50=$1 per hour. 26 Executive Order 9301, issued February 9, 1943, 8 F.R. 1825, provided that all government contractors should work their employees at least 48 hours per week. The Order provided that it should not be construed as superseding the provisions of any individual or collective bargaining agreement with respect to rates of pay for hours worked in excess of the agreed or customary workweek, nor as suspending or modifying any provision of the Fair Labor Standards Act or any other law relating to the payment of wages or overtime. 27 For example, daytime watchman's pay, $.60 per hour. Nighttime watchman's pay $.90 per hour, eight-hour, seven-day shift. Sixteen hours would be compensated for at excess time rates. The watchman's pay would be 56 $.90=$50.40. His statutory excess pay 16 $.45=$7.20; total $57.60. His regular rate is ($57.60—$7.20) 56 or $.90 per hour. Compare Legal Field Letter 109, Office of the Solicitor, Department of Labor, July 31, 1946, 1947 Wage-Hour Man. 66, in which the Chief of the Wage-Hour Section characterizes a particular 50% differential as a shift differential. 28 This is well brought out by a case similar in character to this litigation. Ferrer v. Waterman S.S. Corp., D.C., 70 F.Supp. 1. There the wage schedule was as follows, 70 F.Supp. at page 3: GENERAL CARGO From To Work Days Holidays 7 A.M. 12 M.D....... $0.55. $0.77 12 M.D. 1 P.M........ 0.90. 1.00 1 P.M. 4 P.M........ 0.55. 0.77 4 P.M. 6 P.M........ 0.77. 0.84 6 P.M. 7 P.M........ 0.90. 1.20 7 P.M. 11 P.M....... 0.77. 0.84 11 P.M. 12 M.N....... 0.90. 1.25 12 M.N. 6 A.M........ 0.84. 1.02 6 A.M. 7 A.M........ 1.30. 1.40 29 We avoid any extended discussion of respondents' suggestion that the proper way to determine the regular rate is to divide the wages received during the first forty hours of work in a week by 40. The quotient, it is suggested, would be the regular rate. One fault of that method, we think, is that such wages might contain overtime premium payments; for example, a contract which fixed a rate for 36 hours and a higher rate for subsequent hours. Another objection is that such a method of computation would give an improperly weighted average for the rate of pay for the entire week; an employee who performed more highly skilled or unpleasant work after 40 hours of work would not receive the proper amount of statutory excess compensation if the regular rate were computed only on the basis of the first 40 hours. The statement as to statutory excess hours in Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 43 , 65 S.Ct. 1242, 1245, was made as to a situation where this Court concluded the dual pay plan of the case was 'wholly unrealistic and artificial * * * so as to negate the statutory purposes.' The problem we are here considering was not at issue. 30 The question is sufficiently shown by this excerpt: 'Extra compensation paid for overtime work, even if required to be paid by a union agreement or other agreement between the employer and his employees need not be included in determining the employee's regular hourly rate of pay (see par. 13 of this bulletin). Furthermore, in determining whether he has met the overtime requirements of section 7 the employer may properly consider as overtime compensation paid by him for the purpose of satisfying these requirements, only the extra amount of compensation—over and above straight time—paid by him as compensation for overtime work that is, for hours worked outside the normal or regular working hours—regardless of whether he is required to pay such compensation by a union or other agreement.' Interpretative Bulletin No. 4, United States Department of Labor, Wage and Hour Division, Office of the Administrator, revised November 1940. 31 As a matter of fact in half of the cargo classifications, the overtime rate was a few cents less per hour than time and a half the straight time rates. 32 Conclusion of Law No. 3: 'The 'straight time hourly rate' set forth in each subdivision of Paragraph 4 of the Collective Agreement, as stated in Finding of Fact No. 9, constituted the regular rate at which plaintiffs were employed when handling the stated kind of cargo.' 33 It is clear under the applicable section of the agreement, § 2(a), note 5 above, that a man could work all his time wholly in contract overtime hours. An employee received overtime premium for work done in what the trial court considered to be the basic workweek. Finding 43(a): 'If, and only if, a longshoreman worked more than 40 hours between 8 a.m. and 12 noon, and 1 p.m. and 5 p.m. on Mondays to Fridays, inclusive, and between 8 a.m. and 12 noon on Saturday of that workweek, none of these days being a holiday, he was paid an additional sum for work on Saturday morning in excess of 40 hours—namely 62 1/2 cents per hour, * * *' 34 See Interpretative Bulletin No. 4, § 14. The Administrator illustrates his position with the following example: an employee works 30 hours a week at an occupation paying 40 cents an hour and 20 hours in the same week at an occupation paying 50 cents an hour. The employee's regular rate of pay is 44 cents an hour (30 hours 40 cents 20 hours 50 cents 50 hours), and he is entitled to receive $2.20 in addition to the $22 he has already received, equal to the number of overtime hours (10) multiplied by one-half the regular rate of pay (22 cents). If it were held that an employer, under the contract we are here considering, could credit himself only with the wages actually paid during the hours following the first 40, an employee who performed 40 hours of contract overtime work early in the week and 10 hours of straight time after the first 40 hours would receive a larger award than an employee who first worked 10 straight time hours and then worked 40 contract overtime hours. Such a variation in the amount of statutory excess compensation would not be in accord with the statutory purpose. Compare, however, Releases 1913 and 1913(a) issued by the Administrator on December 1, 1942 and January 5, 1943, which provide that an employer may if he so elects compute the regular rate on the basis of the number of hours worked in excess of 40. If that method of computation of the regular rate is followed, an employer could credit himself with the wages actually paid during the hours in excess of 40. 1 Section 1(a), Portal-to-Portal Act of 1947, 61 Stat. 84, 29 U.S.C. § 251(a), 29 U.S.C.A. § 251(a). 2 'No employer shall * * * employ any of his employees * * * for a workweek longer than forty hours * * * unless such employee receives compensation for his employment in excess of (fory hours) at a rate not less than one and one-half times the regular rate at which he is employed.' 52 Stat. 1060, 1063, 29 U.S.C. § 207(a), 29 U.S.C.A. § 207(a). 3 '2(a) The basic working day shall consist of 8 hours, and te basic working week shall consist of 44 hours. Men shall work any night of the week, or on Sundays, Holidays, or Saturday afternoons, when required. On Saturday night, work shall be performed only to finish a ship for sailing on Sunday, or to handle mail or baggage. '(b) Meal hours shall be from 6 a.m. to 7 a.m., from 12 Noon to 1 p.m., from 6 p.m. to 7 p.m., and from 12 Midnight to 1 a.m. '3(a) Straight time rate shall be paid for any work performed from 8 a.m. to 12 Noon and from 1 p.m. to 5 p.m., Monday to Friday, inclusive, and from 8 a.m. to 12 Noon Saturday. '(b) All other time, including meal hours and the Legal Holidays specified herein, shall be considered overtime and shall be paid for at the overtime rate. '(c) The full meal hour rate shall be paid if any part of the meal hour is worked and shall continue to apply until the men are relieved. * * *' 4 For purposes of this case, the 'overtime' rate may be regarded as 150% of 'straight time' in all instances, since the District Court allowed the respondents to recover for those few instances where the 'overtime' was slightly less, and this portion of its judgment was not appealed. 5 On the other hand, although the contract did not so specify, in the unusual situation of a longshoreman working over forty hours of 'straight time' for one employer in one week, he was paid time and a half for the excess. Where this had not been done, the District Court allowed appropriate recovery, and this was not appealed. 6 Similar intentions were expressed again and again in the Committee Hearings and on the floor of both Houses of Congress by the spokesmen of the Administration and Congressional Committee members. See the Joint Hearings before the Senate Committee on Labor and Education and the House Committee on Labor, 75th Cong., 1st Sess., pp. 46—47 (Asst. Atty. Gen. Jackson); id. pp. 181—83 (Secy. Perkins and Sen. Walsh); 81 Cong.Rec. 7650, 7651, 7808 (Sen. Black); 7652, 7799, 7800, 7885—86, 7937 (Sen. Walsh); 7813 (Sen. Pepper); 82 Cong.Rec. 1390 (Rep. Norton); 1395 (Rep. Randolph); 83 Cong.Rec. 7291 (Rep. Allen); 7310 (Rep. Fitzgerald); 9258 (Rep. Randolph). 7 Cf. Lord Stowell, in The Neptune, 1 Hagg.Adm. 227, 232: '* * * the natural and legal parents of wages are the mariner's contract, and the performance of the service covenanted therein; they in fact generate the title to wages.' 8 The following figures were either stipulated by the parties, found as facts by the District Court and concurred in the Circuit Court of Appeals andt his Court, or computed from such statistics: Oct. 24, 1938 1932-37 (effective date Apr. 1, 1944— average of FLSA) to Mar. 31, 1945 Aug. 31, 1939 (height of (eve of war) wartime activity) Work performed during straight time hours.. 79.93%. 75.03% 54.5% Night work... 15.13%. 17.89% 20.5% Weekend work.. 4.94%. 7.08% 25.0% Total night work by men who had worked during same day 13. 2% 23.29% 44.5% Ditto by those who had not. 86. 8% 76.71% 55.5% Total man-hours, consisting of night work by those who had not worked during same day 2.57% 4.17% 11.1% Concentration of man-hours straight time over overtime 11.22 8.47 3.38 9 That the hours designated by the agreement as 'overtime' were regarded by the union as excessive hours, rather than merely as unpleasant hours, may also be deduced from the fact that they included much weekday time in which there was ample daylight during a large part of the year, and were not confined to nights and weekends. Another indication of the same thing is the fact that the history of the union agreements for New York longshoremen reveals a succession of reductions of the total number of 'straight time' hours parallel to the reduction of the usual weekly working hours during the same period throughout American industry. 10 Of course, if it can be shown that particular employees for reasons of color, lack of seniority, or anything else—were not fairly or properly represented in the collective bargaining agreement, and were discriminated against and forced into a less desirable class of work, not because of accident or their on desire but because of the deliberate policy of the employers, the union, or both, we cannot treat the agreement made for the generality of longshoremen as binding upon them as well. See Steele v. Louisville & N.R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173; Tunstall v. Brotherhood of Locomotive Firemen and Enginemen, 323 U.S. 210, 65 S.Ct. 235, 89 L.Ed. 187. The respondents' claim was not based upon any such allegation. 11 Italics supplied. 12 The Interpretations of the Wage-Hour Administrator pertinent to this case are conflicting and inconclusive. Citation of the most relevant should suffice. Cf. §§ 69, 70, Interpretative Bulletin No. 4, Wage and Hour Division, Department of Labor.
67
334 U.S. 541 68 S.Ct. 1213 92 L.Ed. 1561 ESTINv.ESTIN. No. 139. Argued Feb. 2, 3, 1948. Decided June 7, 1948. Mr. James G. Purdy, of New York City, for petitioners. Mr. Roy Guthman, of New York City, for respondents. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This case, here on certiorari to the Court of Appeals of New York, presents an important question under the Full Faith and Credit Clause of the Constitution.1 Article IV, § 1. It is whether a New York decree awarding respondent $180 per month for her maintenance and support in a separation proceeding survived a Nevada divorce decree which subsequently was granted petitioner. 2 The parties were married in 1937 and lived together in New York until 1942 when the husband left the wife. There was no issue of the marriage. In 1943 she brought an action against him for a separation. He entered a general appearance. The court, finding that he had abandoned her, granted her a decree of separation and awarded her $180 per month as permanent alimony. In January 1944 he went to Nevada where in 1945 he instituted an action for divorce. She was notified of the action by constructive service but entered no appearance in it. In May, 1945, the Nevada court, finding that petitioner had been a bona fide resident of Nevada since January 30, 1944, granted him an absolute divorce 'on the ground of three years continual separation, without cohabitation.' The Nevada decree made no provision for alimony, though the Nevada court had been advised of the New York decree. 3 Prior to that time petitioner had made payments of alimony under the New York decree. After entry of the Nevada decree he ceased paying. Thereupon respondent sued in New York for a supplementary judgment for the amount of the arrears. Petitioner appeared in the action and moved to eliminate the alimony provisions of the separation decree by reason of the Nevada decree. The Supreme Court denied the motion and granted respondent judgment for the arrears. Sup., 63 N.Y.S.2d 476. The judgment was affirmed by the Appellate Division, 271 App.Div. 829, 66 N.Y.S.2d 421, and then by the Court of Appeals. 296 N.Y. 308, 73 N.E.2d 113. 4 We held in Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273; 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577, 157 A.L.R. 1366, (1) that a divorce decree granted by a State to one of its domiciliaries is entitled to full faith and credit in a bigamy prosecution brought in another State, even though the other spouse was given notice of the divorce proceeding only through constructive service; and (2) that while the finding of domicile by the court that granted the decree is entitled to prima facie weight, it is not conclusive in a sister State but might be relitigated there. And see Esenwein v. Pennsylvania, 325 U.S. 279, 65 S.Ct. 1118, 89 L.Ed. 1608, 157 A.L.R. 1396. The latter course was followed in this case, as a consequence of which the Supreme Court of New York found, in accord with the Nevada court, that petitioner 'is now and since January 1944, has been a bona fide resident of the State of Nevada.' (63 N.Y.S.2d 482) 5 Petitioner's argument therefore is that the tail must go with the hide—that since by the Nevada decree, recognized in New York, he and respondent are no longer husband and wife, no legal incidence of the marriage remains. We are given a detailed analysis of New York law to show that the New York courts have no power either by statute or by common law to compel a man to support his ex-wife, that alimony is payable only so long as the relation of husband and wife exists, and that in New York, as in some other states, see Esenwein v. Pennsylvania, supra, 325 U.S. page 280, 65 S.Ct. 1118, 89 L.Ed. 1608, 157 A.L.R. 1396, a support order does not survive divorce. 6 The difficulty with that argument is that the highest court in New York has held in this case that a support order can survive divorce and that this one has survived petitioner's divorce. That conclusion is binding on us, except as it conflicts with the Full Faith and Credit Clause. It is not for us to say whether that ruling squares with what the New York courts said on earlier occasions. It is enough that New York today says that such is her policy. The only question for us is whete r New York is powerless to make such a ruling in view of the Nevada decree. 7 We can put to one side the case where the wife was personally served or where she appears in the divorce proceedings. Cf. Yarborough v. Yarborough, 290 U.S. 202, 54 S.Ct. 181, 78 L.Ed. 269; Davis v. Davis, 305 U.S. 32, 59 S.Ct. 3, 83 L.Ed. 26, 118 A.L.R. 1518; Sherrer v. Sherrer, 334 U.S. 343, 68 S.Ct. 1087; Coe v. Coe, 334 U.S. 378, 68 S.Ct. 1094. The only service on her in this case was by publication and she made no appearance in the Nevada proceeding. The requirements of procedural due process were satisfied and the domicile of the husband in Nevada was foundation for a decree effecting a change in the marital capacity of both parties in all the other States of the Union, as well as in Nevada. Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273. But the fact that marital capacity was changed does not mean that every other legal incidence of the marriage was necessarily affected. 8 Although the point was not adjudicated in Barber v. Barber, 21 How. 582, 588, 16 L.Ed. 226, the Court in that case recognized that while a divorce decree obtained in Wisconsin by a husband from his absent wife might dissolve the vinculum of the marriage, it did not mean that he was freed from payment of alimony under an earlier separation decree granted by New York. An absolutist might quarrel with the result and demand a rule that once a divorce is granted, the whole of the marriage relation is dissolved, leaving no roots or tendrils of any kind. But there are few areas of the law in black and white. The greys are dominant and even among them the shades are innumerable. For the eternal problem of the law is one of making accommodations between conflicting interests. This is why most legal problems end as questions of degree. That is true of the present problem under the Full Faith and Credit Clause.2 The question involves important considerations both of law and of policy which it is essential to state. 9 The situations where a judgment of one State has been denied full faith and credit in another State, because its enforcement would contravene the latter's policy, have been few and far between. See Williams v. North Carolina, 317 U.S. 287, 294, 295, 63 S.Ct. 207, 210, 211, 87 L.Ed. 279, 143 A.L.R. 1273; Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 438, 439, 64 S.Ct. 208, 88 L.Ed. 149, 150 A.L.R. 413, and cases cited; Sherrer v. Sherrer, supra. The Full Faith and Credit Clause is not to be applied, accordion-like, to accommodate our personal predilections. It substituted a command for the earlier principles of comity and thus basically altered the status of the States as independent sovereigns. Williams v. North Carolina, 317 U.S. 287, 301, 302, 63 S.Ct. 207, 214, 87 L.Ed. 279, 143 A.L.R. 1273; Sherrer v. Sherrer, supra. It ordered submission by one State even to hostile policies reflected in the judgment of another State, because the practical operation of the federal system, which the Constitution designed, demanded it. The fact that the requirements of full faith and credit, so far as judgments are concerned,3 are exacting, if not inexorable (Sherrer v. Sherrer, supra), does not mean, however, that the State of the domicile of one spouse may, through the use of constructive service, enter a decree that changes every legal incidence of the marriage relationship.4 10 Marital status involves the regularity and integrity of the marriage relation. It affects the legitimacy of the offspring of marriage. It is the basis of criminal laws, as the bigamy prosecution in Williams v. North Carolina dramatically illustrates. The State has a considerable interest in preventing bigamous marriages and in protecting the offspring of marriages from being bastardized. The interest of the State extends to its domiciliaries. The State should have the power to guard its interest in them by changing or altering their marital status and by protecting them in that changed status throughout the farthest reaches of the nation. For a person domiciled in one State should not be allowed to suffer the penalties of bigamy for living outside the State with the only one which the State of his domicile recognizes as his lawful wife. And children born of the only marriage which is lawful in the State of his domicile should not carry the stigma of bastardy when they move elsewhere. These are matters of legitimate concern to the State of the domicile. They entitle the State of the domicile to bring in the absent spouse through constructive service. In no other way could the State of the domicile have and maintain effective control of the marital status of its domiciliaries. 11 Those are the considerations that have long permitted the State of the matrimonial domicile to change the marital status of the parties by an ex parte divorce proceeding, Thompson v. Thompson, 226 U.S. 551, 33 S.Ct. 129, 57 L.Ed. 347, considerations which in the Williams cases we thought were equally applicable to any State in which one spouse had established a bona fide domicile. See 317 U.S. pages 300—301, 63 S.Ct. page 214, 87 L.Ed. 279, 143 A.L.R. 1273. But those considerations have little relevancy here. In this case New York evinced a concern with this broken marriage when both parties were domiciled in New York and before Nevada had any concern with it. New York was rightly concerned lest the abandoned spouse be left impoverished and perhaps become a public charge. The problem of her livelihood and support is plainly a matter in which her community had a legitimate interest. The New York court, having jurisdiction over both parties, undertook to protect her by granting her a judgment of permanent alimony. Nevada, however, apparently follows the rule that dissolution of the marriage puts and end to a support order. See Herrick v. Herrick, 55 Nev. 59, 68, 25 P.2d 378, 380. But the question is whether Nevada could under any circumstances adjudicate rights of respondent under the New York judgment when she was not personally served or did not appear in the proceeding. 12 Bassett v. Bassett, 9 Cir., 141 F.2d 954, held that Nevada could not.5 We agree with that view. 13 The New York judgment is a property interest of respondent, created by New York in a proceeding in which both parties were present. It imposed obligations on petitioner and granted rights to respondent. The property interest which it created was an intangible, jurisdiction over which cannot be exerted through control over a physical thing. Jurisdiction over an intangible can indeed only arise from control or power over the persons whose relationships are the source of the rights and obligations. Cf. Curry v. McCanless, 307 U.S. 357, 366, 59 S.Ct. 900, 905, 83 L.Ed. 1339, 123 A.L.R. 162. 14 Jurisdiction over a debtor is sufficient to give the State of his domicile some control over the debt which he owes. It can, for example, levy a tax on its transfer by will (Blackstone v. Miller, 188 U.S. 189, 23 S.Ct. 277, 47 L.Ed. 439; State Tax Commission of Utah v. Aldrich, 316 U.S. 174,1 76, 177, 62 S.Ct. 1008, 1009, 86 L.Ed. 1358, 139 A.L.R. 1436) appropriate it through garnishment or attachment (Chicago, R.I. & P.R. Co. v. Sturm, 174 U.S. 710, 19 S.Ct. 797, 43 L.Ed. 1144; see Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023, 3 Ann.Cas. 1084), collect it and administer it for the benefit of creditors. Clark v. Williard, 294 U.S. 211, 55 S.Ct. 356, 79 L.Ed. 865, 98 A.L.R. 347; Fischer v. American United Ins. Co., 314 U.S. 549, 553, 62 S.Ct. 380, 382, 86 L.Ed. 444. But we are aware of no power which the State of domicile of the debtor has to determine the personal rights of the creditor in the intangible unless the creditor has been personally served or appears in the proceeding. The existence of any such power has been repeatedly denied. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565; Hart v. Sansom, 110 U.S. 151, 3 S.Ct. 586, 28 L.Ed. 101; New York Life Ins. Co. v. Dunlevy, 241 U.S. 518, 36 S.Ct. 613, 60 L.Ed. 1140. 15 We know of no source of power which would take the present case out of that category. The Nevada decree that is said to wipe out respondent's claim for alimony under the New York judgment is nothing less than an attempt by Nevada to restrain respondent from asserting her claim under that judgment. That is an attempt to exercise an in personam jurisdiction over a person not before the court. That may not be done. Since Nevada had no power to adjudicate respondent's rights in the New York judgment, New York need not give full faith and credit to that phase of Nevada's judgment. A judgment of a court having no jurisdiction to render it is not entitled to the full faith and credit which the Constitution and statute of the United States demand. Hansberry v. Lee, 311 U.S. 32, 40, 41, 61 S.Ct. 115, 117, 85 L.Ed. 22, 132 A.L.R. 741; Williams v. North Carolina, 325 U.S. 226, 229, 65 S.Ct. 1092, 1094, 89 L.Ed. 1577, 157 A.L.R. 1366, and cases cited. 16 The result in this situation is to make the divorce divisible to give effect to the Nevada decree insofar as it affects marital status and to make it ineffective on the issue of alimony. It accommodates the interests of both Nevada and New York in this broken marriage by restricting each State to the matters of her dominant concern. 17 Since Nevada had no jurisdiction to alter respondent's rights in the New York judgment, we do not reach the further question whether in any event that judgment would be entitled to full faith and credit in Nevada. See Sistare v. Sistare, 218 U.S. 1, 30 S.Ct. 682, 54 L.Ed. 905, 28 L.R.A.,N.S., 1068, 20 Ann.Cas. 1061; Barber v. Barber, 323 U.S. 77, 65 S.Ct. 137, 89 L.Ed. 82, 157 A.L.R. 163; Griffin v. Griffin, 327 U.S. 220, 66 S.Ct. 556, 90 L.Ed. 635. And it will be time enough to consider the effect of any discrimination shown to out-of-state ex parte divorces when a State makes that its policy. 18 Affirmed. 19 Mr. Justice FRANKFURTER, dissenting. 20 The Court's opinion appears to rest on three independent grounds: 21 (1) New York may, consistently with the Full Faith and Credit Clause, hold that a prior separate maintenance decree of one of its courts survives a decree of divorce within the scope of enforceability of the rule in Williams v. North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273, whether such divorce is granted in New York or by a sister State; 22 (2) By virtue of its interest in preventing its citizens from becoming public charges, New York may constitutionally provide that a domestic separate maintenance decree servives a sister-State divorce decree which must be respected in New York under the rule in the first Williams case, supra; 23 (3) A separate maintenance decree creates an obligation which may not, consistently with due process, be extinguished by a court lacking personal jurisdiction of the obligee, though possessed of jurisdiction to terminate her marital status, and any judgment purporting to do so is not entitled to extra-State recognition. 24 To the first of these grounds I assent, and if such is the law of New York I agree that the decision of the New York Court of Appeals in this case must be upheld. It is for New York to decide whether its decrees for separate maintenance survive divorce or terminate with it, provided, of course, that its decision is not a mere attempt to defeat a federal right, given by the Full Faith and Credit Clause, under the guise of a determination of State law. Cf. Davis v. Wechsler, 263 U.S. 22, 24, 25, 44 S.Ct. 13, 14, 68 L.Ed. 143. 25 The second ground presents difficulties. I cannot agree that New York's interest in its residents would justify New York in giving less effect to an enforceable Nevada divorce granted to one domiciled in Nevada, against a spouse not personally served, than it would give to a valid New York divorce similarly obtained. As to this, I agree with the views of by brother JACKSON. If, on the other hand, New York does not so discriminate against enforceable 'ex parte' divorce decrees granted by a sister State, no problem under the Full Faith and Credit Clause arises. 26 Furthermore, if the respondent had obtained her separate maintenance decree in Pennsylvania—which treats such decrees as terminated by any valid divorce, see Esenwein v. Commonwealth, 325 U.S. 279, 65 S.Ct. 1118, 89 L.Ed. 1608, 157 A.L.R. 1396—and had subsequently moved to New York and there brought a suit based on the Pennsylvania decree, it is clear that New York's interest in preventing the respondent from becoming a public charge would not justify refusal to treat the separate maintenance decree as having been terminated. New York would be required to refer to the law of Pennsylvania to determine whether the maintenance decree of that Commonwealth had survived the Nevada divorce, and, finding that it had not, the New York courts could not enforce it. 27 My difficulty with the third ground of the Court's opinion is that Nevada did not purport, so far as the record discloses, to rule on the survival of the New York separate maintenance decree. Nevada merely established a change in status. It was for New York to determine the effect, with reference to its own law, of that change in status. If it was the law of New York that divorce put an end to its separate maintenance decree, the respondent's decree would have been terminated not by the Nevada divorce but by the consequences, under the New York law, of a change in status, even though brought about by Nevada. Similarly, Nevada could not adjudicate rights in New York realty, but, if New York law provided for dower, a Nevada divorce might or might not terminate a dower interest in New York realty depending on whether or not New York treated dower rights as extinguished by divorce. 28 If the Nevada decree, insofar as it affected the New York separate maintenance decree, were violative of due process, New York of course would not have to give effect to it. It could not do so even if it wished. If the Nevada decree involved a violation of due process there is an end of the matter and other complicated issues need not be considered! It would not matter whether New York had a special interest in preventing its residents from becoming public charges, or whether New York treated maintenance decrees as surviving a valid divorce. 29 Accordingly, the crucial issue, as I see it, is whether New York has held that no 'ex parte' divorce decree could terminate a prior New York separate maintenance decree, or whether it has decided merely that no 'ex parte' divorce decree of another State could. The opinion of the Court of Appeals leaves this crucial issue in doubt. The prior decisions of the New York courts do not dispel my doubts. Neither do the cases cited in the Court of Appeals' opinion, which, with the exception of Wagster v. Wagster, 193 Ark. 902, 103 S.W.2d 638, do not involve 'ex parte' domestic divorces. New York may legitimately decline to allow any 'ex parte' divorce to dissolve its prior separate maintenance decree, but it may not, consistently with Williams v. North Cr olina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273, discriminate against a Nevada decree granted to one there domiciled, and afford it less effect than it gives to a decree of its own with similar jurisdictional foundation. I cannot be sure which it has done. 30 I am reinforced in these views by Mr. Justice JACKSON'S dissent. As a New York lawyer and the Justice assigned to the Second Circuit, he is presumably not without knowledge of New York law. The Court's opinion is written in a spirit of certitude that the New York law is contrary to that which Mr. Justice JACKSON assumes it to be. Thus, on the issue that I deem decisive of the question whether New York has given full faith and credit to the Nevada decree—namely, whether under New York's law divorce decrees based on publication terminate support—her law has thus far not spoken with ascertainable clarity. I would therefore remand the case to the New York Court of Appeals for clarification of its rationale. '* * * It is * * * important that ambiguous or obscure adjudications by state courts do not stand as barriers to a determination by this Court of the validity under the federal constitution of state action. Intelligent exercise of our appellate powers compels us to ask for the elimination of the obscurities and ambiguities from the opinions in such cases.' Minnesota v. National Tea Co., 309 U.S. 551, 557, 60 S.Ct. 676, 679, 84 L.Ed. 920. 31 Mr. Justice JACKSON, dissenting. 32 If there is one thing that the people are entitled to expect from their lawmakers, it is rules of law that will enable individuals to tell whether they are married and, if so, to whom. Today many people who have simply lived in more than one state do not know, and the most learned lawyer cannot advise them with any confidence. The uncertainties that result are not merely technical, nor are they trivial; they affect fundamental rights and relations such as the lawfulness of their cohabitation, their children's legitimacy, their title to property, and even whether they are law-abiding persons or criminals. In a society as mobile and nomadic as ours, such uncertainties affect large numbers of people and create a social problem of some magnitude. It is therefore important that, whatever we do, we shall not add to the confusion. I think that this decision does just that. 33 These parties lived together in New York State during their entire married life. Courts of that State granted judgment of separation, with award of alimony to the wife, in October 1943. Three months later the husband journeyed to Nevada and in three more months began a divorce action. No process was served on the wife in Nevada; she was put on notice only by constructive service through publication in New York. Notified thus of what was going on, she was put to this choice: to go to Nevada and fight a battle, hopeless under Nevada laws, to keep her New York judgment, or to do nothing. She did nothing, and the Nevada court granted the husband a divorce without requiring payment of alimony. 34 Now the question is whether the New York judgment of separation or the Nevada judgment of divorce controls the present obligation to pay alimony. The New York judgment of separation is based on the premise that the parties remain husband and wife, though estranged, and hence the obligation of support, incident to marriage, continues. The Nevada decree is based on the contrary premise that the marriage no longer exists and so obligations dependent on it have ceased. 35 The Court reaches the Solomon-like conclusion that the Nevada decree is half good and half bad under the full faith and credit clause. It is good to free the husband from the marriage; it is not good to free him from its incidental obligations. Assuming the judgment to be one which the Constitution requires to be recognized at all, I do not see how we can square this decision with the command that it be given full faith and credit. For reasons which I stated in dissenting in Williams v. Nort Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279, 143 A.L.R. 1273, I would not give standing under the clause to constructive service divorces obtained on short residence. But if we are to hold this divorce good, I do not see how it can be less good than a divorce would be if rendered by the courts of New York. 36 As I understand New York law, if, after a decree of separation and alimony, the husband had obtained a New York divorce against his wife, it would terminate her right to alimony. If the Nevada judgment is to have full faith and credit, I think it must have the same effect that a similar New York decree would have. I do not see how we can hold that it must be accepted for some purposes and not for others, that he is free of his former marriage but still may be jailed, as he may in New York, for not paying the maintenance of a woman whom the Court is compelled to consider as no longer his wife. 1 That clause directs that 'Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State' and provides that 'Congress may by general Laws prescribe the Manner in which such Acts, Records, and Proceedings, shall be proved, and the Effec thereof.' By the Act of May 26, 1790, c. 11, 1 Stat. 122, as amended, 28 U.S.C. § 687, 28 U.S.C.A. § 687, Congress provided that the 'records and judicial proceedings' of the courts of any State 'shall have such faith and credit given to them in every court within the United States, as they have by law or usage in the courts of the State from which they are taken.' 2 See Bingham, In the Matter of Haddock v. Haddock, 21 Corn.L.Quart. 393; Radin, The Authenticated Full Faith and Credit Clause, 39 Ill.L.Rev. 1; Holt, The Bones of Haddock v. Haddock, 41 Mich.L.Rev. 1013, 1034; Barnhard, Haddock Reversed—Harbinger of the Divisible Divorce, 31 Geo.L.J. 210; Cook, Is Haddock v. Haddock Overruled, 18 Ind.L.J. 165. 3 As respects statutes, see the discussion in Williams v. North Carolina, 317 U.S. 287, 295, 296, 63 S.Ct. 207, 211, 212, 87 L.Ed. 279, 143 A.L.R. 1273. 4 The case is unlike Thompson v. Thompson, 226 U.S. 551, 33 S.Ct. 129, 57 LE d. 347, where the wife by her conduct forfeited her right to alimony under the laws of the State of the matrimonial domicile where her husband obtained the divorce, and hence could not retain a judgment for maintenance subsequently obtained in another jurisdiction. 5 And see Miller v. Miller, 200 Iowa 1193, 206 N.W. 262.
1011
334 U.S. 699 68 S.Ct. 1229 92 L.Ed. 1663 TRUPIANO et al.v.UNITED STATES. No. 427. Argued March 9, 1948. Decided June 14, 1948. Mr. Frank G. Schlosser, of Hoboken, N.J., for petitioners. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 This case adds another chapter to the body of law growing out of the Fourth Amdndment to the Constitution of the United States. That Amendment provides: 'The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.' In other words, the Fourth Amendment is a recognition of the fact that in this nation individual liberty depends in large part upon freedom from unreasonable intrusion by those in authority. It is the duty of this Court to give effect to that freedom. 2 In January, 1946, the petitioners sought to lease part of the Kell farm in Monmouth County, New Jersey, and to erect a building thereon. Kell suspected that they intended to build and operate an illegal still. He accordingly reported the matter to the appropriate federal authority, the Alcohol Tax Unit of the Bureau of Internal Revenue. The federal agents told Kell to accept the proposition, provided he did nothing to entice or encourage the petitioners into going ahead with their plans and provided he kept the agents informed of all developments. Nilsen, one of the agents, was assigned in February to work on the farm in the desiguise of a 'dumb farm hand' and to accept work at the still if petitioners should offer it. 3 Toward the end of March, 1946, Kell agreed with petitioners to let them rent part of his farm for $300 a month. Kell and Nilsen assisted petitioners in the erection of the building, a roughly constructed barn about 200 yards from the Kell farmhouse. Nilson also assisted in the erection of the still and the vats. 4 Operation of the still began about May 13, 1946. Nilsen thereafter worked as 'mash man' at a salary of $100 a week, which he turned over to the Government. During this period he was in constant communication with his fellow agents. By prearrangement, he would meet one or more of the agents at various places within a few miles of the Kel farm; at these meetings 'the conversation would be about the still building I had assisted in erecting or about the illicit distillery that I was working at on the Kell farm.' On May 20 he met with one of his superior officers and gave him samples of alcohol, several sugar bags, a yeast wrapper and an empty five-gallon can which had been taken from the still premises. 5 On May 26 Nilsen received a two-way portable radio set from his superiors. He used this set to transmit frequent bulletins on the activities of the petitioners. On the basis of radio intelligence supplied by Nilsen, a truckload of alcohol was seized on May 31 about an hour after it had left the farm. 6 At about 9 p.m. in the evening of June 3, 1946, Nilsen radioed his superior that the still operators were awaiting the arrival of a load of sugar and that alcohol was to be taken from the farm when the sugar truck arrived. Nilsen apparently knew then that a raid was scheduled for that night, for he told Kell during the evening that 'tonight is the night.' He radioed at 11 p.m. that the truck had been delayed but that petitioners Roett and Antoniole were at the still. 7 Three federal agents then drove to within three miles of the farm, at which point they were met by Kell. The remainder of the distance was traversed in Kell's automobile. They arrived at the farm at about 11:45 p.m. The agents stated that the odor of fermenting mash ans the sound of a gasoline motor were noticeable as the car was driven onto the farm premises; the odor became stronger and the noise louder as they alighted from the car and approached the building containing the still. Van De Car, one of the agents, went around one end of the building. Looking through an open door into a dimly lighted interior he could see a still column, a boiler and gasoline pump in operation. He also saw Antoniole bending down near the pump. He entered the building and placed Antoniole under arrest. Thereupon he 'seized the illicit distillery.' 8 After this arrest and seizure, Van De Car looked about further and observed a large number of five-gallon cans which he later found to contain alcohol and some vats which contained fermenting mash. Another agent, Casey, testified that he could see several of these cans through the open door before he entered; he subsequently counted the cans and found that there were 262 of them. After he entered he saw the remainder of the distillery equipment, including four large mash vats. The third agent, Gettel, proceeded to a small truck standing in the yard and 'searched it thoroughly for papers and things of an evidentiary nature.' It does not appear whether he was successful in his search or whether he took anything from the truck. 9 A few minutes later Roett was arrested outside the building. Petitioners Trupiano and Riccardelli apparently were arrested later that night by other agents, the place and the circumstances not being revealed by the record before us. In addition, three other persons were arrested that night because of their connections with the illegal operations; one of them, who was unknown to Nilsen, was arrested when he arrived at the farm with a truck loaded with coke. 10 The agents engaged in this raid without securing a search warrant or warrants of arrest. It is undenied that they had more than adequate opportunity to obtain such warrants before the raid occurred, various federal judges and commissioners being readily available. 11 All of the persons arrested were charged with various violations of the Internal Revenue Code arising out of their ownership and operation of the distillery. Prior to the return of an indictment against them, the four petitioners filed in the District Court for the District of New Jersey a motion alleging that the federal agents had illegally seized 'a still, alcohol, mash and other equipment,' and asking that 'all such evidence' be excluded and suppressed at any trial and that 'all of the aforesaid property be returned. The District Court denied th motion after a hearing, holding that the seizure was reasonable and hence constitutional. 70 F.Supp. 764. The Circuit Court of Appeals for the Third Circuit affirmed per curiam the order of the District Court. 163 F.id 828. District Court. 163 F.2d 828. property was seized by federal agents without a search warrant under circumstances where such a warrant could easily have been obtained. The Government, however, claims that the failure to secure the warrant has no effect upon the validity of the seizure. Reference is made to the well established right of law enforcement officers to arrest without a warrant for a felony committed in their presence, Carroll v. United States, 267 U.S. 132, 156, 157, 45 S.Ct. 280, 286, 69 L.Ed. 543, 39 A.L.R. 790, a right said to be unaffected by the fact that there may have been adequate time to procure a warrant of arrest. Since one of the petitioners, Antoniole, was arrested while engaged in operating an illegal still in the presence of agents of the Alcohol Tax Unit, his arrest was valid under this view even though it occurred without the benefit of a warrant. And since this arrest was valid, the argument is made that the seizure of the contraband open to view at the time of the arrest was also lawful. Reliance is here placed on the long line of cases recognizing that an arresting officer may look around at the time of the arrest and seize those fruits and evidences of crime or those contraband articles which are in plain sight and in his immediate and discernible presence. Weeks v. United States, 232 U.S. 383, 392, 34 S.Ct. 341, 344, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177; Carroll v. United States, supra, 267 U.S. at page 158, 45 S.Ct. at page 287; Agnello v. United States, 269 U.S. 20, 30, 46 S.Ct. 4, 5, 70 L.Ed. 145, 51 A.L.R. 409; United States v. Lee, 274 U.S. 559, 563, 47 S.Ct. 746, 748, 71 L.Ed. 1202; Marron v. United States, 275 U.S. 192, 198, 199, 45 S.Ct. 74, 76, 77, 72 L.Ed. 231; Go-Bart Importing Co. v. United States, 282 U.S. 344, 358, 51 S.Ct. 153, 158, 75 L.Ed. 374; United States v. Lefkowitz, 285 U.S. 452, 465, 52 S.Ct. 420, 423, 76 L.Ed. 877, 82 A.L.R. 775; Harris v. United States, 331 U.S. 145, 150, 151, 67 S.Ct. 1098, 1101, 91 L.Ed. 1399. 12 We sustain the Government's contention that the arrest of Antoniole was valid. The federal agents had more than adequate cause, based upon the information supplied by Nilsen, to suspect that Antoniole was engaged in felonious activities on the farm premises. Acting on that suspicion, the agents went to the farm and entered onto the premises with the consent of Kell, the owner. There Antoniole was seen through an open doorway by one of the agents to be operating an illegal still, an act felonious in nature. His arrest was therefore valid on the theory that he was committing a felony in the discernible presence of an agent of the Alcohol Tax Unit, a peace officer of the United States. The absence of a warrant of arrest, even though there was sufficient time to obtain one, does not destroy the validity of an arrest under these circumstances. Warrants of arrest are designed to meet the dangers of unlimited and unreasonable arrests of persons who are not at the moment committing any crime. Those dangers, obviously, are not present where a felony plainly occurs before the eyes of an officer of the law at a place where he is lawfully present. Common sense then dictates that an arrest in that situation is valid despite the failure to obtain a warrant of arrest. 13 But we cannot agree that the seizure of the contraband property was made in conformity with the requirements of the Fourth Amendment. It is a cardinal rule that, in seizing goods and articles, law enforcement agents must secure and use search warrants wherever reasonably practicable. Carroll v. United States, supra, 267 U.S. at page 156, 45 S.Ct. at page 286; Go-Bart Importing Co. v. United States, supra, 282 U.S. at page 358, 51 S.Ct. at page 158; Taylor v. United States, 286 U.S. 1, 6, 52 . Ct. 466, 467, 76 L.Ed. 951; Johnson v. United States, 333 U.S. 10, 14, 15, 68 S.Ct. 367, 369, 370. This rule rests upon the desirability of having magistrates rather than police officers determine when searches and seizures are permissible and what limitations should be placed upon such activities. United States v. Lefkowitz, supra, 285 U.S. at page 464, 52 S.Ct. at page 423. In their understandable zeal to ferret out crime and in the excitement of the capture of a suspected person, officers are less likely to possess the detachment and neutrality with which the constitutional rights of the suspect must be viewed. To provide the necessary security against unreasonable intrusions upon the private lives of individuals, the framers of the Fourth Amendment required adherence to judicial processes wherever possible. And subsequent history has confirmed the wisdom of that requirement. 14 The facts of this case do not measure up to the foregoing standard. The agents of the Alcohol Tax Unit knew every detail of the construction and operation of the illegal distillery long before the raid was made. One of them was assigned to work on the farm along with the illicit operators, making it possible for him to secure and report the minutest facts. In cooperation with the farm owner, who served as an informer, this agent was in a position to supply information which could easily have formed the basis for a detailed and effective search warrant. Concededly, there was an abundance of time during which such a warrant could have been secured, even on the night of the raid after the odor and noise of the distillery confirmed their expectations. And the property was not of a type that could have been dismantled and removed before the agents had time to secure a warrant; especially is this so since one of them was on hand at all times to report and guard against such a move. See United States v. Kaplan, 2 Cir., 89 F.2d 869, 871. 15 What was said in Johnson v. United States, supra, 333 U.S. at page 15, 68 S.Ct. at page 369, is equally applicable here: 'No reason is offered for not obtaining a search warrant except the inconvenience to the officers and some slight delay necessary to prepare papers and present the evidence to a magistrate. These are never very convincing reasons and, in these circumstances, certainly are not enough to by-pass the constitutional requirement. * * * If the officers in this case were excused from the constitutional duty of presenting their evidence to a magistrate, it is difficult to think of a case in which it should be required.' 16 And so when the agents of the Alcohol Tax Unit decided to dispense with a search warrant and to take matters into their own hands, they did precisely what the Fourth Amendment was designed to outlaw. Uninhibited by any limitations that might have been contained in a warrant, they descended upon the distillery in a midnight raid. Nothing circumscribed their activities on that raid except their own good senses, which the authors of the Amendment deemed insufficient to justify a search or seizure except in exceptional circumstances not here present. The limitless possibilities afforded by the absence of a warrant were epitomized by the one agent who admitted searching 'thoroughly' a small truck parked in the farmyard for items of an evidentiary character. The fact that they actually seized only contraband property, which would doubtless have been described in a warrant had one been issued, does not detract from the illegality of the seizure. See Amos v. United States, 255 U.S. 313, 41 S.Ct. 266, 65 L.Ed. 654; Byars v. United States, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520; Taylor v. United States, supra. 17 Moreover, the proximity of the contraband property to the person of Antoniole at the moment of his arrest was a fortuitous circumstance which was inadequate to legalize the seizure. As we have seen, the existence of this property and the desirability of seizing it were known to the agents long before the seizr e and formed one of the main purposes of the raid. Likewise, the arrest of Antoniole and the other petitioners in connection with the illicit operations was a foreseeable event motivating the raid. But the precise location of the petitioners at the time of their arrest had no relation to the foreseeability or necessity of the seizure. The practicability of obtaining a search warrant did not turn upon whether Antoniole and the others were within the distillery building when arrested or upon whether they were then engaged in operating the illicit equipment. Antoniole just happened to be working amid the contraband surroundings at 11:45 p.m. on the night in question, while the other three petitioners chanced to be some place else. But Antoniole might well have been outside the building at that particular time. If that had been the case and he had been arrested in the farmyard, the entire argument advanced by the Government in support of the seizure without warrant would collapse. We do not believe that the applicability of the Fourth Amendment to the facts of this case depends upon such a fortuitous factor as the precise location of Antoniole at the time of the raid. 18 In other words, the presence or absence of an arrestee at the exact time and place of a foreseeable and anticipated seizure does not determine the validity of that seizure if it occurs without a warrant. Rather the test is the apparent need for summary seizure, a test which clearly is not satisfied by the facts before us. 19 A search or seizure without a warrant as an incident to a lawful arrest has always been considered to be a strictly limited right. It grows out of the inherent necessities of the situation at the time of the arrest. But there must be something more in the way of necessity than merely a lawful arrest. The mere fact that there is a valid arrest does not ipso facto legalize a search or seizure without a warrant. Carroll v. United States, supra, 267 U.S. at page 158, 45 S.Ct. at page 287. Otherwise the exception swallows the general principle, making a search warrant completely unnecessary wherever there is a lawful arrest. And so there must be some other factor in the situation that would make it unreasonable or impracticable to require the arresting officer to equip himself with a search warrant. In the case before us, however, no reason whatever has been shown why the arresting officers could not have armed themselves during all the weeks of their surveillance of the locus with a duly obtained search warrant—no reason, that is, except indifference to the legal process for search and seizure which the Constitution contemplated. 20 We do not take occasion here to reexamine the situation involved in Harris v. United States, supra. The instant case relates only to the seizure of contraband the existence and precise nature and location of which the law enforcement officers were aware long before making the lawful arrest. That circumstance was wholly lacking in the Harris case, which was concerned with the permissible scope of a general search without a warrant as an incident to a lawful arrest. Moreover, the Harris case dealt with the seizure of Government property which could not have been the subject of a prior search warrant, it having been found unexpectedly during the course of a search. In contrast, the contraband seized in this case could easily have been specified in a prior search warrant. These factual differences may or may not be of significance so far as general principles are concerned. But the differences are enough to justify confining ourselves to the precise facts of this case, leaving it to another day to test the Harris situation by the rule that search warrants are to be obtained and used wherever reasonably practicable. 21 What we have here is a set of facts governed by a principle indistinguishable from that recognized and applied in Taylor v. United States, supra. The Court there held that the seizure of illicit whiskey was unreasonable, however well-grounded the suspicions of the federal agents, where there was an abundant opportunity to obtain a search warrant and to proceed in an orderly, judicial way. True, the Taylor case did not involve a seizure in connection with an arrest. And the officers there made an unlawful entry onto the premises. But those factors had no relation to the practicability of obtaining a search warrant before making the seizure. It was the time element and the foreseeability of the need for a search and seizure that made the warrant essential. The Taylor case accordingly makes plain the illegality of the seizure in the instant proceeding. 22 The Fourth Amendment was designed to protect both the innocent and the guilty from unreasonable intrusions upon their right of privacy while leaving adequate room for the necessary processes of law enforcement. The people of the United States insisted on writing the Fourth Amendment into the Constitution because sad experience had taught them that the right to search and seize should not be left to the mere discretion of the police, but should as a matter of principle be subjected to the requirement of previous judicial sanction wherever possible. The effective operation of government, however, could hardly be embarrassed by the requirement that arresting officers who have three weeks or more within which to secure the authorization of judicial authority for making search and seizure should secure such authority and not be left to their own discretion as to what is to be searched and what is to be seized. Such a requirement partakes of the very essence of the orderly and effective administration of the law. 23 It is a mistake to assume that a search warrant in these circumstances would contribute nothing to the preservation of the rights protected by the Fourth Amendment. A search warrant must describe with particularity the place to be searched and the things to be seized. Without such a warrant, however, officers are free to determine for themselves the extent of their search and the precise objects to be seized. This is no small difference. It is a difference upon which depends much of the potency of the right of privacy. And it is a difference that must be preserved even where contraband articles are seized in connection with a valid arrest. 24 It follows that it was error to refuse petitioners' motion to exclude and suppress the property which was improperly seized. But since this property was contraband, they have no right to have it returned to them. 25 Reversed. 26 Mr. Chief Justice VINSON, with whom Mr. Justice BLACK, Mr. Justice REED and Mr. Justice BURTON concur, dissenting. 27 Federal officers, following a lawful arrest, seized contraband materials which were being employed in open view in violation and defiance of the laws of the land. Today, the Court for the first time has branded such a seizure illegal. Nothing in the explicit language of the Fourth Amendment dictates that result. Nor is that holding supported by any decision of this Court. 28 The material facts are not in dispute. In January, 1946, certain of the petitioners approached one Kell offering to rent a portion of the latter's farm on which a building was to be erected. His suspicions aroused, Kell reported the matter to agents of the Alcohol Tax Unit of the Bureau of Internal Revenue. He was advised that the offer could be accepted provided that nothing was done to entice petitioners into completion of their plans. An agent, Nilsen, was assigned to the farm to act the part of a farm hand in the employ of Kell. 29 Ultimately, an agreement was entered into whereby Kell rented a portion of his farm to petitioners at $300 a month. Petitioners, with the assistance of Kell and Nilsen, constructed a barn-like structure some two hundred yards from the farmhouse. A still and vats were installed. After the still began operation, Nilsen acted as a 'mash man' receiving a salary of $100 a week from petitioners. All sums received by Nilsen were turned over t the Federal Government. 30 Throughout this period, Nilsen reporter regularly to his superiors. As a result of this information, federal agents on May 31, 1946, seized a truckload of alcohol about an hour after it had left the Kell farm. 31 The night of June 3, 1946, was chosen by the agents to conduct their raid. Kell cooperated fully with the officers and drove three of the agents to the farm in his own car. As the car entered the farm premises, the odor of fermenting mash and the sound of a gasoline motor became apparent. When the agents alighted from the car it was obvious that the sound and the odor were emanating from the building in which the still was located. One of the agents approached the structure and through an open door observed a still and a boiler. He also saw the petitioner Antoniole bending over a gasoline pump. The agent entered the building and placed Antoniole under arrest on the theory that a crime was being committed in his presence. Subsequently, the agent seized the still, mash vats containing fermenting mash, other distillery equipment, and 262 five-gallon cans containing illicit alcohol. Neither the arrest nor the seizure was effected under the authority of a warrant. Later six other persons were arrested, including three of the petitioners in this case.1 32 There can be no doubt that the activities of petitioners were in flagrant violation of the laws of the United.2 It is clear, also, that the materials seized consisted of instrumentalities used by petitioners in their criminal enterprise and contraband goods, possession of which is a crime. The materials and objects falling into the control of the federal agents, therefore, were of the type properly subject to lawful seizure.3 33 Further, it is obvious that entry of the federal agents onto the farm premises was in no sense trespassory or otherwise illegal. Amos v. United States, 1921, 255 U.S. 313, 41 S.Ct. 266, 65 L.Ed. 654; Byars v. United States, 1927, 273 U.S. 28, 47 S.Ct. 248, 71 L.Ed. 520. Kell, the owner of the farm, gave his active consent to the entry. Indeed, he voluntarily drove three of the agents to the premises in his own car. 34 Nor can there be doubt that the arrest of the petitioner Antoniole while engaged in the commission of a felony in the presence of the agent was a valid arrest. The majority of the Court excplicitly concedes such to be the fact. Under the English common law, a police officer had power without a warrant to arrest persons committing a misdemeanor in the officer's presence and persons whom the officer had reasonable cause to believe had committed a felony. This rule, which had its origin in the ancient formative period of the common law, was firmly established at the time of the adoption of the Fourth Amendment.4 Since that time it has received general application b state and federal courts.5 Indeed, this Court has heretofore given specific recognition to the rule. Carroll v. United States, 1925, 267 U.S. 132, 156, 157, 45 S.Ct. 280, 286, 69 L.Ed. 543, 39 A.L.R. 790.6 35 Thus, even though agents charged with enforcement of the laws of the United States made a lawful entry onto the farm and despite the fact that a valid arrest was made of a party who was in the act of committing a felony, the Court now holds that the arresting officer in the absence of a search warrant was powerless to make a valid seizure of contraband materials located in plain sight in the structure in which the arrest took place. And this despite the long line of decisions in this Court recognizing as consistent with the restrictions of the Fourth Amendment the power of law-enforcement officers to make reasonable searches and seizures as incidents to lawful arrests. 36 In Agnello v. United States, 1925, 269 U.S. 20, 30, 46 S.Ct. 4, 5, 70 L.Ed. 145, 51 A.L.R. 409, this Court stated: 'The right without a search warrant contemporaneously to search persons lawfully arrested while committing crime and to search the place where the arrest is made in order to find and seize things connected with the crime * * * as well as weapons and other things to effect an escape from custody, is not to be doubted. * * * Such searches and seizures naturally and usually appertain to and attend such arrests.'7 And see Weeks v. United States, 1914, 232 U.S. 383, 392, 34 S.Ct. 341, 344, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177; Carroll v. United States, supra, 267 U.S. at page 158, 45 S.Ct. at page 287; United States v. Lee, 1927, 274 U.S. 559, 563, 47 S.Ct. 746, 748, 71 L.Ed. 1202; Marron v. United States, 1927, 275 U.S. 192, 198, 199, 48 S.Ct. 74, 76, 77, 72 L.Ed. 231; Go-Bart Importing Co. v. United States, 1931, 282 U.S. 344, 358, 51 S.Ct. 153, 158, 75 L.Ed. 374; United States v. Lefkowitz, 1932, 285 U.S. 452, 465, 52 S.Ct. 420, 423, 76 L.Ed. 877, 82 A.L.R. 775; Harris v. United States, 1947, 331 U.S. 145, 150, 151, 168, 186, 67 S.Ct. 1098, 1101, 1110, 1114, 91 L.Ed. 1399. 37 The validity of the search and seizure as incident to a lawful arrest has been based upon a recognition by this Court that where law-enforcement agents have lawfully gained entrance into premises and have executed a valid arrest of the occupant, the vital rights of privacy protected by the Fourth Amendment are not denied by seizure of contraband materials and instrumentalities of crime in open view or such as may be brought to light by a reasonable search. Here there can be no objection to the scope or intensity of the search. Cf. Marron v. United States, supra; Go-Bart Importing Co. v. United States, supra; United States v. Lefkowitz, supra; Harris v. United States, supra. The seizure was not preceded by an exploratory search. The objects seized were in plain sight. To insist upon the use of a search warrant in situations where the issuance of such a warrant can contribute nothing to the preservation of the rights which the Fourth Amendment was intended to protect, serves only to open an avenue of escape for those guilty of crime and to menace the effective operation of government which is an essential precondition to the existence of all civil liberties. 38 In reaching its result the Court relies on Taylor v. United States, 1932, 286 U.S. 1, 52 S.Ct. 466, 76 L.Ed. 951. There, federal agents broke into a garage and seized a quantity of illicit liquor.A t the time of entry, 'No one was within the place, and there was no reason to think otherwise.' Id. 286 U.S. at page 5, 52 S.Ct. at page 467. The agents acted without the authority of a search warrant, nor, unlike the present case, was lawful entry into the building made for the purpose of effecting a valid arrest. Under these circumstances the Court ruled that the seizure was unlawful. But to apply that holding in a situation like the present where law-enforcement officers have entered a building to arrest a party openly engaged in the commission of a felony, is to disregard the very basis upon which the Taylor case was decided. 39 We are told, however, that although the petitioner Antoniole was arrested while undeniably engaged in the commission of a felony, his presence in the building in which the contraband materials were located was a 'fortuitous circumstance which was inadequate to legalize the seizure.' We should suppose that any arrest of a party engaged in the commission of a felony is based in part upon an element of chance. Criminals do not normally choose to engage in felonious enterprises before an audience of police officials. We may well anticipate the perplexity of officers engaged in the practical business of law enforcement when confronted with a rule which makes the validity of a seizure of contraband materials as an incident to a lawful arrest dependent upon subsequent judicial judgment as to the 'fortuitous' circumstances relating to the presence of the party arrested on the premises in which the illegal goods are located. 40 Nor are we free to assume that the agents in this case would have proceeded illegally to seize the materials in the barn in the absence of the justification of a valid arrest. A lawful seizure is not to be invalidated by speculations as to what the conduct of the agents might have been had a different factual situation been presented. 41 The case of Johnson v. United States, 1948, 333 U.S. 10, 68 S.Ct. 367, does not support the result which the Court has reached. For there the majority of the Court held that the arrest in question was an invalid one. Obviously, a search and seizure may not be held valid on the sole ground that it was an incident to an invalid arrest. Such is not the situation here. 42 In Carroll v. United States, supra, at page 149 of 267 U.S., at page 284 of 45 S.Ct., this Court observed: 'The Fourth Amendment is to be construed in the light of what was deemed an unreasonable search and seizure when it was adopted, and in a manner which will conserve public interests as well as the interests and rights of individual citizens.' We believe that the result reached today is not consistent with judicial authority as it existed before the adoption of the Fourth Amendment nor as it has developed since that time. Nor do we feel that the decision commends itself as adapted to conserve vital public and individual interests. Heretofore it has been thought that where ofenforcement of the law have lawfully enficers charged with the responsibility of tered premises and executed a valid arrest, a reasonable accommodation of the interests of society and the individual permits such officials to seize instrumentalities of the crime and contraband materials in open view of the arresting officer. The Court would now condition this right of seizure after a valid arrest upon an ex post facto judicial judgment of whether the arresting officers might have obtained a search warrant. At best, the operation of the rule which the Court today enunciates for the first time may be expected to confound confusion in a field already replete with complexities. 1 Subsequently, petitioners moved the District Court to order the return of the property seized and to suppress its use as evidence. 1947, 70 F.Supp. 764. The motion was denied. The order was affirmed by the Circuit Court of Appeals in a per curiam statement. 1947, 3 Cir., 163 F.2d 828. 2 See §§ 2803, 2810, 2812, 2814, 2831, 2833 of the Internal Revenue Code, 26 U.S.C.A. Int.Rev.Code, §§ 2803, 2810, 2812, 2814, 2831, 2833. 3 Boyd v. United States, 1886, 116 U.S. 616, 623, 624, 6 S.Ct. 524, 528, 529, 29 L.Ed. 746; Weeks v. United States, 1914, 232 U.S. 383, 392, 393, 34 S.Ct. 341, 344, 58 L.Ed. 652 L.R.A.1915B, 834, Ann.Cas.1915C, 1177; Gouled v. United States, 1921, 255 U.S. 298, 309, 41 S.Ct. 261, 265, 65 L.Ed. 647; Carroll v. United States, 1925, 267 U.S. 132, 149, 150, 45 S.Ct. 280, 293, 284, 69 L.Ed. 543, 39 A. 269 U.S. 20, 30, 46 S.Ct. 4, 5, 70 L.Ed. 145, 51 A.L.R. 409; Marron v. United States, 1927, 275 U.S. 192, 199, 48 S.Ct. 74, 77, 72 L.Ed. 231; United States v. Lefkowitz, 1932, 285 U.S. 452, 465, 466, 52 S.Ct. 420, 423, 424, 76 L.Ed. 877, 82 A.L.R. 775; Harris v. United States, 1947, 331 U.S. 145, 154, 67 S.Ct. 1098, 1103, 91 L.Ed. 1399. 4 Samuel v. Payne, 1780, 1 Doug.K.B. 359; Wakely v. Hart, 1814, 6 Bin., Pa., 316. And see 2 Hale, Pleas of the Crown 85—97; 4 Blackstone, Commentaries 292—293; Wilgus, Arrest Without a Warrant, 22 Mich.L.Rev. 541, 673. 5 United States v. Daison, D.C., 1923, 288 F. 199; Rohan v. Sawin, 1850, 5 Cush., Mass., 281; Wade v. Chaffee, 1865, 8 R.I. 224, 5 Am.Rep. 572. 6 Cf. Kurtz v. Moffitt, 1885, 115 U.S. 487, 498, 499, 6 S.Ct. 148, 151, 152, 29 L.Ed. 458. 7 And see id. 269 U.S. at pages 32, 33, 46 S.Ct. at page 6.
01
334 U.S. 717 68 S.Ct. 1223 92 L.Ed. 1676 WESTv.OKLAHOMA TAX COMMISSION. No. 489. Argued March 29, 30, 1948. Decided June 14, 1948. On Appeal from the Supreme Court of the State of Oklahoma. Mr. Frank T. McCoy, of Pawhuska, Okl., for appellant. Messrs. R. F. Barry, of Oklahoma City, and Joe M. Whitaker, of Eufaula, Okl., for appellee. Mr. Justice MURPHY delivered the opinion of the Court. 1 This appeal concerns the power of the State of Oklahoma to levy an inheritance tax on the estate of a restricted Osage Indian. Specifically, the problem is whether property held in trust by the United States for the benefit of the Indian may be included within the taxable estate. 2 Charles West, Jr., was a restricted, fullblood, unallotted, adult Osage Indian. He died intestate in 1940, a resident of Oklahoma. No certificate of competency was ever issued to him. Surviving him was his mother, appellant herein, who is a restricted, full-blood Osage Indian. The entire estate passed to her as the sole heir at law.1 3 The Oklahoma Tax Commission entered an order levying a tax on the transfer of the net estate, valued at $111,219.18. With penalties, the total tax imposed was $5,313.35. Appellant made timely objection to the inclusion of certain items in the taxable estate. These items formed the bulk of the estate and had been held in trust for the decedent by the United States, acting through the Secretary of the Interior. Act of June 28, 1906, 34 Stat. 539, as amended, 41 Stat. 1249, 45 Stat. 1478, 52 Stat. 1034. The trust properties involved were as follows: 4 (1) One and 915/2520ths Osage mineral headrights. This item represented the decedent's undivided interest in the oil, gas, coal and other minerals under the lands in Osage County, Oklahoma, said minerals having been reserved to the use of the Osage Tribe by the Act of June 28, 1906.2 5 (2) Surplus funds in the United States Treasury, representing accruals of income to the decedent from the headrights. 6 (3) Stocks and bonds purchased by and in the name of the United States and held for the decedent by the Secretary of the Interior. These purchases were made with the surplus funds accruing from the headrights. 7 (4) Trust funds in the hands of the Treasurer of the United States, representing decedent's share of the proceeds of the sale of the Osage Tribe's lands in Kansas. 8 (5) Personal property purchased with surplus funds. 9 Appellant claimed that these properties were immune from state taxation by virtue of the relevant provisions of the Constitutin , treaties and laws of the United States; hence the Oklahoma Inheritance and Transfer Tax Act of 1939, Title 68 O.S.1941, §§ 989—989t, which authorized the assessment on the properties was invalid in this respect. The Oklahoma Tax Commission rejected this contention and the Supreme Court of Oklahoma affirmed, 199 Okl. —-, 193 P.2d 1017.DP It is essential at the outset to understand the history and nature of the arrangement whereby the United States holds in trust the properties involved in this case. See Cohen, Handbook of Federal Indian Law (1945) 446—455. In 1866, the United States and the Cherokee Nation of Indians executed a comprehensive treaty covering their various relationships. 14 Stat. 799, 804. It was there agreed that the United States might settle friendly Indians in certain areas of Cherokee territory, including what is now Osage County, Oklahoma; these areas had previously been conveyed by the United States to the Cherokees. The treaty further provided that the areas in question were to be conveyed in fee simple to the tribes settled by the United States 'to be held in common or by their members in severalty as the United States may decide.' 10 The Osage Indians subsequently moved to the Indian Territory and settled in what is now Osage County. In 1883, pursuant to the 1866 treaty, the Cherokees conveyed this area to the United States 'in trust nevertheless and for the use and benefit of the said Osage and Kansas Indians.' It is significant that fee simple title to the land was not conveyed at this time to the Osages; instead, the United States received that title as trustee for the Osages. Nor was any distinction here made between the land and the minerals thereunder, legal title to both being transferred to the United States. 11 On June 28, 1906, the Osage Allotment Act, providing for the distribution of Osage lands and properties, became effective. 34 Stat. 539. See Levindale Lead & Zinc Mining Co. v. Coleman, 241 U.S. 432, 36 S.Ct. 644, 60 L.Ed. 1080. Provision was there made for the allotment to each tribal member of a 160-acre homestead, plus certain additional surplus lands. These allotted lands, said § 7, were to be set aside 'for the sole use and benefit of the individual members of the tribe entitled thereto, or to their heirs, as herein, provided.' The homestead was to be inalienable and nontaxable for 25 years or during the life of the allottee. The surplus lands, however, were to be inalienable for 25 years and nontaxable for 3 years, except that the Secretary of the Interior might issue a certificate of competence to an adult, authorizing him to sell all of his surplus lands; upon the issuance of such a certificate, or upon the death of the allottee, the surplus lands were to become immediately taxable. § 2, Seventh; Choteau v. Burnet, 283 U.S. 691, 51 S.Ct. 598, 75 L.Ed. 1353. 12 Section 3 of the Act stated that the minerals covered by these lands were to be reserved to the Osage Tribe for a period of 25 years and that mineral leases and royalties were to be approved by the United States. Section 4 then provided that all money due or to become due to the tribe was to be held in trust by the United States for 25 years;3 but these funds were to be segregated and credited pro rata to the individual members or their heirs, with interest accruing and being payable quarterly to the members. Royalties from the mineral leases were to be placed in the Treasury of the United States to the credit of the tribal members and distributed to the individual members in the same manner and at the same time as interest payments on other moneys held in trust. In this connection, it should be noted that quarterly payments of interest and royalties became so large that Congress later limited the amount of payments that could be made to those without certificates of competence; provision was also made for investing the surplus in bonds, stocks, etc.4 13 According to § 5 of this 1906 statute, at the end of the 25-year trust period 'the lands, mineral interests, and moneys, herein provided for and held in trust by the United States shall be the absolute property of the individual members of the Osage tribe, according to the role herein provided for, or their heirs, as herein provided, and deeds to said lands shall be issued to said members, or to their heirs as herein provided, and said moneys shall be distributed to said members, or to their heirs, as herein provided, and said members shall have full control of said lands, moneys, and mineral interests, except as hereinbefore provided.' It was also stated in § 2, Seventh, that the minerals upon the allotted lands 'shall become the property of the individual owner of said land' at the expiration of 25 years, unless otherwise provided by Congress. 14 Moreover, § 6 provided that the lands, moneys and mineral interests of any deceased member of the Osage Tribe 'shall descend to his or her legal heirs, according to the laws of the Territory of Oklahoma.' Congress subsequently provided, in § 8 of the Act of April 18, 1912, 37 Stat. 86, 88, that any adult member of the tribe who was not mentally incompetent could by will dispose of 'any or all of his estate, real, personal, or mixed, including trust funds, from which restrictions as to alienation have not been removed,' in accordance with the laws of the State of Oklahoma. Such wills could not be probated, however, unless approved by the Secretary of the Interior before the death of the testator. 15 The 25-year trust period established by the 1906 statute has been extended several times by Congress, first to 1946 (41 Stat. 1249), then to 1958 (45 Stat. 1478), and finally to 1984 (52 Stat. 1034). The last extension provided that the 'lands, moneys, and other properties now or hereafter held in trust or under the supervision of the United States for the Osage Tribe of Indians, the members thereof, or their heirs and assigns, shall continue subject to such trusts and supervision until January 1, 1984, unless otherwise provided by Act of Congress.' 16 Application of the foregoing provisions to the estate in issue produces this picture: Legal title to the mineral interests, the funds and the securities constituting the corpus of the trust estate is in the United States as trustee. The United States received legal title to the mineral interests in 1883, when it took what is now Osage County from the Cherokees in trust for the Osages; and that title had not subsequently been transferred. Legal title to the various funds and securities adhered to the United States as the pertinent trusts were established and developed. Beneficial title to these properties was vested in the decedent and is now held by his sole heir the appellant. The beneficiary at all times has been entitled to at least a limited amount of interest and royalties arising out of the corpus. And the beneficiary has a reversionary interest in the corpus, an interest that will materialize only when the legal title passes from the United States at the end of the trust period. Bt until that period ends, the beneficiary has no control over the corpus. See Globe Indemnity Co. v. Bruce, 10 Cir., 81 F.2d 143, 150. 17 Since 1819, when McCulloch v. State of Maryland, 4 Wheat, 316, 4 L.Ed. 579, was decided, it has been established that the property of the United States is immune from any from of state taxation, unless Congress expressly consents to the imposition of such liability. Van Brocklin v. State of Tennessee, 117 U.S. 151, 6 S.Ct. 670, 29 L.Ed. 845; United States v. Allegheny County, 322 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209. This tax immunity grows out of the supremacy of the Federal Government and the necessity that it be able to deal with its own property free from any interference or embarrassment that state taxation might impose. McCulloch v. State of Maryland, supra; Wisconsin Central Railroad Co. v. Price County, 133 U.S. 496, 10 S.Ct. 341, 33 L.Ed. 687. 18 In United States v. Rickert, 188 U.S. 432, 23 S.Ct. 478, 47 L.Ed. 532, the same rule was held to apply where the United States holds legal title to land in trust for an Indian or a tribe. The United States there held legal title to certain lands in trust for a band of Sioux Indians which was in actual possession of the lands. This Court held that neither the lands nor the permanent improvements thereon were subject to state or local ad valorem taxes. It was emphasized that the fee title remained in the United States in obvious execution of its protective policy toward its wards, the Sioux Indians. To tax these lands and the improvements thereon, without congressional consent, would be to tax a means employed by the Government to accomplish beneficent objects relative to a dependent class of individuals. Moreover, the United States had agreed to convey the lands to the allottees in fee at the end of the trust period 'free of all charge or incumbrances whatever.' If the tax in question were assessed and unpaid, the lands could be sold by the tax authorities. The United States would thus be so burdened that it could not discharge its obligation to convey unencumbered land without paying the taxes imposed from year to year. 19 Further application of the tax immunity rule to land held in trust by the United States for the benefit of Indians was made in McCurdy v. United States, 264 U.S. 484, 44 S.Ct. 345, 68 L.Ed. 801. That case involved surplus lands that had been allotted to members of the Osage Tribe. It will be recalled that the Osage Allotment Act of June 28, 1906, had made these surplus lands expressly taxable after three years or at the death of the allottee. The allottees in the McCurdy case died within the three-year period but before deeds to their allotted lands had been executed and delivered to them. Oklahoma sought to place a tax on the lands, the taxable date being within the three-year period and before the execution and delivery of the deeds to the heirs of the allottees. This Court held that legal title to the lands in issue was still in the United States as trustee on the taxable date, title not passing until the execution and delivery of the deeds. In reliance on the Rickert case, the conclusion was reached that the lands were not taxable while held in trust by the United States. See also United States v. Board of Com'rs of Fremont County, Wyo., 10 Cir., 145 F.2d 329; United States v. Thurston County, 8 Cir., 143 F. 287. 20 Since the property here involved is all held in trust by the United States for the benefit of the decedent and his heirs, it is thought to be immune from any form of state taxation under the decisions in the Rickert and McCurdy cases. Reference is made to certain provisions of the Oklahoma Inheritance and Transfer Tax Act which indicate and the inheritance tax in issue might have a very real and direct effect upon the property to which the United States holds title, an effect similar to that which was emphasized in the Rickert case. The Act applies, of course, to the transfer of estates held in trust. § 989. Specific provisioni § then made in § 989i that 'Taxes levied under this Act shall be and remain a lien upon all the property transferred until paid.' Provision is also made for the sale of estate property if necessary to satisfy the tax. §§ 989i and 989l. It is therefore possible that if the tax were unpaid Oklahoma might try to place a lien upon the property which is being transferred, property as to which the United States holds legal title. Complications might arise as to the validity of such a lien. And the United States would be burdened to the extent of opposing the imposition of the lien or seeing that the tax was paid so as to avoid the lien. 21 Moreover, insofar as the inheritance tax is paid out of the surplus and trust funds held by the United States, there is a depletion of the corpus to which the United States holds legal title. Such depletion makes that much smaller the estate which the Government has seen fit to hold in trust for the decedent's heirs. If the estate is to be tapped repeatedly by Oklahoma until 1984 by the deaths of the various heirs, the result may be a substantial decrease in the amount then available for distribution. 22 But our decision in Oklahoma Tax Commission v. United States, 319 U.S. 598, S.Ct. 1284, 87 L.Ed. 1612, has foreclosed an application of the Rickert and McCurdy cases to the estate and inheritance tax situation. Among the properties involved in the Oklahoma Tax Commission case were restricted cash and securities, which could not be freely alienated or used by the Indians without the approval of the Secretary of the Interior. We held that the restriction, without more, was not the equivalent of a congressional grant of estate tax immunity for the transfer of the cash and securities. Moreover, express repudiation was made of the concept that these restricted properties were federal instrumentalities and therefore constitutionally exempt from estate tax consequences. See also Helvering v. Mountain Producers Corporation, 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907. The very foundation upon which the Rickert case rested was thus held to be inapplicable. 23 We fail to see any substantial difference for estate tax purposes between restricted property and trust property. The power of Congress over both types of property is the same. Board of Commissioners of Creek County v. Seber, 318 U.S. 705, 717, 63 S.Ct. 920, 926, 87 L.Ed. 1094; United States v. Ramsey, 271 U.S. 467, 471, 46 S.Ct. 559, 560, 70 L.Ed. 1039. Both devices have the common purpose of protecting those who have been found by Congress to be unable yet to assume a fully independent status relative to property. The effect which an estate or inheritance tax may have is the same in both instances; liens may be placed on both restricted and trust properties and lead to complications; and both types of property may of necessity be depleted to assure payment of the tax. The fact that the United States holds legal title as to trust property but not as to restricted property affords no distinguishing characteristic from the standpoint of an estate tax. In addition, Congress has given no indication whatever that trust properties in general are to be given any greater tax exemption than restricted properties. Hence the Oklahoma Tax Commission case must control our disposition of this proceeding. 24 Implicit in this Court's refusal to apply the Rickert doctrine to an estate or inheritance tax situation is a recognition that such a tax rests upon a basis different from that underlying a property tax. An inheritance or estate tax is not levied on the property of which an estate is composed. Rather it is imposed upon the shifting of economic benefits and the privilege of transmitting or receiving such benefits. United States Trust Co. of New York v. Helvering, 307 U.S. 57, 60, 59 S.Ct. 692, 693, 83 L.Ed. 1104; Whitney v. State Tax Commission, 309 U.S. 530, 538, 60 S.Ct. 635, 638, 84 L.Ed. 909. In this case, for example, the decedent had a vested interest in his Osage headright; an he had the right to receive the annual income from the trust properties and to receive all the properties at the end of the trust period. At his death, these interests and rights passed to his heir. It is the transfer of these incidents, rather than the trust properties themselves, that is the subject of the inheritance tax in question. In this setting, refinements of title are immaterial. Whether legal title to the properties is in the United States or in the decedent and his heir is of no consequence to the taxability of the transfer. 25 The result of permitting the imposition of the inheritance tax on the transfer of trust properties may be, as we have noted, to deplete the trust corpus and to create lien difficulties. But those are normal and intended consequences of the inheritance tax. And until Congress has in some affirmative way indicated that these burdens require that the transfer be immune from the inheritance tax liability, the Oklahoma Tax Commission case permits that liability to be imposed. But that case also makes clear that should any of the properties transferred be exempted by Congress from direct taxation they cannot be included in the estate for inheritance tax purposes. No such properties are here involved, however. 26 We have considered the other points raised by the appellant but deem them to be without merit. The judgment below is therefore affirmed. 27 Affirmed. 28 The CHIEF JUSTICE, Mr. Justice FRANKFURTER and Mr. Justice DOUGLAS dissent. 1 The decedent was also survived by a widow. But she was prohibited by law from inheriting any part of the estate unless she was of Indian blood, a matter which was in dispute. A settlement was reached whereby the widow received a certain amount from the estate, apparently in return for giving up her claim as an heir. 2 An Osage headright has been defined by one court as 'the interest that a member of the tribe has in the Osage tribal trust estate, and the trust consists of the oil, gas, and mineral rights, and the funds which were placed to the credit of the Osage tribe, all fully set out in the above act (Act of June 28, 1906, 34 Stat. 539).' In re Denison, D.C., 38 F.2d 662, 664. Another court has made this definition: 'The right to receive the trust funds and the mineral interests at the end of the trust period, and during that period to participate in the distribution of the bonuses and royalties arising from the mineral estates and the interest on the trust funds, is an Osage headright.' Globe Indemnity Co. v. Bruce, 10 Cir., 81 F.2d 143, 148, 149. Headrights are not transferable and do not pass to a trustee in bankruptcy. Taylor v. Tayrien, 10 Cir., 51 F.2d 884; Taylor v. Jones, 10 Cir., 51 F.2d 892. 3 The trust under which these funds were to be held was established in 1865 by treay between the United States and the Great and Little Osage Indians, 14 Stat. 687. By the terms of this treaty, the proceeds of the sale of Osage lands in Kansas were to be placed in the United States Treasury to the credit of the tribe. Provisions for carrying out the terms of this treaty wave made by Congress in 1880, 21 Stat. 291. 4 By the Act of March 3, 1921, 41 Stat. 1249, Congress provided that so long as the income should be sufficient the adult Osage Indian without a certificate of competency should be paid $1,000 quarterly. See also Act of Feb. 27, 1925, 43 Stat. 1008. In the Act of June 24, 1938, 52 Stat. 1034, it was provided that where the restricted Osage had surplus funds in excess of $10,000 he was to be paid $1,000 quarterly, but if he had surplus funds of less than $10,000 he was to receive quarterly only his current income, not to exceed $1,000 quarterly.
78
334 U.S. 653 68 S.Ct. 1260 92 L.Ed. 1633 CENTRAL GREYHOUND LINES, INC., OF NEW YORKv.MEALEY et al., State Tax Commission of the State of New York. No. 14. Argued Oct. 13, 1947. Decided June 14, 1948. Mr. Tracy H. Ferguson, of Syracruse, N.Y., for appellant. Mr. John C. Crary, Jr., of Albany, N.Y., for appellees. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 This is a proceeding arising out of a determination by the Tax Commission of the State of New York, sustained by the courts of the State, whereby § 186-a of the New York Tax Law, Consol. Laws, c. 62, was construed to impose a tax on appellant's gross receipts from transportation between points within the State but over routes that utilize the highways of Pennsylvania and New Jersey. The appellant contents, against contrary conclusions below, that since the taxed transportation was interstate commerce, New York may not constitutionally tax the gross receipts from such transportation. In any event, it submits that the State may validly tax only so much of these gross receipts as are attributable to the mileage within the State. Before dealing with these issues, we must dispose of an objection to our right to deal with them. 2 The State urges that the constitutional claims here pressed by the appellant were not passed upon by the New York Court of Appeals. The record does not sustain this challenge to our jurisdiction. Th constitutional issues were undeniably raised before the State Tax Commission and on review before the Appellate Division of the Supreme Court, 266 App.Div. 648, 44 N.Y.S.2d 652. The suggestion that these issues were not before the Court of Appeals is based on its statement that the question urged there was 'not one of constitutional taxing power but of statutory construction.' 296 N.Y. 18, 24, 68 N.E.2d 855, 858. But the court proceeded to pass upon the constitutional issues and expressly held that 'there is no constitutional objection to taxation of total receipts here. This is not interstate commerce. * * *' 296 N.Y. at page 25, 68 N.E.2d at page 859. Its amended remittitur stated explicitly that a question arising under the Commerce Clause of the Constitution 'was presented and passed upon,' and that in sustaining the tax the court 'held that the aforesaid statute as so construed is not repugnant to that provision of the Federal Constitution.' This amendment was not a retrospective injection of a non-existent federal question, but a formal certification that a federal claim had been presented and was adjudicated by the Court of Appeals. It is properly here for review. § 237(a) of the Judicial Code, 28 U.S.C. § 344(a), 28 U.S.C.A. § 344(a). 3 This case serves to remind once more that courts do not adjudicate abstractions, such as, 'What is interstate commerce?' Also, it again illustrates that even if it be found that certain transactions in fact constitute interstate commerce, such conclusion does not answer the further inquiry whether a particular assertion of power by a State over such transactions offends the Commerce Clause. Article 1, § 8, cl. 3. 4 It is too late in the day to deny that transportation which leaves a State and enters another State is 'Commerce * * * among the several states' simply because the points from and to are in the same State. Hanley v. Kansas City Southern R. Co., 187 U.S. 617, 23 S.Ct. 214, 215, 47 L.Ed. 333; Western Union Tel. Co. v. Speight, 254 U.S. 17, 41 S.Ct. 11, 65 L.Ed. 104; Missouri Pacific R. Co. v. Stroud, 267 U.S. 404, 45 S.Ct. 243, 69 L.Ed. 683. In reaching the opposite conclusion the State court relied upon three decisions of this Court: Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 12 S.Ct. 806, 36 L.Ed. 672; Ewing v. Leavenworth, 226 U.S. 464, 33 S.Ct. 157, 57 L.Ed. 303; People of State of New York ex rel. Cornell Steamboat Co. v. Sohmer, 235 U.S. 549, 35 S.Ct. 162, 59 L.Ed. 355. The Ewing case was based on the Lehigh Valley case; the Cornell Steamboat case relied on the Ewing and the Lehigh Valley decisions. The holding in the Lehigh Valley case was defined with precision by Mr. Justice Holmes in the Hanley case. He accounted for some State decisions which disregarded interstate commerce as a matter of fact, tested by the actual transaction, as 'made simply out of deference to conclusions drawn from Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 12 S.Ct. 806, 36 L.Ed. 672, and we are of opinion that they carry their conclusions too far.' He pointed out that in the Lehigh Valley case 'the tax 'was determined in respect of receipts for the proportion of the transportation within the State' 145 U.S. 201, 12 S.Ct. 808, 36 L.Ed. 672. Such a proportioned tax has been sustained in the case of commerce admitted to be interstate.' Hanley v. Kansas City Southern R. Co., supra, 187 U.S. at page 621, 23 S.Ct. at page 216, 47 L.Ed. 333. This limited scope of the Lehigh Valley case was the basis of decision in United States Express Company v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459. In that case, the Minnesota Supreme Court had interpreted the Lehigh Valley decision 'as allowing a recovery of taxes upon that proportion of the earnings derived from the carriage wholly within the state This seems to us the safer rule, and avoids any question of taxing interstate commerce, and we adopt and apply it to this case. Nine per cent. of the taxes recovered on this class of earnings should be deducted from the amount of the recovery.' 114 Minn. 346, 350, 131 N.W. 489, 490, 37 L.R.A., N.S., 1127. On writ of error to the Supreme Court of Minnesota, this Court upheld the State court's application of the Lehigh Valley decision. 223 U.S. 335, 341, 342, 32 S.Ct. 211, 213, 56 L.Ed. 459. 5 In view, however, of some contrariety of views to which the opinion in the Lehigh Valley case has given rise, it calls for a more candid consideration than merely quoting phrases from it congenial to a particular decision. The Lehigh Valley case was this. The Lehigh Valley Railroad Company attacked the validity of a Pennsylvania statute taxing the company's gross receipts from its line between Mauch Chunk, Pennsylvania, and Phillipsburg, New Jersey. The Pennsylvania Railroad operated a connecting line between Phillipsburg and Philadelphia. The Lehigh and the Pennsylvania had arranged for continuous transportation of through passengers and freight between Mauch Chunk and Philadelphia. The trial court had found, as appears from the record, that the 'total receipts from this transportation, seven per cent. of which were collected by the Lehigh Valley Railroad Company at the point of shipment and the remainder by the Pennsylvania Railroad Company at point of destination, were apportioned between the companies upon a mileage basis—that is to say, each company's share was in the proportion that the number of miles carried by it bore to the total number of miles carried.' It sustained the tax on the ground that the transportation was in substance 'purely internal.' The Supreme Court of Pennsylvania affirmed on the trial court's opinion. Lehigh Valley R. Co. v. Commonwealth, 1 Monag., Pa., 45, 17 A. 179. 6 When the case got here, the Lehigh Valley contended that the transportation between Mauch Chunk and Phillipsburg constituted interstate commerce and therefore beyond the taxing power of Pennsylvania, because Phillipsburg, while on the Delaware River border between Pennsylvania and New Jersey, was in New Jersey and reached by the railroad via an interstate bridge. Pennsylvania, on the other hand, ignoring the stretch over the interstate bridge (apparently on the theory of de minimis) insisted that the gross receipts were deemed to be 'wholly from traffic within the state' because so treated by the railroad itself. This was based on the fact that the Lehigh Valley and the Pennsylvania Railroad had apportioned the receipts from their through traffic, and the amount of the gross receipts which Pennsylvania taxed was the proportion which the railroads inter se attributed to the Lehigh Valley as its share of the earnings within Pennsylvania. This fiscal arrangement between the two railroads is the explanation and justification for the statement in this Court's opinion that 'The tax under consideration here was determined in respect of receipts for the proportion of the transportation within the state.' 145 U.S. at page 201, 12 S.Ct. at page 808, 36 L.Ed. 672. And so, naturally enough, in the Hanley case the Court called the tax which had been sustained in the Lehigh Valley case 'a proportioned tax,' and as such it 'had been sustained in the case of commerce admitted to be interstate.' Hanley v. Kansas City Southern R. Co., supra, at page 621, 23 S.Ct. at page 216, 47 L.Ed. 333. 7 In support of the proposition that 'a proportioned tax has been sustained in the case of commerce admitted to be interstate' the Hanley case invoked State of Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994. Unfortunately, the opinion in Lehigh Valley did not rely on that case. It did not even mention it. This silence is explicable by the fact that only a few months before, in the same term, the Court had sharply divided on this very issue in the Grand Trunk case. In the Lehigh Valley case Mr. Chief Justice Fuller spoke for a unanimous court. One is entitled to infer that such accord was obtainable by not renewing the battle of the Grand Trunk case. It would not be the firstt ime in the history of this Court that agreement could be reached by one mode of reasoning but not by another. Mr. Justice Bradley and his fellow dissenters in the Grand Trunk case were evidently content to sustain the Pennsylvania tax as a tax on 'domestic transportation,' 'internal intercourse,' in short as not 'interstate commerce,' for thereby they would not bring into question the views so vigorously expressed by them a few months before. 8 It was reasonable enough to disregard the short distance in which the transportation in the Lehigh Valley case went over the interstate bridge on the Delaware River but otherwise was wholly in Pennsylvania, and to treat it as de minimis when the railroad's accounting itself treated the receipts as proportioned. 'Regulation and commerce among the states both are practical rather than technical conceptions, and, naturally, their limits must be fixed by practical lines.' Galveston, Harrisburg and San Antonio R. Co. v. Texas, 210 U.S. 217, 225, 28 S.Ct. 638, 639, 52 L.Ed. 1031. But to label transportation across an interstate stream 'local commerce' for some purposes when it is 'interstate commerce' in other relations, see, e.g., Covington & Cincinnati Bridge Co. v. Kentucky, 154 U.S. 204, 14 S.Ct. 1087, 38 L.Ed. 962, is to use loosely terms having connotations of constitutional significance. To call commerce in fact interstate 'local commerce' because under a given set of circumstances, as in the Lehigh Valley case, a particular exertion of State power is not rendered invalid by the Commerce Clause is to indulge in a fiction. Especially in the disposition of constitutional issues are legal fictions hazardous, because of the risk of confounding users and not merely readers. The kind of confusion to which the Lehigh Valley opinion has given rise results from employing a needless fiction—calling commerce local which in fact is interstate—as a manner of stating that a particular exercise of State power is not invalid even though it affects interstate commerce. The difficult task of determining whether a phase of commerce, concededly interstate, is subject to a particular incidence of State regulation, through taxation or otherwise, is not lessened by calling interstate commerce local commerce in order to sustain its local control. To state this persistent and protean problem of our federalism in the form of a question-begging fiction, is not to answer it. 9 This brings us to the facts of the case before us. New York claims the right to tax the gross receipts from transportation which traverses New Jersey and Pennsylvania as well as New York. To say that this commerce is confined to New York is to indulge in pure fiction. To do so, does not eliminate the relation of Pennsylvania and New Jersey to the transactions nor eliminate the benefits which those two States confer upon the portions of the transportation within their borders. Neither their interests nor their responsibilities are evaporated by the verbal device of attributing the entire transportation to New York. There is no suggestion here that the interstate routes were utilized as a means of avoiding even in part New York's taxation. Compare, e.g., Eichholz v. Public Service Commission of Missouri, 306 U.S. 268, 59 S.Ct. 532, 83 L.Ed. 641, and Ryan v. Pennsylvania Public Utility Commission, 143 Pa.Super. 517, 17 A.2d 637. We are not dealing with a necessary deviation or a calculated detour. Nor is New York seeking to tax transactions physically outside its borders but so trifling in quantity to the New York commerce, of which they form a part, as to be constitutionally insignificant. New York seeks to tax the total receipts from transportation of which nearly 43% of the mileage lay in New Jersey and Pennsylvania. Transactions which to such a substantial extent actually take place in New Jersey and Pennsylvania cannot be deemed legally to take place in New York. 10 Of course we are dealing here with 'interstate commerce.' Of course Congress did not exceed t § power to regulate such commerce when in the Motor Carrier Act of 1935 it explicitly included commerce such as that before us within the scope of that Act: 'The term 'interstate commerce' means commerce between any place in a State and any place in another State or between places in the same State through another State, whether such commerce moves wholly by motor vehicle or partly by motor vehicle and partly by rail, express, or water.' 49 Stat. 543, 544, 49 U.S.C. § 303(a)(10), 49 U.S.C.A. § 303(a)(10). In a case like this nothing is gained, and clarity is lost, by not starting with recognition of the fact that it is interstate commerce which the State is seeking to reach and candidly facing the real question whether what the State is exacting is a constitutionally fair demand by the State for that aspect of the interstate commerce to which the State bears a special relation. See Union Brokerage Co. v. Jensen, 322 U.S. 202, 64 S.Ct. 967, 88 L.Ed. 1227, 152 A.L.R. 1072, and Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28, 68 S.Ct. 358. Such being the real issue inevitably 'nice distinctions are to be expected.' Galveston, Harrisburg and San Antonio R. Co. v. Texas, supra, 210 U.S. at page 225, 28 S.Ct. at page 639, 52 L.Ed. 1031. But such distinctions would be clearer and more reasonably made if, for instance, a flat privilege tax applied by a municipality to an express company shipping packages between points within a State, but over routes which for a very short distance pass out of the State, had been frankly sustained on the ground that the tax did not burden interstate commerce in the constitutional sense rather than on the ground that it was not interstate commerce. Compare Ewing v. Leavenworth, supra, with Kirmeyer v. Kansas, 236 U.S. 568, 35 S.Ct. 419, 59 L.Ed. 721. Again, it would have made for a less dialectical, if not more coherent, development of the law to sustain a New York gross receipts tax on a New York corporation, engaged in towing vessels between ports in the State of New York on the Hudson River traversing the New Jersey side but not touching its shore, on the ground that upon the facts of that case, and more particularly New Jersey's relation to the transactions, (very different from those now before us), New York was not burdening interstate commerce, rather than to hold that 'transportation between the ports of the state is not interstate commerce, excluded from the taxing power of the state, because as to a part of the journey the course is over the territory of another state.' Compare People of State of New York ex rel. Cornell Steamboat Co. v. Sohmer, supra, 235 U.S. at page 560, 35 S.Ct. at page 164, 59 L.Ed. 355, with Cornell Steamboat Co. v. United States, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978. 11 It is significant that, so far as we are advised, no State other than New York seeks to tax the unapportioned receipts from transportation going through more than one State, (except to an extent so insignificant as to be disregarded), merely because such transportation returns to the State of its origin. If New Jersey and Pennsylvania could claim their right to make appropriately apportioned claims against that substantial part of the business of appellant to which they afford protection, we do not see how on principle and in precedent such a claim could be denied. This being so, to allow New York to impose a tax on the gross receipts for the entire mileage—on the 57.47% within New York as well as the 42.53% without—would subject interstate commerce to the unfair burden of being taxed as to portions of its revenue by States which give protection to those portions, as well as to a State which does not. This is not to conjure up remote possibilities. Pennsylvania's claim to tax a portion of appellant's gross receipts from the transportation which New York has taxed is not a matter of speculation. Apparently, Pennsylvania has so taxed since 1931. Penn.Laws 1931, p. 694, No. 255, as amended by Act of June 5, 1947, P.L. 451, No.2 04, 72 P.S. §§ 2184, 2185. New York does not deny that Pennsylvania in fact so taxes, though there is dispute as to the meaning of the formula by which she does so. But even if neither Pennsylvania nor New Jersey sought to tax their proportionate share of the revenue from this transportation, such abstention would not justify the taxing by New York of the entire revenue. Freeman v. Hewit, 329 U.S. 249, 256, 67 S.Ct. 274, 288, 91 L.Ed. 265. But its very nature an unapportioned gross receipts tax makes interstate transportation bear more than 'a fair share of the cost of the local government whose protection it enjoys.' Id., 329 U.S. at page 253, 67 S.Ct. at page 277, 91 L.Ed. 265. The vice of such a tax is that it lays 'a direct burden upon every transaction in (interstate) commerce by withholding, for the use of the state, a part of every dollar received in such transactions.' Crew Levick Co. v. Pennsylvania, 245 U.S. 292, 297, 38 S.Ct. 126, 128, 62 L.Ed. 295; see Adams Manufacturing Co. v. Storen, 304 U.S. 307, 311, 58 S.Ct. 913, 915, 82 L.Ed. 1365, 117 A.L.R. 429; Freeman v. Hewit, supra; Joseph v. Carter and Weekes Stevedoring Co., 330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993. 12 However, while the New York courts have construed the statute as levying an unapportioned gross receipts tax on this transaction, the entire tax need not fall. The tax may be 'fairly apportioned' to the 'business done within the state by a fair method of apportionment.' Western Livestock v. Bureau of Internal Revenue, 303 U.S. 250, 255, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. There is no dispute as to feasibility in apportioning this tax. On the record before us the tax may constitutionally be sustained on the receipts from the transportation apportioned as to the mileage within the State. See Ratterman v. Western Union Telegraph Co., 127 U.S. 411, 427, 428, 8 S.Ct. 1127, 1132, 32 L.Ed. 229. There is no question as to the fairness of the suggested method of apportionment. Compare State of Maine v. Grand Trunk R. Co., supra, with New Jersey Bell Telephone Co. v. State Board of Taxes and Assessments, 280 U.S. 338, 50 S.Ct. 111, 74 L.Ed. 463; cf. Wallace v. Hines, 253 U.S. 66, 40 S.Ct. 435, 64 L.Ed. 782. Both appellant and appellee have indicated here that, as a matter of construction, the statute under consideration permits such apportionment, but that is a matter for the New York courts to determine. 13 The judgment is reversed and the cause is remanded for further proceedings not inconsistent with this opinion. 14 Reversed and remanded. 15 Mr. Justice RUTLEDGE concurs in the result. 16 Mr. Justice MURPHY, with whom Mr. Justice BLACK and Mr. Justice DOUGLAS concur, dissenting. 17 A precise delineation of the controlling facts is essential to a determination of the constitutional issue involved in this appeal. That issue concerns an alleged conflict between the commerce clause of the Constitution of the United States and a New York statute taxing the gross income of utilities doing business within that state. Specifically, the problem relates to an application of the tax to the gross receipts from bus transportation originating and terminating in New York but passing through parts of New Jersey and Pennsylvania. 18 Section 186-a of the New York Tax Law is entitled 'Emergency tax on the furnishing of utility services.' It imposes a tax 'equal to two percentum of its gross income * * * upon every utility doing business in this state * * * in addition to any and all other taxes and fees imposed by any other provision of law for the same period.'1 The word 'utility' is defined to include every person 'subject to the supervision of either division of the state department of public service'2 and the words 'gross income' are defined to include 'receipts received in or by reason of any sale * * * made or service rendered for ultimate consumption or use by the purchaser in this state * * *.'3 19 Appellant is a New York corporation engaged in business as a common carrier by omnibus. It operates its buses both within and without New York and is subject to the supervision of the New York Public Service Commission. Hence it is a utility within the meaning of § 186-a. 20 Appellant operates buses over numerous routes from New York City to Buffalo and other cities in upstate New York, routes which cut across sections of New Jersey and Pennsylvania and which are the most direct ones possible. The controversy is concerned only with the taxation under § 186-a of that part of appellant's receipts derived from continuous transportation of passengers between New York points over such routes. Application of the tax to the receipts from transportation moving solely within New York is not contested; and receipts from transportation between New York points and out-of-state points have not been taxed. 21 At the hearing before the State Tax Commission relative to the contested tax, the parties agreed that the evidence would be limited to the operations over these routes during July, 1937, and that the conclusions to be drawn from such evidence would be applicable to all months subsequent thereto. The evidence which was introduced revealed that 57.47% of the total mileage of the journeys over the routes in question was traversed within New York, while 42.53% thereof was traversed within New Jersey and Pennsylvania. Although some transfers and stopovers in New Jersey and Pennsylvania were indicated, there was no showing that they were of a substantial number or that they were of such a nature as to break the transportation between New York points into two unrelated trips. The legal issues in the case have been predicated at all times upon the evidence that there was continuous transportation of passengers between New York points on single tickets and upon the evidence as to the percentage of the mileage traversed within and without New York. 22 The State Tax Commission construed § 186-a as applicable to appellant's total receipts from the transportation in issue, proration of the receipts in accordance with the mileage traversed in New York being considered unnecessary. So construed, § 186-a was held not to conflict with the commerce clause of the Federal Constitution. This ruling was sustained by the New York courts. 23 The crucial fact, from the constitutional standpoint, is the dual and unique character of transportation between termini in the same state where the territory of another state is traversed en route. Such transportation has both interstate and intrastate features. From the standpoint of physical movement, there is a crossing of state lines and a journey over territory belonging to more states than one—a movement that is undeniably interstate. At the same time, however, the business of transporting passengers or freight between points in the same state is essentially local in character despite the interstate movement. All of the essential elements of the commercial intercourse represented by the continuous transportation are resident in that one state. The parties to the transportation contract, the making of the contract and the service which is the subject of the contract are identified preeminently with that state. The whole purpose of the transaction is to transport the passengers or freight to a point within the same state as the point of origin. Passage through another state is a mere geographic incident in the consummation of this local transaction. While that passage may have interstate significance for other purposes, it cannot operate by itself to make interstate the commercial relationship underlying the continuous transportation. 24 And so within the narrow compass of this particular type of transportation it is something more than a fiction to say that both interstate and intrastate features are present. Cf. Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28, 68 S.Ct. 358. It is a e cognition of the hard realities of the situation. It is a realization that transporting persons between points in the same state is a business local in all its commercial connotations, even though there is a physical movement of an interstate character. Due respect for Mr. Justice Holmes' admonition that commerce among the states is a practical rather than a technical legal conception, Swift & Co. v. United States, 196 U.S. 375, 398, 25 S.Ct. 276, 280, 49 L.Ed. 518, forbids an indiscriminate application of the interstate label simply because state lines are crossed in the course of a particular business. Where local elements remain intact despite the interstate movement it is of the essence of practicality to give recognition to that fact. Such is the situation in this case. 25 This Court has long recognized that this type of transportation, unlike other types, is physically interstate and commercially local. And it has given life to that distinction so that the federal power over interstate commerce might remain effective without detracting unnecessarily from the scope of state power over those engaged in this narrow transportation sphere. Where the proposed state action is such as to create an actual or potential conflict with the federal authority arising out of the physical movement across state lines, the Court has emphasized the interstate aspect of the transportation in making the federal power supreme. Thus in Hanley v. Kansas City Southern R. Co., 187 U.S. 617, 23 S.Ct. 214, 47 L.Ed. 333, Congress was found to have the sole power to fix the rates for transportation of freight by rail between two points in Arkansas over a route passing through a part of the Indian Territory; Arkansas was accordingly precluded from the exercise of its ratemaking authority in this instance. Such transportation was said to be interstate, stress being laid upon the physical movement of the freight across and beyond the Arkansas border. See also Missouri Pacific R. Co. v. Stroud, 267 U.S. 404, 45 S.Ct. 243, 69 L.Ed. 683; Western Union Tel. Co. v. Speight, 254 U.S. 17, 41 S.Ct. 11, 65 L.Ed. 104; compare Wilmington Transportation Co. v. Railroad Commission, 236 U.S. 151, 35 S.Ct. 276, 59 L.Ed. 508. 26 But where the impact of state action is such as not to endanger or embarrass federal control over interstate movements, the Court has relied upon the local elements of the transportation in sanctioning the imposition of state authority. This has occurred in the setting of state gross receipts taxes and city license taxes levied on those engaged in the type of transportation here involved. Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 12 S.Ct. 806, 36 L.Ed. 672; United States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459; Ewing v. Leavenworth, 226 U.S. 464, 33 S.Ct. 157, 57 L.Ed. 303; Cornell Steamboat Co. v. Sohmer, 235 U.S. 549, 35 S.Ct. 162, 59 L.Ed. 355. In those cases the taxes were non-discriminatory in nature and interfered in no way with any regulations Congress might wish to impose by reason of the movements across state lines. The thrust of the taxes affected only the business of transporting articles between two points in the same state and the receipts derived therefrom. That business was considered to be of a local variety and a clear rejection was made of the contention that 'the mere passage over the soil of another state renders that business foreign which is domestic.' Lehigh Valley R. Co. v. Pennsylvania, supra, 145 U.S. at page 202, 12 S.Ct. at page 808, 36 L.Ed. 672. As stated in Cornell Steamboat Co. v. Sohmer, supra, 235 U.S. at page 560, 35 S.Ct. at page 164, 59 L.Ed. 355, 'But transportation between the ports of the state is not interstate commerce, excluded from the taxing power of the state, because as to a part of the journey the course is over the territory of another state.' 27 Room has thus been made in our federal system for a reasonable accommodation of the federal and state interests in regulating and taxing those engaged in this unq ue transportation. See Cornell Steamboat Co. v. United States, 321 U.S. 634, 639, note 4, 64 S.Ct. 768, 771, 88 L.Ed. 978. It is an accommodation designed to protect the national interest in uniform regulation of interstate movements as well as to safeguard the states' legitimate interest in placing a fair share of the local burdens on those doing local business.4 28 The proper answer to the issue in this case is dictated in large part by the Lehigh Valley line of decisions. Those prior cases are not to be dismissed as dialectical exercises in the law of interstate commerce. They represent a realistic appreciation of the fact that the business from which the gross receipts in issue were derived is local in nature. And § 186-a of the New York Tax Law, in taxing those gross receipts, is consistent with the commerce clause of the Federal Constitution. This tax is grounded on a base different from that which justifies the exercise of federal power, making a conflict between federal and state authority impossible. In effect, § 186-a levies a non-discriminatory tax on all companies furnishing continuous transportation service between cities in that state. The tax is in terms of a percentage of the gross receipts from that service. Engaging in such transportation service is a local business, even though some of the routes cross parts of other states. And taxing the gross receipts from this service is well within the constitutional power of New York so far as the commerce clause is concerned.5 29 In light of the past decisions of this Court, the only novel question here presented is whether New York must limit its tax to that proportion of the receipts which corresponds to the proportion of the mileage traversed within that state on the trips in issue, i.e. 57.47%. Lehigh Valley R. Co. v. Pennsylvania, supra, and United States Express Co. v. Minnesota, supra, did not involve this question since the gross receipts taxes had there been prorated by the respective states before reaching this Court, and Ewing v. Leavenworth, worth, supra, was concerned only with a flat license tax. While Cornell Steamboat Co. v. Sohmer, supra, did involve an unapportioned gross receipts tax, the facts were such as to make it impossible to determine what proportion of the journeys took place outside New York; the precise issue was thus unresolved. 30 The rule requiring apportionment of gross receipts taxes to the activities carried on within a state is one that is necessarily predicated upon the existence of some interstate activities which the commerce clause places beyond the taxing power of the state. See Ratterman v. Western Union Tel. Co., 127 U.S. 411, 8 S.t . 1127, 32 L.Ed. 229; Wisconsin & M.R. Co. v. Powers, 191 U.S. 379, 24 S.Ct. 107, 48 L.Ed. 229. It is designed to prevent the levying of such taxes as will discriminate against or prohibit the interstate activities or will place the interstate commerce at a disadvantage relative to local commerce. But this rule obviously is inapplicable where the tax is not levied on what is appropriately labelled interstate commerce. And as we have seen, New York here has levied a tax solely upon the local business of transporting passengers between points in that state, which constitutes the furnishing of utilities within the meaning of the New York Tax Law. The fact that 42.53% of the transportation occurs outside New York does not make that business any less local. From the commercial standpoint, the out-of-state segment of the journey retains its position as an integral part of the continuous local transaction. The proportion of the transportation actually taking place within or without New York thus has no commerce clause significance under these circumstances. Inasmuch as the restrictive force of the commerce clause is non-effective, New York is entitled to tax the total gross receipts from this local commerce. 31 This result does not permit other states, within the framework of the commerce clause, to tax the local business of transporting passengers between New York points. What is local business as to New York is not local business as to New Jersey or Pennsylvania. The elements which justify New York's unapportioned tax exists only in that state. If New Jersey or Pennsylvania were to tax a portion of appellant's gross receipts from the transportation in issue, such tax would involve quite different constitutional considerations than those which sustain the New York tax. Since New Jersey and Pennsylvania would have an interest in the situation because of the physical movements occurring within their borders, concentration would have to be placed upon the interstate aspect of the transportation. The problem would then be whether these states could constitutionally tax the portion of the gross receipts derived from the mileage traversed therein. If such taxes were sustained, the resulting multiple burden on the gross receipts would simply be a natural consequence of conducting a local business in such a manner as to use the facilities of more states than one. But that type of multiple burden is not outlawed by the commerce clause. Nor does the possibility of such a burden make the business of transporting persons between points in New York any less local in nature. 32 I would therefore affirm the judgment below. 1 New York Tax Law, § 186-a, subd. 1. 2 New York Tax Law, § 186-a, subd. 2(a). 3 New o rk Tax Law, § 186-a, subd. 2(c). 4 Section 203(a)(10) of Part II of the Interstate Commerce Act, 49 U.S.C. § 303(a)(10), 49 U.S.C.A. § 303(a)(10), defines interstate commerce, for federal regulatory purposes, to include commerce 'between places in the same State through another State.' But § 202(c) of the same Act, 49 U.S.C. § 302(b), 49 U.S.C.A. § 302(b) states that nothing therein 'shall be construed to affect the powers of taxation of the several States.' This is a Congressional recognition of the accommodation that exists in regard to the federal and state interests. See, in general, Kauper, 'State Regulation of Interstate Motor Carriers,' 31 Mich.L.Rev. 1097, 1105—1107; Tarney, 'Methods for Differentiating Interstate Transportation from Intrastate Transportation,' 6 Geo.Wash.L.Rev. 553, 633—637; Ganit, The Commerce Clause, § 62(d), (1932). 5 The proper result in this case is aptly paraphrased in Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 201, 202, 12 S.Ct. 806, 808, 36 L.Ed. 672: 'So as to the traffic of the Erie Railway between the cities of New York and Buffalo, we do not understand that that company escapes taxation in respect of that part of its business because some miles of its road are in Pennsylvania, while the New York Central is taxed as to its business between the same places, because its rails are wholly within the state of New York.'
78
334 U.S. 624 68 S.Ct. 1238 92 L.Ed. 1614 UNITED STATESv.JOHN J. FELIN & CO., Inc. No. 17. Reargued Nov. 18, 19, 1947. Decided June 14, 1948. Mr. George T. Washington, of Washington, D.C., for petitioner. Mr. Arthur L. Winn, Jr., of Washington, D.C., for respondent. Mr. Justice FRANKFURTER announced the judgment of the Court and delivered an opinion in which the CHIEF JUSTICE and Mr. Justice BURTON concurred. 1 This is a claim for just compensation, based on the Fifth Amendment, by a slaughterer whose meat products the Government requisitioned for war purposes. The Court of Claims awarded damages above the maximum prices fixed by the Office of Price Administration for such products and measured by what that court deemed the replacement cost of the requisitioned property. 67 F.Supp. 1017, 107 Ct.Cl. 155. The implications of this ruling reach far, and so we brought the case here. 330 U.S. 814, 67 S.Ct. 864. 2 While the immediate facts of this controversy are few and undisputed, they can be understood only in connection with the recognized facts in the meat industry. Of these we must take judicial notice inasmuch as we must translate the idiom of the industry into vernacular English. Also, of course, we must consider the facts in the context of the rather intricate system of meat price regulation by O.P.A. 3 The respondent was engaged in the business of packing pork products in Philadelphia. It bought hogs in Chicago, St. Louis, and Indianapolis and transported them to Philadelphia where they were slaughtered and converted into various pork cuts and products. It sold these products to retail dealers in Philadelphia, and it had also supplied pork products to Government agencies. 4 On January 30, 1942, the President approved the Emergency Price Control Act. 56 Stat. 23, 50 U.S.C.App. § 901 et seq., 50 U.S.C.A.Appendix, § 901 et seq. Accordingly, the Price Administrator, by a series of regulations, established maximum prices for dressed hogs and wholesale pork cuts. Revised Maximum Price Regulation No. 148, issued on October 22, 1942, governed the pork cuts here involved. 7 Fed.Reg. 8609, 8948, 9005; 8 Fed.Reg. 544. 5 To meet the food needs entailed by the war, the President under the authority of the Second War Powers Act, 56 Stat. 176, 50 U.S.C. Supp. V, § 633, 50 U.S.C.A.Appendix, § 633, created the Food Distribution Administration, with the Secretary of Agriculture as its head. E.O. 9280, 50 U.S.C.A.Appendix, § 601 note, 7 Fed.Reg. 10179. This Administration was given authority to assign food priorities, to 'allocate' food to governmental agencies and for private account, and to assist in carrying out the program of the Lend-Lease Act of March 11, 1941, 55 Stat. 31, 22 U.S.C.A. § 411 et seq. To carry out the task thus delegated by the President, the Food Distribution Administration issued to each packer operating under federal inspection a priority order calling for delivery of a proportionate part of the total quantity needed at the particular time.1 A packer's quota was based on the ratio of meat produced in his plant to the total production in all federally inspected plants. 6 In conformity with this system, the respondent, on February 2, 1943, was requested to deliver 225,000 pounds of lard and pork products to the Federal Surplus Commodity Corporation for delivery under the Lend-Lease program. The respondent was advised that this order was to be filled in preference to any other order or contract of lower priority, and at the applicable O.P.A. ceiling prices. Insisting that it could no longer afford to sell to the Government at ceiling prices, respondent refused to make delivery. 7 On March 1, 1943, the Food Distribution Administration, exercising powers not questioned, issued an order requisitioning the lard and pork products in controversy.2 On March 3, 1943, the property was duly seized in respondent' Philadelphia packing house. On March 24, 1943, respondent filed its claim with the Administration for 'just compensation' for taking this property. Its total claim was $55,525, of which $16,250 was for lard and $39,275 for pork cuts. On May 7, 1943, the Administration, by way of preliminary determination of the just compensation for the requisitioned property, fixed the value of the lard at $15,543.78 and the pork cuts at $25,112.50. These amounts were based on the O.P.A. ceiling prices applicable to these products. On May 22, 1943, the preliminary award was made final. Respondent accepted in full payment the award as to the lard; it refused to accept the determination as to the pork cuts and, in accordance with the statutory procedure in the case of rejection of such an award, was paid half of it. On June 24, 1943, respondent instituted this action in the Court of Claims to recover the additional amount which when added to the $12,556,25, the half of the Government's valuation for those cuts, would constitute 'just compensation' for what the Government had taken. 8 The Court of Claims referred the proceeding to a commissioner, who took evidence and reported to the court. Upon the basis of his report and the underlying evidence, the Court of Claims found as a fact that the replacement cost of the requisitioned pork cuts at the time and place of the taking was $30,293, and concluded, as a matter of law, that such replacement cost and not the maximum ceiling price was the proper measure of damages for the taking. We heard argument at the last Term, and after due consideration deemed it appropriate to order reargument at this Term.3 9 At the outset it is important to make clear what it is we are called upon to decide. The conventional criterion for determining what is 'just compensation' for private property taken for public use is what it would bring in the free, open market. E.g., Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236; Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 123, 49 S.Ct. 471, 474, 68 L.Ed. 934; L. Vogelstein & Co. v. United States, 262 U.S. 337, 340, 43 S.Ct. 564, 565, 67 L.Ed. 1012. But there must be a market to make the criterion available. Here there was a market in which the respondent could have sold the pork cuts, but it was not a free and open market; it was controlled in its vital feature, selling price, by the O.P.A. It is this fact that creates the problem of the case, assuming that the case is not dogmatically disposed of by holding that inasmuch as the maximum price is the only price which respondent could legally have got for its goods it is just compensation. We are not passing on the abstract question whether a lawfully established maximum price is the proper measure of 'just compensation' whenever property is taken for public use. We are adjudicating only the precise issues that emerge from this case. 10 The Second War Powers Act, 1942, under which respondent's property was authorized to be taken, restricted compensation for the taking to that which the Fifth Amendment enjoins. 56 Stat. 176, 181, 50 U.S.C.A.Appendix, § 721. In enforcing this constitutional requirement 'the question is, What has the owner lost? not, What has the taker gained?' Boston Chamber of Commerce v. Boston, 217 U.S. 189, 195, 30 S.Ct. 459, 460, 54 L.Ed. 725; McGovern v. New York, 229 U.S. 363, 33 S.Ct. 876, 57 L.Ed. 1228, 46 L.R.A.,N.S., 391. Respondent's sole claim is for the pecuniary equivalent of the property taken. This is not a situation where consequential damages, in any appropriate sense of the term, are urged as a necessary part of just compensation. Respondent does not claim such damages on the theory that, in order to protect its good will, it had to supply its regular customers and that this compelled replacement of the requisitioned pork products by the purchase, slaughter, and processing of live hogs.4 Cf. United States v. General Motors Corporation, 323 U.S. 373, 382, 65 S.Ct. 357, 361, 89 L.Ed. 311, 156 A.L.R. 390; United States v. Petty Motor Co., 327 U.S. 372, 377, 378, 66 S.Ct 596, 599, 600, 90 L.Ed. 729; United States ex rel. and for Use of Tennessee Valley Authority v. Powelson, 319 U.S. 266, 281, 282, 63 S.Ct. 1047, 1055, 1056, 87 L.Ed. 1390. Respondent claims that replacement cost is the proper measure of the value of the property when requisitioned. This action was brought to recover damages which the respondent would suffer, so it maintains, if it accepted the Government's offer of the applicable ceiling prices in satisfaction of 'just compensation.' The burden therefore rests on the respondent to prove the damages it would suffer by not receiving more than the ceiling prices. Marion & R.V.R. Co. v. United States, 270 U.S. 280, 285, 46 S.Ct. 253, 255, 70 L.Ed. 585. 11 The Court of Claims found that the principal item in the cost of processing respondent's products was what it had to pay for live hogs; that, inasmuch as live hogs were not then covered by price regulation, the Chicago market quotations governed price in the packing industry; that the Chicago average live hog price was $15.59 during March 1943;5 and that, on the basis of this price, the replacement cost for the requisitioned property was $30,293. We are of opinion that in reaching this conclusion the court below failed to take into account decisive factors for the proper disposition of the action brought by the respondent. 12 We are dealing with a claim for damages arising out of a transaction pertaining to a particular industry, and the transaction cannot be torn from the context of that industry. It is practically a postulate of the slaughtering industry that replacement cost does not afford a relevant basis for determining the true value of the industry's products. 'Manufacturing operations in the meat packing industry do not consist of assembling raw materials for the purpose of obtaining one finished product, but rather of separating or breaking down raw materials (cattle, etc.) into many parts, one of which (dressed carcass) is the major product, and the other parts of which are further processed into numerous by-products.' Kingan & Co. v. Bowles, Em.App., 144 F.2d 253, 254. In consequence, cost in the industry generally is like a fagot that cannot be broken up into simple, isolated pieces. See Greer, Packinghouse Accounting (Prepared by the Committee on Accounting of the Institute of American Meat Packers), passim. 'The accounting procedure in the hog business is even more complicated than that of the cattle, calf, or sheep business, because the operations involve a greater breaking up of the dressed carcass and more numerous processes extending over considerable periods of time.' Id. at 33—34. The problem is one of 'joint cost' in a business which 'produces no single major product,' id. at 213, with the result that no accountant has thus far 'been able to devise a method yielding by-product or joint-cost figures which does note mbody a dominance of arbitrariness and guesswork.' Hamilton, Cost as a Standard for Price, 4 Law and Contemp.Prob. 321, 328; cf. Greenbaum, The Basis of Property Shall Be the Cost of Such Property: How is Cost Defined?, 3 Tax L.Rev. 351, 356—359. 13 If, as suggested in argument, a hog were nothing but an articulated pork chop, and the processing of edible and inedible by-products were not characteristic of the industry, the price of a live hog might well represent the collective cost of the derivative pork cuts. The pork chop, however, is but one of the many edible hog products. According to an estimate about the time of the requisitioning of these pork cuts, there were more than 200 pork items (exclusive of sausage products) in the market. See Supplementary Statement of Considerations for Revised Regulation No. 148, Pike and Fisher, 3 OPA Food Desk Book 46,151. 'Most pork products,' the Administrator found, 'are consumed in a cured or processed state. Fresh pork products, such as pork chops and fresh ham, represent not over 20 per cent of the vast quantity of pork which moves by rail. The remaining 80 per cent reaches the consumer in a wide variety of processed forms, including dry, dry cured, sweet pickled, smoked, cooked, baked and canned.' Id. at 46,141. It deserves noting that the requisitioned products in controversy included cured regular hams, cured clear bellies, cured picnics, and salted fatbacks. 14 The petitioner was also engaged in by-product processing,6 for the Government took from him 100,000 pounds of refined pure lard. For the value of the lard the respondent accepted the administrative award.7 Admittedly, part of the cost of the live hog must be charged to by-products. However, any method of apportioning the total cost to the by-products is highly speculative.8 15 Since so much speculative approximation and guesswork entered into the determination of cost, selling price, and profit, the industry, naturally enough, was in almost continuous controversy with the Price Administrator about them. The respondent was party to these controversies. On July 17, 1942, it filed a protest against Maximum Price Regulation No. 148 which was consolidated with the protest of 115 other pork slaughterers against this regulation. On the basis of calculations as to the cut-out value or replacement cost of various pork cuts, the slaughterers contended that the regulation did not allow them sufficient operating margin over the cost of live hogs. In rejecting the protest, on April 23, 1943, the Administrator made this ruling: 'The interdependence of all phases of the operations of packing establishments makes precise evaluation of the relationship between prices on dressed and processed meats and live hog prices impossible except in terms of the over-all financial position of the industry.' In the Matter of Rapides Packing Co., Pike and Fisher, 1 OPA Opinions and Decisions 243. The respondent, on March 8, 1943, had also protested, again on the basis of the cost of live hogs, against the revision of the regulation. This protest was consolidated with those of 15 other pork slaughterers and, substantially on the ground taken in the Rapides Packing Co. case, this second protest was likewise rejected by the Administrator. In the Matter of Greenwood Packing Plant, Pike and Fisher, 1 OPA Opinions and Decisions 296, 299. 16 Review by the Emergency Court of Appeals was not sought,9 although the first denial of respondent's claim for the replacement cost of pork cuts, based on live hog prices, came shortly after the Government's requisitioning of the products as to which he now makes the same contention. It is noteworthy that the pork price margins were almost the only meat price margins which were not challenged before the Emergency Court of Appeals in what has been called 'the battle of the meat regulations.' See Hyman and Nathanson, Judicial Review of Price Control: The Battle of the Meat Regulations, 42 Ill.L.Rev. 584. 17 The considerations which underlay the Administrator's meat price determinations are most pertinent to the solution of our immediate problem. The result of his analysis was that the profit and loss data on a slaughterer's entire operations were the only dependable figures from which the fairness of meat prices could be deduced. The Administrator pointed out that the industry, on the basis of its accounting figures, had historically lost money on its meat sales.10 Since, however, by taking the by-product sales into full account its operations as a whole were highly profitable, these meat sale losses were 'more in the nature of bookkeeping losses which failed to take fully into account the integrated nature of the industry.' These views were approvingly quoted by the Emergency Court of Appeals in Armour & Co. v. Bowles, Em.App., 148 F.2d 529, 535. 18 In both of the consolidated proceedings to which the respondent was a party, the Administrator x plicitly requested to be furnished with the industry's profit and loss data. In the earlier proceeding, no proof of loss was filed by any of the protestants. In the Matter of Rapides Packing Co. supra. In the second proceeding the Administrator made this finding: 19 'The three Protestants who submitted further evidence did not even thus sustain their claims of individual hardship. One of them showed a net profit of $60,492.44 for the five months period ending March 27, 1942; another a net profit of $6,838.00 for the three months period ending April 1, 1943, and the third failed to submit a profit and loss statement and balance sheet although specifically requested to do so.' In the Matter of Greenwood Packing Plant, supra, at 297. 20 Not merely does the industry generally seem to have prospered under price control,11 but so did the respondent12 despite the fact that throughout the period in controversy it continued to buy live hogs at prevailing prices and to sell pork products derived from them at the authorized ceiling prices, even when this meant selling its pork products below the price that the Court of Claims found to be their replacement cost value.13 21 Most pertinent, therefore, are the pronouncements of the packing industry made before these matters became embroiled in price-fixing litigation. 'The cost of a dressed hog carcass, or of a lot of dressed hog carcasses, may be determined quite satisfactorily; but when a carcass is cut up into its various merchantable parts, all record of cost is lost, as it is impossible to determine the cost of any of these cuts.' Greer, Packinghouse Accounting (Prepared by the Committee on Accounting of the Institute of American Meat Packers), p. 246, and also pp. 43, 58, 61, 62. Since the 'results for the hog business as a whole can be found only by adding the profits or losses for all merchandising departments,' id. at 218, the only accurate formula for costs in hog slaughtering is a profit and loss statement for the entire operations. Id. at 43, 44. 22 It is as old as the common law that an allegation purporting to be one of fact but contradicted by common knowledge is not confessed by a demurrer.14 Of course, findings of fact are binding on this Court, but if this Court had to treat as the starting point for the determination of constitutional issues a spurious finding of 'fact' contradicted by an adjudicated finding between the very parties to the instant controversy, constitutional adjudication would become a verbal game. 23 There are facts and facts, even in Court of Claims' litigation. It is the function of the Court of Claims to make findings. But when a judgment based on such findings is here brought in question it is the function of this Court to ascertain the meaning of the findings in order to determine their legal significance. The judgment of the court below that 'replacement cost' is the proper measure of just compensation and the mode by which it reached the amount of that cost are inescapably enmeshed in considerations that are clearly familiar issues of law and particularly of constitutional law. Where the conclusion is a 'composite of fact and law,' Cedar Rapids Gas Light Co. v. Cedar Rapids, 223 U.S. 655, 668, 32 S.Ct. 389, 390, 56 L.Ed. 594, this Court may certainly hold that as a matter of law the findings are erroneous. See, e.g., Washington ex rel. Oregon R. & Nav. Co. v. Fairchild, 224 U.S. 510, 528, 32 S.Ct. 535, 539, 56 L.Ed. 863. Even when this Court reviews State court judgments involving constitutional issues it 'must review independently the legal issues and those factual matters with which they are commingled.' See Oyama v. California, 332 U.S. 633, 636, 68 S.Ct. 269, 270 (and the authorities therein cited.) Similarly, findings concurred in by two courts do not control the decision here where 'facts and their constitutional significance are too closely connected' and 'the standards and the ultimate conclusion involve questions of law inseparable from the particular facts to which they are applied.' United States v. Appalachian Electric Power Co., 311 U.S. 377, 403, 61 S.Ct. 291, 297, 85 L.Ed. 243. Even where the parties to the litigation have stipulated as to the 'facts,' this Court will disregard the stipulation, accepted and applied by the courts below, if the stipulation obviously forecloses real questions of law. See, e.g., Swift & Co. v. Hocking Valley R. Co., 243 U.S. 281, 37 S.Ct. 287, 61 L.Ed. 722. 24 The prior proceedings between the same parties, as to which we would be blind not to take judicial notice, as well as the unquesto ned facts pertaining to the meat industry are relevant to interpret the findings of the Court of Claims. We have concluded that here 'replacement cost' is a spurious, i.e., non-legal, basis for determining just compensation. It is as though the Court of Claims had based its opinion on a balance sheet and we had to interpret the balance sheet into actualities. And so we hold that, as a matter of law, the court below erred in utilizing replacement cost as the basis for determining what constituted just compensation. 25 When due regard is given to the findings of the Court of Claims, they fail to establish that the compensation proffered by the Government for the requisitioned pork cuts, based on the maximum ceiling prices, falls short of 'just compensation.' We are therefore not called upon to consider whether as a matter of constitutional law prices fixed by the Government for the sale of commodities are the measure of 'just compensation' for commodities seized by the Government. As the conflict of opinion here indicates, that is a debatable issue which, since we can, we must avoid adjudicating. See Spector Motor Service v. McLaughlin, 323 U.S. 101, 105, 65 s.Ct. 152, 154, 89 L.Ed. 101. 26 The burden of proving its case was upon the respondent. The nature of this burden was to prove, in light of the governing facts of the industry, that the administrative award for the taking of respondent's property was less than just compensation, based as it was on prices which the Administrator had established for those products and which had been left undisturbed by the process devised by Congress for assuring the fairness of these prices. By evidence merely of bookkeeping losses, respondent did not carry its burden of proving actual damage. Just compensation is a practical conception, a matter of fact and not of fiction. Respondent introduced no evidence, and the Court of Claims made no findings, to establish a loss based on its total operations during the period relevant to the slaughtering of the hogs from which the requisitioned products were processed.15 On the basis of such figures it would be necessary to determine by reasonable allocations the portion of the loss properly attributable to the goods seized by the Government. In the proceedings below the respondent neither alleged such a loss nor submitted proof in support of it. Since it has not maintained its burden of proving that the ceiling price award entails damages, the judgment of the Court of Claims cannot stand. 27 The judgment is reversed with directions to the Court of Claims to enter a judgment for the respondent in an amount not exceeding $12,556.25, with interest on the amount of $25,112.50 from March 3, 1943, the date of the requisition, to May 22, 1943, the date of the final award made by the Director of the Food Distribution Administration. 28 Mr. Justice REED, with whom Mr. Justice BLACK and Mr. Justice MURPHY join, concurring in the judgment. 29 I agree with the disposition of this case made by Justice FRANKFURTER'S opinion. However, I cannot concur in the reasoning by which that result is reached. That opinion holds that the respondent is not entitled to recover as 'just compensation' anything in addition to the ceiling price unless it can 'establish a loss based on its total operations during the period relevant to the slaughtering of the hogs from which the requisitioned products were processed' and 'determine by reasonable allocations the portion of the loss properly attributable to the goods seized by the Government.' Why a loss on total operations must be established in order to show the loss on the hog products requisitioned by the Government is not clear to me. It is the market value of any product that is the basis for 'just compensation.' If there is no real market value, cost may be an element in the determination of value. Under the circumstances of this case, any other value than the ceiling price is illusory. Consequently I believe that whenever perishable property is taken for public use under controlled-market conditions, the constitutionally established maximum price is the only proper standard of 'just compensation.' 30 Five members of this Court express their agreement that replacement cost, if relevant, has been properly found by the Court of Claims. If replacement cost, determined by any accounting system, is a factor, the evidence on which the Court of Claims based its findings of that cost is not before us, and therefore those findings cannot be properly regarded as unsatisfactory. Even if we assume that the evidence offered did not properly allocate costs, the Government raised no such issue by its petition for certiorari or in its brief. The record does show a finding of replacement cost based upon some evidence. In the absence of that evidence from the record, it must be assumed that it would support the findings. If we assume that replacement cost is relevant, to say that a manufacturer who proves that cost by the results of his own system of cost accounting may not retain his award because a more accurate accounting system exists, though not offered in evidence, disregards the salutary rule that litigants in civil matters must be allowed to frame their issues and prove their cases in trial courts as each desires. This principle includes the introduction of such relevant evidence as each wishes to introduce Often proof of value or damages is difficult. Courts then reach conclusions from the relevant evidence presented. Palmer v. Connecticut Railway & Lighting Co., 311 U.S. 544, 61 S.Ct. 379, 85 L.Ed. 336; Bigelow v. RKO Radio Pictures, 327 U.S. 251, 66 S.Ct. 574, 90 L.Ed. 652. Findings are properly made on the basis of the relevant evidence heard and are not subject to attack because other available evidence might have been produced. The suggestion of Justice FRANKFURTER'S opinion as to a better method for determining replacement cost is futile, since it furnishes a rule, rejected by the majority of this Court, for the Court of Claims to use in determining just compensation. The approval of the method for determining replacement cost used by the Court of Claims by a majority of this Court logically requires a decision on whether or not the ceiling price represents 'just compensation.' 31 It may be assumed that the respondent cannot replace the requisitioned hog products at the ceiling price. If respondent was impelled to replace the requisitioned products in its stock, its reasons for so doing lay in the realm of business judgment. There was no legal compulsion. It acted to keep its line of goods complete, to serve its customers and to preserve its good will. Any additional cost to the respondent caused by replacing the products was a consequential damage for which compensation is not given in federal condemnation proceedings. United States v. Petty Motor Co., 327 U.S. 372, 378, 66 S.Ct. 596, 599, 90 L.Ed. 729. See United States v. General Motors Corporation, 323 U.S. 373, 382, 65 S.Ct. 357, 361, 89 L.Ed. 311. 32 It has been long established that in a free market the market price is the proper criterion for determining 'just compensation.' Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 708, 78 L.Ed. 1236; Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 123, 44 S.Ct. 471, 474, 68 L.Ed. 934. In L. Vogelstein & Co. v. United States, 262 U.S. 337, 43 S.Ct. 564, 67 L.Ed. 1012, this Court held that the prevailing price in a controlled market was 'just compensation.' The Vogelstein Company was a wholesaler of refined copper. Between September 28, 1917, and February 1, 1918, the United States requisitioned from the Company 12,542,857 pounds of copper for which it paid 23.5¢ per pound. But this method of determining replacement cost supply and demand on a free and open market; it was a price fixed by an agreement made by the War Industries Board with copper producers and approved by the President on September 21, 1917. Vogelstein Company, although not a producer, had apparently cooperated with the producers in the establishment and maintenance of the 23.5¢ price. The Company argued that it was entitled to 26.8¢ per pound—the average cost to it of the copper requisitioned by the United States. This Court concluded that paying the fixed 23.5¢ was correct. 'The market price was paid. The market value of the copper taken at the time it was taken measures the owner's compensation.' 262 U.S. at page 340, 43 S.Ct. at page 565. 67 L.Ed. 1012. Consequently, the judgment of the Court of Claims dismissing the company's petition was affirmed. This acceptance of the fixed price as the market value closely approaches the situation now presented. 33 It would be anomalous to hold that Congress can constitutionally require persons in the position of the respondent to sell their perishable property to the general public at a fixed price or not to sell to anyone1 and later to hold that the Government must pay a higher price than the general public where it requisitions the perishable property because of a replacement cost, greater than the fixed price. It is true that the United States by exercising its power of requisitioning compelled the respondent to sell to it; but the compulsion to sell to the general public at ceiling prices was hardly less severe. The choice was between sales at the fixed price or, at the best, economic hibernation and, at the worst, economic extinction. The two situations are so parallel that the constitutionally established maximum price may, under the circumstances here, be properly taken as the measure of 'just compensation.' That lawfully fixed market price determines what the perishable article can be sold for or its market value in any real sense. It gives to the condemnee any profit for increased value in his hands and takes nothing from him that he could lawfully obtain since consequential damages for loss of good will cannot be obtained. Such maximum price is 'just compensation.'2 34 If the Government fixed prices with the predominant purpose of acquiring property affected by its order, a different situation would be presented. Here we have price regulation of meat products on a national scale with judicial review of those regulations. The Government sought for itself no unique opportunity to purchase. 35 The respondent, as Justice Frankfurter's opinion points out filed several protests against the Maximum Price Regulations controlling the ceiling prices of hog products. These protests were rejected by the Administrator and review by the Emergency Court of Appeals was not sought. It was during the course of these proceedings that evidence of the profit and loss of the industry and of the replacement cost of pork products could properly be introduced. However, once the maximum price had been set and had not been set aside by direct attack, that price became the only relevant measure of just compensation. Whether normally admissible or not,3 the replacement cost of perishable articles then subject to price control, bought to maintain the good will of a business, cannot be an element in the determination of value to fix just compensation. Therefore, evidence of replacement cost in condemnation proceedings such as that before the Court today is irrelevant and should not be admitted. 36 Mr. Justice RUTLEDGE, concurring. 37 Six members of the Court agree that the judgment of the Court of Claims must be reversed, but are equally divided in their groundings. Since I am in partial agreement with both groups, I state my own conclusions independently. 38 It may be, as my brother REED and those who join with him think, that the ceiling price in a wartime controlled market should furnish the measure of constitutional just compensation for property of a highly perishable nature taken. Perhaps also this view should be qualified further, as by some limitation which would make adjustments beyond that price permissible when the circumstances of the taking are such that they would entail destruction of property values beyond those inherent merely in the property which the Government receives and uses.1 39 But I am also in agreement with my brother FRANKFURTER and those who concur with him that it is not necessary to reach these important constitutional issues in this case. For I think that, with reference to such perishable commodities taken under circumstances like these, the legal market or ceiling price furnishes at least presumptively the measure of just compensation, and that this measure should apply unless and until the owner sustains the burden of proving that he has sustained some loss for which he is entitled to a greater award. 40 That burden, I also agree, the respondent has not sustained in this case. The Court of Claims awarded respondent its 'replacement costs,' in the view that 'when property is taken the owner must be put in as good position pecuniarily as he was in before his property was taken.'2 Payment of the ceiling price did not do this, since as the court pointed out respondent 'felt obliged to furnish its customers a certain amount of products, alh ough at a loss, in order to retain their good will and * * * hold its organization together.'3 For this reason it became necessary for respondent to go into the market and purchase live hogs and process them, paying a higher price than it had paid for the hogs from which the products taken had been processed. In this way respondent incurred a loss it would not have incurred had those products not been taken. 41 On this basis, I agree with Mr. Justice REED that the loss is one for consequential damages. That is, it is one to compensate for loss incurred to preserve unimpaired respondent's good will,4 not to compensate for any value lawfully obtainable for the articles then or prospectively within any reasonable future period, in view of the property's perishable nature, from other sources. 42 But respondent asserts its claim to 'replacement value' on a different theoretical basis, i.e., not as compensation for loss incurred in preserving good will, but as the proper measure of the value of the property when requisitioned. And if market price, here ceiling price, is not the measure of compensation, it is said 'replacement cost' furnishes the best substitute or at any rate an appropriate element for consideration. 43 The difference in the present circumstances would seem to be highly verbal. For in any event the loss was actually incurred for the purpose of keeping respondent's customers satisfied and thus preserving its good will unimpaired; in other words, to prevent the accrual of injury consequential to the taking. 44 It is true that in circumstances where there is no market value, 'replacement cost' has been held appropriate for consideration in reaching a judgment concerning the value which is just compensation. But this seems to me a different thing from allowing such proof, when the loss it reflects has been incurred solely to prevent consequential injury, and there is a market value presumptively valid to compensate for all losses incurred except that loss. To allow that proof in these circumstances would be in substance if not in form to be permitting an award for elements of consequential damages entirely out of line with the policy of this Court's prior decisions concerning compensation for such injuries.5 45 The considerations set forth by my brother FRANKFURTER respecting the difficulties, indeed the near impossibility, of proving costs in this case would seem to support this conclusion. Accordingly, I concur in the judgment of the Court. 46 Mr. Justice JACKSON, with whom Mr. Justice DOUGLAS joins, dissenting. 47 It would appear that this Court in this case is exceeding the limitation placed by Congress on its review of Court of Claims decisions. 28 U.S.C. § 288, 28 U.S.C.A. § 288, 53 Stat. 75. The Court does not decide, as Congress has authorized it to do, that any finding of the Court of Claims is not supported by substantial evidence, or that the ultimate findings lack support in evidentiary findings, or that there has been a failure to make findings on the material issues. Instead, in effect it sets aside the judgment below on its own interpretation of 'recognized facts in the meat industry.' Of these it takes judicial notice on the basis of an assortment of publications which, whatever their merits if called to the attention of the court below, should not in this Court outweigh specific findings of fact by the Court of Claims based on evidence before it. 48 Taking the facts as found by the Court of Claims, the case is this: Claimant was a meat packer and among its products were pork chops. The Government set a maximum price at which pork chops could be sold. It set no maximum price on the two principal factors in the cost of pork chops, viz: live hogs and labor. The result was that claimant's uncontrolled costs mounted until, on what is found to be a fair allocation of costs between chops and other products of the hog, it was costing more to produce the pork chops than the price for which claimant was permitted to sell them. But there were certain collateral benefits derived from supplying old patrons, even at a loss, to avoid heavier losses from shutting down the business and to keep customer good will for the hoped-for day of normal business. 49 However, the Government decided to buy claimants' chops. It offered the maximum OPA price. As there was no such compensating advantage to the packer in selling its choice cuts to the Government at a loss, as in keeping its business going with its general customers, it refused the offer. The Government then seized its pork chops and the company now claims the 'just compensation' which the Constitution guarantees to those whose private property is taken for public use. The Government contends, and the practical effect of the Court's holding is, that the company can recover only the maximum price fixed for its products by the Office of Price Administration, in spite of the finding that this is less than it cost to produce or to replace them. 50 It is hard to see how just compensation can be the legal equivalent of a controlled price, unless a controlled price is also always required to equal just compensation. It never has been held that in regulating a commodity price the Government is bound to fix one that is adequately compensatory in the constitutional sense, so long as the owner is free to keep his property or to put it on the market as he chooses. If the Government were required to do so, the task of price regulation would be considerably, if not disastrously, complicated and retarded. It seems quite indispensable to the Government itself, for the long-range success of price controls, that fixed prices for voluntary sales be not identified with the just compensation due under the Constitution to one who is compelled to part with his property. 51 The war did not repeal or suspend the Fifth Amendment. United States v. New River Collieries, 262 U.S. 341, 343, 43 S.Ct. 565, 566, 67 L.Ed. 1014; United States v. L. Cohen Grocery Co., 255 U.S. 81, 88, 41 S.Ct. 298, 299, 65 L.Ed. 516. But it is obvious that the constitutional guaranty of just compensation for private property taken for public use becomes meaningless if the Government may first, under its 'war powers,' fix the market price and then make its controlled figure the measure of compensation.1 52 It must be remembered that market price, as such, is not controlling. The Fifth Amendment's 'exact limitation on the power of the Government'2 is not market price—it is just compensation. The former is relevant and this Court has so considered it, only because, in a free market, it is perhaps the best key to value at the time of taking. Original cost and replacement cost yield to it only because of that factor. But here, there is no true market price3 to provide the usually accepted standard of value. The relevance of original cost and replacement cost, even in this situation, cannot seriously be denied. In the absence of an over-riding free-market price, the courts must turn to the soundest standards otherwise available. 53 We think the Court of Claims made no error of law in thinking that the controlled market price for voluntary sales was not the measure of just compensation for the seized pork chops. Limiting our review to the scope which Congress has authorized, we find no error in its calculation of just compensation for the purposes of complying with the constitutional requirements. 1 In 1943 there were 308 hog slaughterers whose establishments operated under federal inspection. Livestock, Meats, and Wool Market Statistics and Related Data 1945, compiled by the Livestock Branch, Production and Marketing Administration, United States Department of Agriculture, p. 31. In 1942 there had been only 218 hog slaughtering establishments under federal inspection, and in 1944 there were 322. Ibid. 2 The requisitioned property consisted of the following: 40,000 pounds Cured Regular Hams, 14 to 18 lb. range 40,000 pounds Cured Clear Bellies, 10 to 14 lb. range 15,000 pounds Cured Picnics, 6 to 10 lb. range 30,000 pounds Salted Fatbacks, 8 to 12 lb. range 100,000 pounds Refined Pure Lard, 1 lb. prints (30 lbs. to carton) 3 After the case was taken under advisement, following reargument, a matter was brought to our attention which calls for consideration, however summary. We were advised that on March 23, 1943, the respondent filed with the O.P.A. an 'Application for Adjustment of Maximum Prices for Commodities or Services under Government Contracts or Subcontracts,' pursuant to Procedural Regulation No. 6, 7 Fed.Reg. 5087, and Supplementary Order No. 9, 7 Fed.Reg. 5444. (See 7 Fed.Reg. 5088 for the form of the application.) The purpose of these regulations was to afford opportunity for relief to sellers who had made, or proposed to make, 'contracts or subcontracts' with the Government. This application had lain dormant from the date of its filing until December 13, 1947, when we were advised by counsel for the Government that it was now in the files of the Reconstruction Finance Corporation, which is third in the chain of title from the O.P.A., through the Office of Temporary Controls, charged with the administration of these two regulations. On December 15, 1947, counsel for the respondent advised the R.F.C. that it withdrew the application insofar as it pertained to the requisitioned commodities in controversy here. While the Government does not suggest that the dormancy of this application renders present proceedings, if not moot, premature, such apparently is the intimation. If the regulations in fact authorized one who is not a 'contractor or subcontractor' in the ordinary meaning of those terms to obtain special administrative relief apart from the statutory scheme relating to requisitioned property, technical issues would have to be faced which we need not particularize. Counsel for the Government advise us that a counsel for the R.F.C. has now interpreted the regulations not only (1) as applicable to requisitioned commodities, but (2) as authorizing retroactive price adjustments for requisition transactions completed before readjustment is sought. Not unnaturally, the Government states that the applicability of this procedure forr eadjustment 'to requisitioned commodities may not be readily apparent from its terms.' While normally we accept the construction placed upon a regulation by those charged with its administration, we must reject a construction that is not only as unnatural as what is now proposed but comes to us post litem motam five years after the application. It should also be pointed out that the construction now placed upon the regulations is not made by the administration that promulgated it but by the second successor agency for liquidating what is left of this administration. With due regard for the respect we owe to administrative rulings in their normal setting, it would require such a remaking of the regulations as reason and fair dealing here reject. The provisions for readjustment of contracts relate to a transaction in which the seller and the purchasing agency of the Government were in agreement as to the contract price. The price was paid, subject to the approval of the application for adjustment. If so approved, the seller retained the purchase price; if disapproved, the seller had to make a refund. See Armour & Co. v. Brown, Em.App., 137 F.2d 233, 240. In the case of a requisitioned commodity, certainly prior to the filing of an application, not prior to the filing of an application, no for refund has been made. In short, we reject this belated and novel construction and are of the opinion that the pendency of this moribund application before the R.F.C., now withdrawn by the respondent, was no bar to this suit. 4 If the respondent had sold the pork products in controversy here to its regular customers, it would have done so at the applicable ceiling prices. If the Government had then requisitioned the property from these customers, there would have been no question that the ceiling prices would have been the measure of just compensation. 5 This was obviously not the cost of the hogs from which the pork products requisitioned by the order of March 1, 1943, were processed. The relevant hogs were purchased in some previous month and at a lower cost. The Chicago average was $15.35 in February and $14.78 in January, 1943, and $14.01 in December and $13.96 in November, 1942. Livestock, Meats, and Wool Market Statistics and Related Data 1945, compiled by the Livestock Branch, Production and Marketing Administration, United States Department of Agriculture, p. 54. Moreover, these were the average prices for average weights of hogs. Ibid. The Government took specific pork products which were processed from hogs of a definite weight for which the respondent paid specific prices in the Chicago, St. Louis, or Indianapolis markets. 6 There are 'numerous by-products,' and the computation of the values for 'such by-products as casings, grease, fertilizer, and hog hair, is rather complex.' Greer, Packinghouse Accounting (Prepared by the Committee on Accounting of the Institute of American Meat Packers) (1929) at 213 and 219, respectively; see, generally, Clemen, By-Products in the Packing Industry (1929); Moulton and Lewis, Meat through the Microscope (rev.ed.1940); Readings on By-Products of the Meat Packing Industry, collected by the Institute of Meat Packing, University of Chicago (1941); Rhoades, Merchandising Packingshouse Products, Institute of Meat Packing, University of Chicago (1929); Tolman, Packing-House Industries (1922). 7 Since, as we hold, the value of the individual products can only be determined by proportionate allocation from the overall operations, it seems to us that respondent's acceptance of the award as to the lard was hardly consistent with its rejection of the award as to the other pork products. 8 'On much of the material transferred (from one of the slaughterer's departmental accounts to another), such as blood, bones, tankage, glue stock, etc., there is no ascertainable outside market, and the packers must perforce place quite arbitrary valuations on this material having no probable relation to either cost or market. Again certain products are in the green stage when transferred, and an outside market only obtains for the finished stage, with the result that arbitrary deductions must be made from the finished market, estimated to establish a nonexistent 'green' market. The certification of internal transfer prices presents, accordingly, an almost interminable problem to any outside reviewing body.' Report of the Federal Trade Commission on the Meat-Packing Industry (1920), Part V, 56. The industry's position as to the utilization of such cost allocations and the Price Administrator's objections thereto are quoted fully and discussed in Armour & Co. v. Bowles, Em.App., 148 F.2d 529, 535—539. 9 It is also significant that none of the other 130 protestants sought review in the Emergency Court of Appeals. Cf., e.g., Kingan & Co. v. Bowles, Em.App., 144 F.2d 253, and Armour & Co. v. Bowles, Em.App., 148 F.2d 529, for that court's views on replacement cost as a basis for the determination of value. 10 'It is a notable fact, that according to the present method of departmental accounting, the packers are in the habit of showing low profits or even positive losses in the carcass-meat departments, while at the same time exhibiting large profits in the by-products or 'specialty' departments, the chief reason for this somewhat extraordinary state of affairs being found in the valuations placed upon the transfers.' Report of the Federal Trade Commission on the Meat-Packing Industry (1920), Part V, 56. While a great deal of time has passed since this 1920 report, the Price Administrator reached the same conclusions in 1943, and the Emergency Court of Appeals quoted the report more fully in 1945. See Armour & Co. v. Bowles, Em.App., 148 F.2d at page 537. 11 See War Profits Study No. 14, Office of Research, Financial Analysis Branch, Office of Price Administration, L.R. 790; Agnello v. United States, 1925, Office of Temporary Controls (1947) pp. 17, 45—47, 73—75. This is a study of the profits of 520 food processors, but the foregoing references were to the separate tabulations concerning the 79 meat packers included in the study. The financial data was compiled from Moody's Industrials, Standard & Poor's Corporation Records, and the OPA Financial Reports submitted by the packers. Id. at 19. Of the total 79 meat packers, 54 are processing slaughterers, 10 non-processing slaughterers, and 15 non-slaughterers. The comparison between the 1943 operations and the base period (1936—39 average) operations shows for the 54 processing slaughterers: Net sales: 1943—$4,575,528,000 (after renegotiation refunds)/base period—$2,382,211,000; Profits before income taxes: 1943—$125,463,000 (after renegotiation refunds)/ base period—$24,415,000; Profits after taxes: 1943 $50,402,000 (after renegotiation refunds)/base period—$19,255,000; Return on sales: 1943—2.7%/base period—1.0%; Return on net worth: 1943—19.5%/base period—4.1%; Return on invested capital: 1943 16.5%/base period—4.1%. Id. at 45, 47. For the 10 nonprocessing slaughterers, the comparison shows: 1943—$1,027,000/base period—$184,000; Profits after taxes: 1943—$390,000/base period—$147,000; Return on sales: 1943 1.7%/base period—.6%; Return on net worth: 1943—28.0%/base period 6.3%; Return on invested capital: 1943—25.5%/base period—5.9%. Ibid. 12 Respondent's income account for the year ending December 31, 1943, shows: net sales: "Net sales.............. $14,225,056. Cost of sales........... 12,950,785. Selling, etc., exp......... 869,770. Operating profit........... 404,500. Other income................ 18,717. Total income............... 423,217. Misc. deductions............ 13,229. Income taxes............... 176,619. Net income................. 233,369. Earn., pfd. share................... $40.21 Earn., com. share................... 17.97" See Moody's Manual of Investments, American and Foreign, Industrial Securities, 1944, p. 647. The 1943 net income figure of $233,369 compared favorably with preceding years: 1942—$73,292; 1941—$150,069; 1940—$148,164; and 1939—d$76,936. 13 The court below found that in order to protect its good will and keep its organization intact, 'Throughout the period mentioned (prior to and after the March 1943 requisition), plaintiff (respondent) continued to buy live hogs at prevailing prices and to sell pork products derived from them at the ceiling prices authorized by regulations of the Office of Price Administration, even when the cost of live hogs was greater than the wholesale prices of the products obtained from them.' 67 F.Supp. at page 1022. 14 'If one enters my close, and with an iron sledge and bar breaks and displaces the stones on the land, being my chattels, and I request him to desist, and he refuses, and threatens me if I shall approach him; and upon this I, to prevent him from doing more damage to the stones, not daring to approach him, throw some stones at him molliter et molli manu, and they fall upon him molliter, still this is not a good justification, for the judges say that one cannot throw stones molliter, although it were confessed by a demurrer. * * *' Cole v. Maunder, 2 Roll.Abr. 548 (K.B. 1635) (as translated from the Norman French in Ames, Cases on Pleading (1875) 2). 15 The court below found that the $25,112.50 award was the equivalent of the ceiling price of the requisitioned property when sold at wholesale in carload quantities at Philadelphia on March 3, 1943, the date the Government took possession and title; that the respondent customarily sold its products at wholesale but in lots of less than 500 pounds each and that it made delivery to its customers by means of 57 route trucks; that the ceiling price if the requisitioned property had been sold in this customary manner would have been $26,362.50; that the difference between the two ceiling price figures resulted from the $1 per cwt. deduction established by the price regulation for sales in carload quantities; and that the '$1.00 differential was intended to partially defray the expense incurred for delivery and sale in less than carload quantities.' 67 F.Supp. at page 1022. Respondent did not challenge the reasonableness of the $1 differential in its petition filed with the court below. Respondent argues here, however, that the effect of the differential is to reduce the return it would have netted if it had been allowed to sell the requisitioned products in small quantities. But, bearing in mind that this is a suit for actual damages, the argument has a fatal weakness. If the respondent had sold in smaller quantities at the higher ceiling price and made delivery by truck, it would have incurred all of the expenses that motivated the differential invoicing, billing, handling, and transpr tation. None of these expenses was incurred when the Government requisitioned the pork products. The 'loss' in the gross sales figures would have been counterbalanced, to some extent at least, by the additional expenditures. Cf. Superior Packing Co. v. Clark, Em.App., 164 F.2d 343, 347, 348. All this bears on the guiding consideration that recovery in this action must be related to proof of actual loss. 1 See Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834; Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892. 2 Cf. Nortz v United States, 294 U.S. 317, 328, 329, 55 S.Ct. 428, 431, 79 L.Ed. 907, 95 A.L.R. 1346. 3 See Orgel, Valuation Under Eminent Domain (1936) 586. 1 In some situations the Court has allowed compensation for the destruction of property as being equivalent to 'taking' it, cf., e.g., United States v. Welch, 217 U.S. 333, 30 S.Ct. 527, 54 L.Ed. 787, 28 L.R.A.,N.S., 385, 19 Ann.Cas. 680; Richards v. Washington Terminal Co., 233 U.S. 546, 34 S.Ct. 654, 58 L.Ed. 1088, L.R.A.1915A, 887; United States v. General Motors Corporation, 323 U.S. 373, 384, 65 S.Ct. 357, 362, 89 L.Ed. 311; in others apparently what amounted in effect to destruction has been regarded as infliction of consequential injuries and thus as not compensable, cf. e.g., Bothwell v. United States, 254 U.S. 231, 41 S.Ct. 74, 65 L.Ed. 238; Mitchell v. United States, 267 U.S. 341, 45 S.Ct. 293, 69 L.Ed. 644. 2 67 F.Supp. 1017, 107 Ct.Cl. 155, 165. For this grounding the court relied upon citation of Seaboard Air Line R. Co. v. United States, 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664; Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 125, 44 S.Ct. 471, 475, 68 L.Ed. 934; United States v. Miller, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336, 147 A.L.R. 55; Walker v. United States, 64 F.Supp. 135, 105 Ct.Cl. 553. The quoted statement, of course, taken abstractly, is broad enough to permit the award of consequential damages, an effect contrary to this Court's consistent rulings. See the authorities cited in note 4. 3 67 F.Supp. 1017, 107 Ct.Cl. 155, 165. The record before us contains no proof that replacing the requisitioned goods was essential to prevent respondent from going out of business or that the loss of good will entailed by the taking, if not repaired by replacement, would have prevented continued employment of respondent's employees or disrupted its organization. 4 See United States v. Petty Motor Co., 327 U.S. 372, 378, 66 S.Ct. 596, 599, 90 L.Ed. 729, and authorities cited; cf. United States v. General Motors Corporation, 323 U.S. 373, 383, 65 S.Ct. 357, 361, 80 L.Ed. 311. 5 See authorities cited in note 4. 1 Such a rule hardly squares with the doctrine laid down by this Court more than fifty years ago that 'the compensation must be a full and perfect equivalent for the property taken,' Monongahela Navigation Company v. United States, 148 U.S. 312, 326, 13 S.Ct. 622, 626, 37 L.Ed. 463, or later expressions that 'the owner shall be put in as good a position pecuniarily as he would have been if his property had not been taken,' Seaboard Air Lin R. Co. v. United States, 261 U.S. 299, 304, 43 S.Ct. 354, 356, 67 L.Ed. 664; Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236; United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336. 2 '* * * in this fifth amendment there is stated the exact limitation on the power of the government to take private property for public uses.' Monongahela Navigation Co. v. United States, 148 U.S. 312, 325, 13 S.Ct. 622, 626, 37 L.Ed. 463. 3 The price approved as just compensation in L. Vogelstein & Co. v. United States, 262 U.S. 337, 43 S.Ct. 564, 67 L.Ed. 1012, was fixed by agreement between the Government and the producers, represented by a committee whose members Vogelstein had nominated, and helped to elect, to represent the industry. Thus that price is not comparable to the Government-dictated price involved in this case. In the Vogelstein case, this Court said: 'Appellant's contention that there was no market price other than that fixed by the fiat of the United States is without support. * * *' 262 U.S. at page 339, 43 S.Ct. at page 565, 67 L.Ed. 1012. And, further, 'The finding of the Court of Claims is plain and cannot be read as referring to a mere fiat price.' 262 U.S. at page 340, 43 S.Ct. at page 565, 67 L.Ed. 1012.
34
334 U.S. 806 68 S.Ct. 1185 92 L.Ed. 1739 HEDGEBETHv.STATE OF NORTH CAROLINA. No. 674. Argued April 27, 1948. Decided June 14, 1948. Mr. Wilford L. Whitley, Jr., of Plymouth, N.C., for petitioner pro hac vice by Special leave of Court. Mr. Ralph Moody, of Raleigh, N.C., for respondent. PER CURIAM. 1 After a conviction for robbery, petitioner sued out a writ of habeas corpus in a Superior Court of North Carolina claiming that the sentence he is serving involved a denial of his rights under the Fourteenth Amendment. The writ was dismissed and the dismissal affirmed by the Supreme Court of North Carolina, 228 N.C. 259, 45 S.E.2d 563. If petitioner's allegations, with supporting affidavits, in the habeas corpus proceedings controlled the issue before us, they would establish circumstances that make the right to assistance of counsel an ingredient of the Due Process Clause. While the Supreme Court of North Carolina recognized the right of an accused to the benefit of counsel under appropriate circumstances, it held that in the proceedings on the habeas corpus the trial court had before it not merely the petitioner's allegations but 'the oral testimony of the sheriff, which was not sent up.' In short, there was before the North Carolina Supreme Court only a partial record of the proceedings in the Superior Court. In reviewing a judgment of a State court, we are bound by the record on which that judgment was based. Since the North Carolina Supreme Court went on the ground that it did not have the full record before it, we are constrained to dismiss this writ because the judgment below can rest on a non-federal ground. Petitioner's rights under the Federal Constitution must be pursued according to the procedural requirements of North Carolina or, in default of relief by available North Carolina proceedings, by a new claim of denial of due process for want of such relief. Foster v. Illinois, 332 U.S. 134, 139, 67 S.Ct. 1716, 1719, 91 L.Ed. 1955. 2 Writ dismissed. 3 Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE are of the opinion that the judgment should be reversed.
89
334 U.S. 728 68 S.Ct. 1256 92 L.Ed. 1683 GRYGERv.BURKE. No. 541. Argued April 26, 27, 1948. Decided June 14, 1948. Rehearing Denied Oct. 11, 1948. Mr. Archibald Cox, of Cambridge, Mass., for petitioner. Mr. Franklin E. Barr, of Philadelphia, Pa., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 The Commonwealth of Pennsylvania holds the petitioner prisoner under a life sentence as an habitual criminal. His claim here, protesting denial by the State Supreme Court of his petition for a writ of habeas corpus, is that the Federal Constitution requires Pennsylvania to release him on due process of law grounds because (1) he was sene nced as a life offender without counsel or offer of counsel; (2) one of the convictions on which the sentence is based occurred before the enactment of the Pennsylvania Habitual Criminal Act1 and the statute is therefore unconstitutionally retroactive and ex post facto; and (3) sentencing under this Act unconstitutionally subjects him to double jeopardy. 2 At the outset, we face the suggestion that the case cannot properly be decided on the merits by this Court because, as a matter of state law, the attack on the life sentence may be premature since petitioner would be validly restrained on prior sentences not expiring until at least February 1949, even if the life sentence were to be invalidated. Some members of the Court prefer to affirm the judgment on that ground. However, since the state law question is not free from difficulty, the issue was not fully litigated in this Court, and since, on the merits,2 the same conclusion is reached, we dispose of the case in that manner. 3 Beginning in 1927, at the age of seventeen, this petitioner has been arrested eight times for crimes of violence, followed in each instance by plea of guilty or by conviction. Respondent states, and petitioner does not deny, that of the last 20 years of his life, over 13 years have been spent in jail. A schedule of his pleas or convictions and pertinent data is appended, those in italics being the four on the basis of which an information was filed charging him to be a fourth offender. Brought into court on that limited charge, he acknowledged his identity as the convict in each of the previous cases and he was given a life sentence pursuant to the Act. He was without counsel and it is said that he was neither advised of his right to obtain counsel nor was counsel offered to him.3 4 It rather overstrains our credulity to believe that one who had been a defendant eight times and for whom counsel had twice waged defenses, albeit unsuccessful ones, did not know of his right to engage counsel. No request to do so appears. The only question of fact before the court on the fourth offender charge was whether he was the same person who was convicted in the four cases. This he then admitted and does not now deny. The only other question was sentence, and it does not appear that any information helpful to petitioner was unknown to the court. 5 It is said that the sentencing judge prejudiced the defendant by a mistake in construing the Pennsylvania Habitual Criminal Act in that he regarded as mandatory a sentence which is discretionary. It is neither clear that the sentencing court so construed the statute, nor if he did that we are empowered to pronounce it an error of Pennsylvania law. It is clear that the trial court, in view of defendant's long criminal record, considered he had a duty to impose the life sentence and referred to it as one 'required by the Act.' But there is nothing to indicate that he felt constrained to impose the penalty except as the facts before him warranted it. And it in any event is for the Pennsylvania courts to say under its law what duty or discretion the court may have had. Nothing in the record impeaches the fairness and temperateness with which the trial judge approached his task. His action has been affirmed by the highest court of the Commonwealth. We are not at liberty to conjecture that the trial court acted under an interpretation of the state law different from that which we might adopt and then set up our own interpretation as a basis for declaring that due process has been denied. We cannot treat a mere error of state law, if one occurred, as a denial of due process; otherwise, every erroneous decision by a state court on state law would come here as a federal constitutional question. 6 We have just considered at length the obligation of the States to provide counsel to defendants who plead guilty to non-capital offenses. Bute v. Illinois, 333 U.S. 640, 68 S.Ct. 763. Notwithstanding the resourceful argument of assigned counsel in this Court, we think that precedent settles the issue here, that no exceptional circumstances are present and that, under the circumstances disclosed by the record before us, the State's failure to provide counsel for this petitioner on his plea to the fourth offender charge did not render his conviction and sentence invalid. 7 Nor do we think the fact that one of the convictions that entered into the calculations by which petitioner became a fourth offender occurred before the Act was passed, makes the Act invalidly retroactive or subjects the petitioner to double jeopardy. The sentence as a fourth offender or habitual criminal is not to be viewed as either a new jeopardy or additional penalty for the earlier crimes. It is a stiffened penalty for the latest crime, which is considered to be an aggravated offense because a repetitive one. Cf. Moore v. Missouri, 159 U.S. 673, 16 S.Ct. 179, 40 L.Ed. 301; McDonald v. Massachusetts, 180 U.S. 311, 21 S.Ct. 389, 45 L.Ed. 542; Graham v. West Virginia, 224 U.S. 616, 32 S.Ct. 583, 56 L.Ed. 917; Carlesi v. New York, 233 U.S. 51, 34 S.Ct. 576, 58 L.Ed. 843; Pennsylvania ex rel. Sullivan v. Ashe, 302 U.S. 51, 58 S.Ct. 59, 82 L.Ed. 43. 8 The judgment is affirmed. 9 Table of Pleas and Convictions. 10 Date Charge Plea Sentence 11 1927 Burglary Guilty 1 year. 12 1928 Assault and battery; Guilty 1 year. 13 carrying concealed 14 deadly weapon. 15 1929 Burglary; breaking and Not guilty Committed to 16 entering with intent to Reformatory 17 commit a felony. indefinitely. 18 1930 Armed robbery, armed Guilty 5 to 10 years. 19 assualt, entering with 20 intent to rob. 21 1937 Burglary, carrying Guilty of receiving stolen 1 1/2 to 22 concealed deadly weapon. goods, and carrying 3 years. 23 concealed deadly weapon. 24 1943 Burglary, receiving stolen Guilty of receiving 5 to 10 years. 25 good's—12 offenses each stolen goods. 26 1944 Burglary Not guilty 5 to 10 years. 27 1944 Aggravated assault and Not guilty Suspended. 28 battery. 29 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK, Mr. Justice DOUGLAS and Mr. Justice MURPHY join, dissenting. 30 Even upon the narrow view to which a majority of this Court adhere concerning the scope of the right to counsel in criminal cases, as guaranteed by the Fourteenth Amendment's requirement of due process of law, I cannot square the decision in this case with that made in Townsend v. Burke, 334 U.S. 736, 62 S.Ct. 1252. 31 The opinion in that case declares that 'the disadvantage from absence of counsel, when aggravated by circumstances showing that it resulted in the prisoner actually being taken advantage of, or prejudiced, does make out a case of violation of due process.' In this view the Court finds that Townsend was prejudiced by the trial court's action in sentencing him on the basis either of misinformation sum itted to it concerning his prior criminal record or by its misreading of the record and carelessness in that respect. On the same basis Gryger's sentence was invalid, although the Court finds no such exceptional circumstances here inducing prejudice as it finds in Townsend's case. 32 The record, in my judgment, does reveal such a circumstance, one working to induce prejudice at exactly the same point as with Townsend, namely, upon the critical question of sentence. So far as the record reveals, Gryger was sentenced to life imprisonment by a court working under the misconception that a life term was mandatory, not discretionary, under the Pennsylvania Habitual Criminal Act.1 33 Exactly the opposite is true. In explicit terms the statute puts imposition of life imprisonment upon fourth offenders 'in the discretion of the judge.'2 Moreover, appeal of the sentence is authorized 'not only as to alleged legal errors but also as to the justice thereof,' with the costs of appeal and reasonable counsel fee to be paid by the Commonwealth.3 34 In spite of his discretion and duty to exercise it, the sentencing judge, remarking that the only question was whether petitioner was the same person who had suffered the prior convictions, repeatedly spoke as if the life sentence were mandatory. The statements quoted in the margin are typical.4 35 It is immaterial that the same sentence might or probably would have been imposed in an exercise of the court's discretion. Petitioner was entitled to have sentence pronounced in that manner, not as an automatic mandate of statute. The denial of the very essence of the judicial process, which is the exercise of discretion where discretion is required, is in itself a denial of due process, not merely an error of state law of no concern to this Court. And we cannot speculate whether the same sentence would have been pronounced if the court's discretion had been exercised. 36 Moreover, the court's misconception, together with the absence of counsel, deprived the petitioner of any chance to be heard on the crucial question of sentence, the only matter left for hearing and the vital one after his plea of guilty was received. Even if it could be assumed, as the Court says, that he knew of his right to counsel from his frequent prior appearances in court,5 still it cannot be assumed, indeed the record substantially disproves, that he knew the exact terms of the Habitual Criminal Act.6 He therefore, misled it would seem by the court's language giving no hint of its discretionary power, made no plea in mitigation and had no representative to correct the court's misconception or present considerations which might have induced a sentence less severe than the one pronounced. To paraphrase the concluding sentence of the opn ion in the Townsend case, 'Counsel might not have changed the sentence, but he could have taken steps to see that the sentence was not predicated on misconception or misreading of the controlling statute, a requirement of fair play which absence of counsel withheld from this prisoner.' 37 I find it difficult to comprehend that the court's misreading or misinformation concerning the facts of record vital to the proper exercise of the sentencing function is prejudicial and deprives the defendant of due process of law, but its misreading or misconception of the controlling statute, in a matter so vital as imposing mandatory sentence or exercising discretion concerning it, has no such effect. Perhaps the difference serves only to illustrate how capricious are the results when the right to counsel is made to depend not upon the mandate of the Constitution, but upon the vagaries of whether judges, the same or different, will regard this incident or that in the course of particular criminal proceedings as prejudicial. 1 § 1108 of the Penal Code of 1939, 18 P.S. § 5108. 2 Respondent contested the case below and in this Court on the merits. We assume that the Supreme Court of Pennsylvania passed on petitioner's allegations of deprivation of federal constitutional rights and that those issues are therefore open here. Herndon v. Lowry, 301 U.S. 242, 247, 57 S.Ct. 732, 734, 81 L.Ed. 1066. 3 The Supreme Court of Pennsylvania has frequently held that the state constitutional provision according defendants the right to be heard by counsel does not require appointment of counsel in noncapital cases. See, for example, Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 24 A.2d 1; Commonwealth ex rel. Withers v. Ashe, 350 Pa. 493, 39 A.2d 610. See also Betts v. Brady, 316 U.S. 455, 465, 62 S.Ct. 1252, 1257, 86 L.Ed. 1595. The Pennsylvania statutes require only that destitute dependents accused of murder shall be assigned counsel. Act of March 22, 1907, 19 P.S. § 784. 1 Pa.Stat.Ann. tit. 18, § 5108. 2 Section 5108(b) provides that when the prior convictions are shown at the trial for the fourth offense, the defendant 'shall, upon conviction * * * be sentenced, in the discretion of the judge trying the case, to imprisonment in a state penitentiary for the term of his natural life.' Section 5108(d), which authorizes the procedure followed in the instant case, viz., a separate proceeding on an information within two years of the fourth conviction, provides that 'the court may sentence him to imprisonment for life as prescribed in clause (b) of this section * * *.' That the statute vests discretion in the sentencing judge has been clearly recognized by the Commonwealth's highest court. Commonwealth ex rel. Foster v. Ashe, 336 Pa. 238, 240, 8 A.2d 542. 3 § 5108(d). 4 '* * * it becomes my duty, under the Act of Assembly, to treat such a case, that is to say, where a person has been found guilty the fourth time of a felony within a prescribed period, to impose the sentence required by the Act.' 'In other words, the law has come to this viewpoint: * * * (a fourth offender) must be removed from the possibility of ever committing the offense again.' 5 A dubious assumption, it would seem, in view of the fact that Pennsylvania generally confines the right to have counsel in criminal trials to capital cases. See, e.g., Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 24 A.2d 1; Commonwealth ex rel. Withers v. Ashe, 350 Pa. 493, 39 A.2d 610, 19 P.S. § 784. But cf. note 3 and text. 6 Petitioner, when served with the information charging him as a fourth offender, was confined in the penitentiary without financial means of preparing a defense. He alleged, without contradiction, that the prison authorities refused his request for a copy of the Habitual Criminal Act. It is no answer, of course, to say that petitioner had no need of the statute or other assistance because of his previous trips through the courts. Whatever knowledge of court procedures he may have acquired, he was unfamiliar with the fourth offender act. Even if petitioner had secured access prior to the hearing to materials needed to prepare a defense, or had been adequately informed by the court as to the statute's terms and his rights thereunder, it is highly unrealistic to assume that petitioner was capable of adequately presenting his own case at the hearing. The pleadings which he filed are telling witness of his limited intelligence and education. And at the hearing it was so obvious that petitioner was unable to comprehend the issues involved that the assistant district attorney representing the Commonwealth remarked, 'He doesn't understand.'
01
334 U.S. 602 68 S.Ct. 1284 92 L.Ed. 1601 UNITED STATESv.ZAZOVE. No. 432. Argued April 19, 1948. Decided June 14, 1948. Rehearing Denied Oct. 11, 1948. See 69 S.Ct. 12. [Syllabus from pages 602-604 intentionally omitted] Mr. Oscar H. Davis, of Washington, D.C., for petitioner. Mr. Edward H. S. Martin, of Chicago, Ill., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 We are called upon in this case to determine whether Regulation 3450 of the Veterans' Administration1 is in accord with a proper construction of § 602(h)(2) of the National Service Life Insurance Act of 1940.2 2 Respondent, Tillie Zazove, was designated beneficiary in a $5,000 contract of National Service Life Insurance. The insured died in 1943, and the named beneficiary filed her claim for the insurance in the Veterans' Administration. Upon denial of the claim, suit was instituted in the District Court for the Northern District of Illinois.3 The District Court ruled, on its view of the facts, that Mrs. Zazove did not stand in loco parentis to the soldier and hence was not one of the persons who could be made a beneficiary as provided by the statute.4 On appeal, the Circuit Court of Appeals for the Seventh Circuit ruled to the contrary and remanded for further proceedings. 156 F.2d 24. 3 The issue remaining for determination by the District Court upon remand was the validity of Regulation 3450. It sustained the regulation as properly issued pursuant to the National Service Life Insurance Act. On a second appeal, the Circuit Court of Appeals, one judge dissenting, reversed. 162 F.2d 443. We granted certiorari to review the important question of statutory construction involved. 4 The basic statutory provision involved is § 602(h) of the National Service Life Insurance Act of 1940, which provides that insurance issued under the Act 'shall be payable in the following manner: 5 '(1) if the beneficiary to whom payment is first made is under thirty years of age at the time of maturity, in two hundred and forty equal monthly installments: * * * 6 '(2) If the beneficiary to whom payment is first made is thirty or more years of age at the time of maturity, in equal monthly installments for one hundred and twenty months certain, with such payments continuing during the remaining lifetime of such beneficiary.' 7 The Administrator, acting under the general rule-making power given him by the Act,5 promulgated Regulation 3450 (set forth in the margin)6 shortly after the enactment of the statute, to put § 602(h) into operation. The regulation provides, for beneficiaries covered by clause (1), that 'payment shall be made in 240 equal monthly installments at the rate of $5.51 for each $1,000 of such insurance.' The amount of the monthly installment is so calculated that the sum of the 240 installments equals the face value of the insurance plus 3% intr est per annum. 8 It is the provision made by the regulation for first beneficiaries covered by clause (2) that is in issue, since the first beneficiary in this case, Mrs. Zazove, was more than thirty years old when the policy matured. For such beneficiaries, who are to receive payments for life with 120 payments certain, the regulation provides that the 'amount of the monthly installment for each $1,000 of insurance shall be determined by the age of the beneficiary as of last birthday at the time of the death of the insured, in accordance with a schedule based upon the American Experience Table of Mortality and interest at the rate of 3 percentum per annum. * * *' Accordingly, the size of the monthly installment varies not merely with the face value of the insurance policy but also with the age of the first beneficiary, the latter factor being used as the basis of an actuarial computation whereby the face value of the policy plus interest is equalized over the life expectancy of the beneficiary. Under this interpretation of § 602(h)(2), the respondent, who was 54 years of age at the death of the insured, is entitled to monthly installments of $29.50, at the rate of $5.90 for each $1,000 of insurance in which she had a beneficial interest. These installments are to be paid for 120 months certain,7 and to continue during her remaining lifetime if she lives beyond that 10-year period. 9 In reversing the District Court, the Circuit Court of Appeals held this method of calculation e t forth by Regulation 3450 to be inconsistent with the provisions of § 602(h)(2). It construed the latter provisions, in accord with the respondent's contention, as plainly requiring that the total of the equal monthly installments payable over a period of 120 months certain should equal the face value of the insurance, plus interest. Under this construction, Mrs. Zazove is entitled to receive $48.08, instead of $29.50, as her monthly installment, so that the total of the 120 payments certain will amount to $5,000 (plus interest), instead of $3,450 (plus interest) as determined by the Veterans' Administration, with the monthly installments due her if she survives the period of guaranteed payments continuing at the same rate. Taking into account Mrs. Zazove's life expectancy as estimated by the American Experience Table of Mortality, the actual cash value of this $5,000 insurance policy at the time of the insured's death would amount of $8,145 under respondent's construction, instead of $5,000 as determined by the regulation.8 10 In arriving at its decision, the majority of the Circuit Court of Appeals reasoned that the terms of § 602(h)(2) are clear and unambiguous; that nothing is said in the statute about equalizing the sum over the life expectancy of the beneficiary; and that Congress unmistakably prescribed payment of the face value plus interest in equal monthly installments over a period of 120 months certain. The major difficulty with this reasoning lies in the inadequate consideration that it gives to the full extent of the payment provided by § 602(h)(2). In effect, the Circuit Court of Appeals majority stopped short, in its reading of the terms for payment of the insurance in that subsection, at the end of the phrase 'in equal monthly installments for one hundred and twenty months certain.' By stopping short at that phrase, the court failed to consider the alternative possibility that Congress intended the immediately following phrase, 'with such payments continuing during the remaining lifetime of such beneficiary,' to provide an additional and equally essential component of the statutory equivalent for the face value of the insurance. Assuming that this alternative construction of the section is in fact what Congress intended, the only proper interpretative regulation would be one that computed the value of the monthly installments payable to any given first beneficiary in such a manner that the value of the payments to be made, giving due weight to the beneficiary's life expectancy at the death of the insured, would be equivalent to the face value of the policy, plus 3% interest. Regulation 3450 is based on that assumption. It was only because the Circuit Court of Appeals failed to regard the continuing payability of monthly installments, after the payment of the 120 installments certain, as possibly constituting a significant component of the insurance for which the serviceman had contracted, rather than a sheer gratuity conferred by Congress, that the court could view the subsection as plainly and without ambiguity requiring the face value of the insurance to be paid by the end of the 120 months certain. 11 Moreover, the very presence of the term 'certain' in the phrase 'equal monthly installments for one hundred and twenty months certain' suggests a view contrary to that reached by the court below. It will be noted that when Congress had in mind, as it clearly did in the case of § 602(h)(1), that a fixed number of installments provided for should equal the face value of the insurance, there was no occasion for the use of 'certain' in describing the installments to be made and, indeed, the term is not found in § 602(h)(1). While the inclusion of the term in describing the fixed number of installments to be paid under § 602(h)(2) might conceivably be a mere superfluity, its presence at least suggests the far greater probability that it was used in the specialized, technical sense in which it is generally employed in the insurance field—namely, to indicate a guaranty that a designated number of monthly payments shall be forthcoming, where a policy provides an option for equal monthly installments continuing throughout the lifetime of a payee, with the individual installment varying in amount depending on the age of the beneficiary when the policy matures.9 12 Hence, in our view, a reading of § 602(h)(2) in its entirety suffices to demonstrate that the language there used by Congress is far from being so clear and so free from ambiguity as to preclude the construction adopted by the Veterans' Administration in Regulation 3450. To this extent, we believe the reasoning of the Circuit Court of Appeals was in error. But that alone would not necessarily invalidate its holding since, as the Government appears to concede, the terms of § 602(h)(2) are not unambiguously in accord with the regulation. Indeed, if the ambiguity inherent in § 602(h)(2) were found in the terms of an ordinary commercial insurance policy, there might well be substantial ground for construing it in favor of the insured.10 13 There is, of course, a marked distinction between the criteria for judicial construction of an ordinary commercial insurance contract, and construction of the provisions of an act of Congress setting up a system of national life insurance for servicemen to be administered by a governmental agency. The statutory provisions, where ambiguous, are to be construed liberally to effectuate the beneficial purposes that Congress had in mind. In this respect, judicial construction of the statute may appear similar to construction of a commercial policy, where ambiguous provisions are generally construed in favor of the insured. In the latter case, construction favorable to the insured rests on the theory that 'The phraseology of contracts of insurance is that chosen by the insurer and the contract in fixed form is tendered to the prospective policy holder who is often without technical training, and who rarely accepts it with a lawyer at his elbow. So if its language is reasonably open to two constructions, that more favorable to the insured will be adopted * * * and unless it is obvious that the words are intended to be used in their technical connotation they will be given the meaning that common speech imports. * * *'11 But the statute is an expression of legislative intent rather than the embodiment of an agreement between Congress and the insured person. Only the intent of Congress, which in this case is the insurer, need be ascertained to fix the meaning of the statutory terms; the layman understanding of the policy holder does not have the relevance here that it has in the construction of a commercial contract.12 14 On the other hand, we think it clear that an administrative regulation purporting to construe an ambiguous subsection of the National Life Insurance Act of 1940 is not automatically to be deemed valid merely because not plainly interdicted by the terms of the particular provision construed. The Administrator's general rule-making power, which was exercised in issuing Regulation 3450, is limited by the statute to 'such rules and regulations, not inconsistent with the provisions of this chapter, as are necessary or ap ropriate to carry out its purposes * * *.'13 Moreover, a 1946 amendment to § 608, designed to eliminate the finality of the decisions of the Administrator on insurance matters,14 amended the last sentence of § 608 to add the words set out in italics: 15 'Except in the event of suit as provided in section 617 hereof, or other appropriate court proceedings, all decisions rendered by the Administrator under the provisions of this Act, or regulations properly issued pursuant thereto, shall be final and conclusive on all questions of law or fact, and no other official of the United States, except a judge or judges of United States courts, shall have jurisdiction to review any such decisions.' 16 The extension of procedures available to secure judicial review, the interpolation of the word 'properly,' and the addition, presumably out of an abundance of caution, of the tautological phrase 'except a judge or judges of United States courts' are indicative of congressional concern that the regulations of the Veterans' Administration be subject to more than casual judicial scrutiny when they are based upon a controverted construction of the statute. 17 Accordingly, § 602(h)(2) must be read in the full context of related sections of the statute and other indicia of legislative intent before we can adequately determine whether the regulation is 'not inconsistent' with the provisions of the Act and whether it is 'necessary or appropriate to carry out its purposes.' We turn therefore from narrow, semantic considerations to a broader context in which the intent of Congress can be more readily comprehended. 18 The proper meaning of § 602(h)(2) becomes apparent when the respective assumptions and consequences of each of the two alternative interpretations before us are tested against the legislative history and the statute viewed in its entirety. The construction adopted by the Circuit Court of Appeals would result in conferring a far greater return to beneficiaries in the group covered by § 602(h)(2), i.e., over thirty at the time of the insured's death, than the return to which first beneficiaries covered by § 602(h)(1), i.e., under thirty at the insured's death, are entitled. It is unquestioned that the latter group, under the original statutory provisions,15 were entitled only to 240 monthly installments (i.e., over a 20-year period) which in the aggregate equal the face value plus interest, with no further installments payable thereafter, whether or not the payee survived that limited period. But, under the ruling of the Circuit Court of Appeals, payments in many if not most of the cases involving the former group of beneficiaries would exceed the face value of the policy since any first beneficiary who survived the 10-year period of § 602(h) (2) would automatically secure more than that amount. In fact, the actual value of a policy, at maturity, to a 30-year old beneficiary, under this ruling, would be almost two and a half times its face amount,16 whereas the 29-year old beneficiary, paid in accordance with § 602(h)(1) (whose interpretation is not open to question), could never receive more than the face amount, plus interest. And the aggregate of guaranteed and continuing payments made at so high a rate under § 602(h)(2) would necessarily greatly exceed the total face value of the policies issued under the statute.17 19 This sharp disparity between the two different groups of beneficiaries does not result under the regulation, since the age of the first beneficiary is used by the regulation as the basis of an actuarial calculation pursuant to a formula whereby total payments under § 602(h)(2) approximate the face value of the policies, plus interest. The extent of the difference in result is indicated by the table, set forth in the margin,18 of comparative present values of the monthly installments under the regulation and under the view of the Circuit Court of Appeals, taking into account the beneficiary's life expectancy as shown by the American Experience Table of Mortality. 20 The Circuit Court thought it probable that Congress originally intended the higher rate of benefit payments to be restricted to the beneficiaries covered by § 602(h)(2) because that group of persons over 30 at the time of the serviceman's death would include parents, who would be at least middleaged, and 'young widows with small children whose ten years of monthly payments would end at the most needed time.'19 This would hardly serve to explain, however, why Congress would intentionally discriminate in so substantial a manner against a similarly deserving but slightly younger widow in the under-thirty category by failing to extend comparable benefits to the latter group. 21 The disparity in benefits available under the respondent's view, as contrasted with those available under the regulation, is reflected in a correspondingly large increase, under the former view, in the total liability for beneficial payments.20 This greatly enhanced liability could be met, theoretically, in either of two ways: by special congressional appropriations, or by greatly increased premium rates substantially above those which are now set by the Veterans' Administration on the assumption that the regulation is proper. 22 The Circuit Court of Appeals was of the opinion that Congress intended the Government to bear the burden of this extraordinary liability. By express provisions in the 1940 Act, Congress specified that the United States would bear the administrative costs of the insurance system,21 excess mortality and disability cost resulting from the extra hazards of war,22 and the cost of reimbursing the reserve fund for waiving recovery of benefit payments erroneously made where it would be inequitable to require repayment.23 Congress obviously contemplated that the reserve fund to meet the liabilities of National Service Life Insurance policies was to be self-supporting, sustained by the premiums paid and by the yield of premiums invested, in all respects aside from those exceptional situations where the statute specifically designated that the Government would bear the financial burden. Yet Congress nowhere specified that the United States would bear the huge cost of the enhanced liability that it would necessarily have anticipated had it impressed upon § 602(h)(2) the meaning that respondent finds there; and that striking omission is persuasive, in the absence of cogent considerations to the contrary, that no generosity of this magnitude was contemplated.24 23 Nor can it be assumed that Congress envisaged the setting of premium rates high enough to meet an added liability of such proportions. Senator Harrison, who was in charge of the original bill, informed the Senate that 'Premium rates based on the average age—25 years—will be 67 cents per thousand per month.'25 Such a rate, though adequate to cover payments under Regulation 3450, would be completely inadequate under the respondent's construction. 24 Moreover, whatever ambiguity exists in the language of § 602(h)(2) is dispelled by a consideration of the practice in effect under United States Government Life Insurance, established for World War I veterans, and the long-established prat ice of commercial insurance companies, viewed as part of the background of experience which the draftsmen of § 602(h)(2) may be assumed to have had in mind. 25 The World War Veterans Act, 1924,26 provided for payment of insurance benefits in 240 equal monthly installments, but authorized the Veterans' Administration (formerly the Veterans' Bureau) to provide in the contract of insurance 'for optional settlements, to be selected by the insured, whereby such insurance may be made payable either in one sum or in installments for thirty-six months or more. * * *' One of the options set up by Regulation 3068 under this statutory authorization, provided that monthly installments in amounts designated in an appended table—the amounts being graduated, just as in Regulation 3450, with the 'age of beneficiary at time of death of the insured'—'will be payable throughout the lifetime of the designated beneficiary, but if such designated beneficiary dies before 240 such installments have been paid, the remaining unpaid monthly installments will be payable in accordance with the beneficiary provisions of the policy.'27 26 It seems apparent to us that the congressional draftsmen, in framing § 602(h) (2), were undoubtedly striving to incorporate into the 1940 Act a provision modeled on the life-annuity-with-240-payments-certain option set up by Regulation 3068 under the World War Veterans Act of 1924, deviating materially only in the number of payments guaranteed. True, § 602(h)(2) does not itself define expressly the method of computation to be used by the Administrator in determining the size of the monthly installments in any given case. But, taking into account the factors previously set forth and considering them against the background of experience under the 1924 Act, the only reasonable conclusion is that Congress intended the calculation to be an acturial one, based on the age of the beneficiary. To subscribe to the opposite conclusion, we must believe that Congress intended, by its wording of § 602(h)(2), to bestow upon beneficiaries of World War II servicemen total payments completely disproportionate to those available to beneficiaries of World War I servicemen. To believe that Congress, by the enactment of a somewhat ambiguous provision, intended this disproportionate result along with the other disparities that have been shown to be required by the respondent's view, puts too great a strain upon the imagination. 27 Moreover, the congressional draftsmen of § 602(h)(2), with the example before them of the 1924 Act and the similar practice of standard commercial insurance companies, undoubtedly considered that even the very wording of that subsection, without more, necessarily implied that the Administrator was to follow the existing practice in calculating the size of the monthly installments. As previously noted, the term 'certain' appearing in the phrase 'equal monthly installments for one hundred and twenty months certain' is a technical word that connotes, because of the context in which it is commonly used in standard commercial policies, an actuarial calculation of the monthly installments payable. 28 For example, one of the standard life insurance policies used in 1940 provided for a life income option to be 'Made payable in equal annual, semi-annual, quarterly or monthly instalments for ten or twenty years certain, with payments continuing during the remaining lifetime of the person upon whose life the income depends. * * * The first instalment will be due upon the date on which the option becomes operative. The amount of such instalments shall be determined in accordance with the table of instalments on the following page, which instalments include interest at the rate of 3% per annum, and shall be based on the sex and the age at birthday nearest the due date of the first instalment, of the person upon whose life the income deped s. * * *'28 Another example, closer to the concise form of § 602(h)(2), though using the term 'fixed' rather than 'certain,' is an option which provides for 'the payment of equal monthly instalments in accordance with the table below (a table whose payments are graduated in amount with respect to the 'Age of Payee Nearest Birthday at Date of First Instalment'), to the insured or the beneficiary, as the case may be, for a fixed period of ten years and for so long thereafter as the payee shall survive, the first instalment being payable immediately.'29 29 Congress may also have assumed that its intent was made manifest by the juxtaposition of § 602(h)(2) with other provisions having similar connotations. Section 605(b), for example, authorizes the Administrator 'to set aside out of (the National Service Life Insurance Fund) such reserve amounts as may be required under accepted actuarial principles, to meet all liabilities under such insurance * * *.' (Italics added.) And § 602(e) provides that the premium rates, all 'cash, loan, paid up, and extended values, and all other calculations in connection with such insurance, shall be based upon said American Experience Table of Mortality and interest at the rate of 3 per centum per annum. * * *' (Italics added.) 30 In any event, the subsequent legislative history of the statute clearly indicates congressional approval of the construction put upon § 602(h)(2) by Regulation 3450. A proposed bill was suggested in a letter written by the Administrator of the Veterans' Administration to Congress in June, 1944, to amend §§ 602(h)(1) and 602(h)(2) of the 1940 Act by authorizing 'the election of a refund life income in lieu of the mode of payments now provided.'30 In explaining the necessity of the amendment, the Administrator pointed out that if 'a widow having a minor child, who is entitled to payments as provided in section 602(h)(2), dies after having received one or more installments of insurance, payments under the contract will cease after payment of 120 installments has been completed even though the total amount of the installments paid or payable is less than the face value of the policy and even though the child is too young to be capable of self-support at the time payments expire. The proposed amendments will authorize the payment of the full face value of the insurance in every instance and will also insure an income throughout the lifetime of the first beneficiary under the policy.'31 31 In other words, the amendment was proposed partly to extend a life income option to beneficiaries covered by § 602(h)(1), who theretofore had been eligible only for the 240-payment plan, and partly to provide a solution for the inequitable situation presented in certain cases covered by the provisions of § 602(h)(2), when the 120 installments certain amounted to less than the face value of the policy and the first beneficiaryd ied before having received an amount equal to that face value. The inequitable situation thus considered to be present under § 602(h)(2) and sought to be ameliorated by the proposed amendment could not have existed, of course, if the Circuit Court of Appeals were correct in the construction it has put upon § 602(h)(2). 32 The Senate Committee on Finance, in recommending passage of the bill, adopted the Administrator's letter as explanatory of the various provisions of the bill32 and indicated thereby its approval of the interpretation embodied in Regulation 3450, since otherwise a major purpose claimed to be effected by the amendment would have been completely illusory. Moreover, a table included in the Administrator's letter, comparing the amount of each monthly imstallment and the sum of the guaranteed installments under the new refund life income plan and under § 602(h)(2), clearly apprised Congress of the construction put upon the latter section by the regulation. Hence, in enacting the amendment33 Congress indicated its approval of the interpretation upon which the Regulation is based.34 33 Similar recognition that in many instances 'the aggregate amount of insurance actually payable' under the original mode of settlement provided by § 602(h)(2) 'amounted to much less than the face of the policy' was given by the House Committee on World War Veterans' Legislation, in recommending a 1946 amendment to permit policies on which payments had been made prior to the 1944 act to elect the refund life income plan.35 The 1946 bill also included a provision setting up optional modes of settlement for insurance maturing on or after August 1, 1946, and the third option was couched in language identical in every significant respect to that used in the original § 602(h)(2).36 Accordingly, when Congress enacted the 1946 bill, it in effect incorporated the old provision of § 602(h)(2), which was the basis for Regulation 3450, and in our view thereby accepted the construction embodied in that regulation, which had been so clearly brought to its attention on this and prior occasions. 34 Further evidence, were any needed, that Congress accepted as its own this interpretation of the language used in § 602(h)(2) is supplied by the significant distinction maintained in this reenactment between the mode of payment originally provided by § 602(h)(2) and the refund life income plan, viewed in the light of the House Committee Report on the bill. It is hardly conceivable and if conceivable, hardly explicable—that Congress meant one thing by the language it used in § 602(h)(2) when enacting the original measure in 1940, and another, quite different thing, when it reenacted that language in 1946. 35 In the light of the foregoing considerations the validity of Regulation 3450 is sustained and the decision of the Circuit Court of Appeals is reversed. 36 Reversed. 1 6 Fed.Reg. 1162, 1166, 38 C.F.R. 1941 Supp. § 10.3450. 2 Part I, Title VI of the Second Revenue Act of 1940, Act of Oct. 8, 1940, c. 757, 54 Stat. 974, 1008, 38 U.S.C. §§ 801, 802(h)(2), 38 U.S.C.A. §§ 801, 802(h)(2). 3 Pursuant to § 617 of the Act, 38 U.S.C. § 817, 38 U.S.C.A. § 817. 4 § 602(g), 38 U.S.C. § 802(g), 38 U.S.C.A. § 802(g). 5 Sec. 608, 38 U.S.C. § 808, 38 U.S.C.A. § 808: 'The Administrator, subject to the general direction of the President, shall administer, execute, and enforce the provisions of this chapter, shall have power to make such rules and regulations, not inconsistent with the provisions of this chapter, as are necessary or appropriate to carry out its purposes, and shall decide all questions arising hereunder. * * *' 6 'Payment to first beneficiary.—Upon due proof of the death of the insured while a National Service Life Insurance policy is in force, the monthly installments, without interest, which have accrued since the death of the insured (the first installment being due on the date of death of the insured) and the monthly installments which thereafter become payable in accordance with the provisions of the policy, shall be paid to the beneficiary or beneficiaries entitled in the following manner: '(a) If the beneficiary to whom payment is first made is under thirty years of age at the time of the death of the insured, payment shall be made in 240 equal monthly installments at the rate of $5.51 for each $1,000 of such insurance. '(b) If the beneficiary to whom payment is first made is thirty or more years of age at the time of the death of the insured, payment shall be made in equal monthly installments for 120 months certain, with such payment continuing throughout the remaining life-time of such beneficiary. The amount of the monthly installment for each $1,000 of insurance shall be determined by the age of the beneficiary as of last birthday at the time of the death of the insured, in accordance with the following schedule based upon the American Experience Table of Mortality and interest at the rate of 3 percentum per annum: "Age of beneficiary Amount of each at date of death monthly of insured installment 30...................... $3.97 . . . 40....................... 4.50 . . . 50....................... 5.39 . . . 54....................... 5.90 . . . 60....................... 6.81 . . . 68....................... 8.19 . . . 70....................... 8.51 . . . 80....................... 9.55 . . . 7 If the first beneficiary fails to survive the 10-year period, after having received at least one installment, 'thereafter monthly installments in the same amount shall be paid to the person or persons entitled as beneficiary until all of the installments certain shall have been paid.' Regulation 3451, 6 Fed.Reg. 1162, 1166, 38 C.F.R.Cum.Supp. § 10.3451. 8 See table, infra note 18. 9 See examples, in the text infra, of standard usage of this term in commercial insurance policies. 10 See Aschenbrenner v. United States Fidelity & Guaranty Co., 1934, 292 U.S. 80, 84 et seq., 54 S.Ct. 590, 592, 78 L.Ed. 1137; Manufacturers' Accident Indemnity Co. v. Dorgan, 6 Cir., 58 F. 945, 956, 22 L.R.A. 620. 11 Aschenbrenner v. United States Fidelity & Guaranty Co., supra note 10, at pages 84, 85, of 292 U.S., at page 590 of 54 S.Ct. 12 This is not, of course, to deny that the statute and regulations adopted pursuant to it give rise to an obligation that has the force of a binding contract with the serviceman insured. See Lynch v. United States, 1934, 292 U.S. 571, 579, 54 S.Ct. 840, 843, 78 L.Ed. 1434. 13 § 608, 38 U.S.C. § 808, 38 U.S.C.A. § 808, quoted in part supra, note 6. 14 S.Rep.No.1705, 79th Cong., 2d Sess. 9; H.R.Rep.No.2002, 79th Cong., 2d Sess. 10; § 12 of the 1946 amendment, 60 Stat. 781, 788, amending § 608. 15 The statute was amended in 1946 to make all future beneficiaries, regardless of age, eligible for the life annuity with 120 guaranteed payments previously limited to those over thirty. § 9 of the 1946 amendment, 60 Stat. 781, 785, adding subsection (t)(3) to § 602 of the 1940 Act. 16 See table, infra note 18. 17 Ibid. As mentioned in note 15 supra, the life annuity with 120 guaranteed pam ents was made available in 1946 to all beneficiaries regardless of age. Acceptance of respondent's interpretation would require us to view Congress as having offered, in the 1946 amendment, four optional settlements (see note 36 infra), three of which would be limited in value at maturity to the face amount of the insurance, while the fourth option would offer a value far in excess of the face amount and would be available to all beneficiaries without regard to their age at the insured's death. By the calculations of the American Experience Table, a person has to be 68 years old before his life expectancy is less than 10 years. Accordingly, in all cases where the first beneficiary is under 68 years of age at the time the insured dies, the actual value of the policy, thus computed, would exceed its face amount. The Administrator estimates that, on the approximately 2.1 billion dollars of death claims already incurred and now being settled under the provision for life income with installments guaranteed for 120 months, the additional liability that would result if settlement were required to be made pursuant to the Circuit Court's holding would amount to approximately 1.8 billion dollars. Government's brief, p. 67. Potential liability on the billions of dollars of insurance now in force and yet to mature would similarly be vastly increased under this view. The precise size of the latter liability is of course problematical. In a letter to the Solicitor General, dated October 24, 1947, the Veterans' Administration estimated the amount of insurance in force and not yet matured at 35 billion dollars. Assuming that all of that insurance would be held to mature at death and that the typical beneficiary would be a woman aged 30 at the death of her husband, and that all policies would be settled under the life income option with installments guaranteed for 120 months, the Administrator estimated that potential liability under respondent's view of the statute might be about 97 billion dollars, instead of 35 billion dollars (the potential liability under Regulation 3450)—an increased future liability of 62 billion dollars. And if 10% of all lapsed policies were reinstated, the potential additional liability (on the basis of the above assumptions) would be about 19.7 billion dollars. While these assumptions may be overly favorable to the Government's contentions and may not be fully borne out by the course of future events, it is obvious—even allowing for a wide margin of error—that the added potential liability under the holding of the Circuit Court of Appeals might well amount to billions of dollars. 18 Present value Present value under under Beneficiary's Regulation C. C. A. 7 age 3450 view 10............... $1,000. $2,786 20............... 1,000. 2,633 30............... 1,000. 2,421 40............... 1,000. 2,136 50............... 1,000. 1,783 54............... 1,000. 1,629 60............... 1,000. 1,411 70............... 1,000. 1,129 See Appendix D of the Government's brief for the mathematical formulae used in constructing this table. 19 Transcript of Record, p. 10. 20 Under the respondent's view, this extraordinary putative liability must be considered to have been tremendously increased by the extension of the § 602(h) (2) method of payment to all beneficiaries by the 1946 amendment which removed the limiting age factor. See note 15 supra. 21 § 606, 38 U.S.C. § 806, 38 U.S.C.A. § 806. 22 § 607(a), 38 U.S.C. § 807(a), 38 U.S.C.A. § 807(a). 23 § 609, 38 U.S.C. § 809, 38 U.S.C.A. § 809. Subsequent amendments to the 1940 Act added other specified costs to be borne by the United States. See, e.g., 38 U.S.C.Supp. V, § 802 et seq., 38 U.S.C.A. § 802 et seq. 24 Cf. the reasoning of the Court, speaking through Mr. Justice Holmes, in Pine Hill Coal Co. v. United States, 1922, 259 U.S. 191, 196, 42 S.Ct. 482, 483, 66 L.Ed. 894: 'A liability in any case is not to be imposed upon a Government without clear words * * * and where, as here, the liability would mount to great sums, only the plainest language could warrant a Court in taking it to be imposed. * * *' 25 86 Cong.Rec. 12920 (1940). 26 Title III, 43 Stat. 607, 624, as amended, 38 U.S.C. § 512, 38 U.S.C.A. § 512. 27 38 C.F.R. 10.3068. 28 The Handy Guide to Standard and Special Contracts (1940) 294. 29 Id. at 613. A third illustration provides in the following terms for an election between a plan similar to that provided by § 602(h)(2) as construed by Regulation 3450, and the refund life income plan provided by the 1944 amendment to the statute (see note 33 infra): 'The company will pay equal monthly instalments during the payee's remaining life, with 120 or 240 instalments certain or with instalments certain until the proceeds are refunded, as may be designated in the election of the option, the amount of each instalment to be determined from the table entitled 'Option 4—Life Income With Instalments Certain' in accordance with the sex of the payee and the age of the payee at the payee's birthday nearest to the date when the proceeds of this policy shall become payable, the first of said instalments to be payable immediately. * * *' Handy Guide, supra note 28, at 983. See also id. at 1284-85. 30 S.Rep. No. 1105, 78th Cong., 2d Sess. 2, quoting the Administrator's letter. 31 Id. (Italics added.) 32 Id. at 1. 33 Section 6 of the 1944 Act, 58 Stat. 762, 763, amended § 602(h)(2) by providing that the Administrator 'may include a provision in the insurance contract authorizing the insured or the beneficiary to elect, in lieu of this mode of payment, a refund life income in monthly installments payable for such period certain as may be required in order that the sum of the installments certain, including a last installment of such reduced amount as may be necessary, shall equal the face value of the contract less any indebtedness with such payments continuing throughout the lifetime of such beneficiary: Provided further, That such optional settlement shall not be available in any case in which such settlement would result in payments of installments over a shorter period than one hundred and twenty months, nor in any case in which payments of insurance installments have been commenced prior to the date of this amendatory Act.' Section 5 of the 1944 Act added a similar amendment to § 602(h)(1). 34 Cf. Alexander v. Mayor, &c., 1809, 5 Cranch 1, 7, 8, 3 L.Ed. 19. 35 H.R.Rep. No. 2002, 79th Cong., 2d Sess. 5. The measure was approved by Congress, and § 5(a) of the Act amends § 602(h)(1) and (2) as indicated. 60 Stat. 781, 782, 783. 36 Section 9 of the Act added to § 602 a new subsection (t). reading as follows: 'Insurance maturing on or subsequent to the date of enactment of the Insurance Act of 1946 shall be payable in accordance with the following optional modes of settlement: '(1) In one sum. '(2) In equal monthly installments of from thirty-six to two hundred and forty in number, in multiples of twelve. '(3) In equal monthly installments for one hundred and twenty months certain with such payments continuing during the remaining lifetime of the first beneficiary. '(4) As a refund life income in monthly installments payable for such pr iod certain as may be required in order that the sum of the installments certain, including a last installment of such reduced amount as may be necessary, shall equal the face value of the contract, less any indebtedness, with such payments continuing throughout the lifetime of the first beneficiary: Provided, That such optional settlement shall not be available in any case in which such settlement would result in payments of installments over a shorter period than one hundred and twenty months. * * *'
12
334 U.S. 672 68 S.Ct. 1270 92 L.Ed. 1647 WADEv.MAYO. No. 40. Submitted March 9, 1948. Decided June 14, 1948. [Syllabus from pages 672-674 intentionally omitted] Mr. E. M. Baynes, of West Palm Beach, Fla., for petitioner. Mr. J. Tom Watson and Sumter Leitner, both of Tallahassee, Fla., for respondent. Mr. Justice MURPHY delivered the opinion of the Court. 1 This case centers on two issues: (1) whether it was proper for a federal district court to entertain a habeas corpus petition filed by a state prisoner who, having secured a ruling from the highest state court on his federal constitutional claim, had failed to seek a writ of certiorari in this Court; (2) whether the federal district court correctly held that the prisoner had been deprived of his constitutional right to counsel at the trial for a non-capital state offense. 2 On February 19, 1945, petitioner Wade was arrested in Palm Beach County, Florida, upon the charge of breaking and entering. He was held in jail until brought to trial before a jury on March 14, 1945, in the Criminal Court of Record of Palm Beach County. Just before the trial started, he asked the trial judge to appoint counsel to represent him, claiming that it was financially impossible to employ one himself. The judge refused the request and the trial proceeded. The juryr eturned a verdict of guilty on the same day and Wade was immediately sentenced to serve five years in the state penitentiary. 3 Wade then obtained the aid of counsel. On March 16, two days after the trial and conviction, this counsel filed a petition for a writ of habeas corpus in the Circuit Court of Palm Beach County. The petition claimed that the refusal of the judge to appoint counsel for Wade at the trial was a denial of the due process of law guaranteed to him by the Fourteenth Amendment to the Constitution of the United States. The writ was issued, a hearing was had, and the Circuit Court thereupon granted the motion of the state's attorney to quash the writ. This action was taken on the authority of two decisions of the Supreme Court of Florida holding that under Florida law a trial court has no duty to appoint counsel to represent the accused in a non-capital case. Watson v. State, 142 Fla. 218, 194 So. 640; Johnson v. State, 148 Fla. 510, 4 So.2d 671. 4 Wade's counsel appealed the decision of the Circuit Court to the Supreme Court of Florida. In the latter court, the state's Attorney General filed a motion to dismiss the appeal as frivolous. Two points were emphasized in this motion: (1) Wade had not appealed from his conviction or even filed a motion for a new trial; (2) the Circuit Court had quashed the habeas corpus writ on the authority of the two cases cited in its order. The Supreme Court, upon consideration of this motion, granted the motion and dismissed the appeal. No written opinion was filed and no indication was given whether the appeal was dismissed for one or both of the reasons advanced by the Attorney General. The date of this action was May 14, 1945. No attempt was made to secure a writ of certiorari from this Court. 5 Nearly a year later, on May 8, 1946, a petition for a writ of habeas corpus was filed in the United States District Court for the Southern District of Florida. This petition alleged that the refusal to appoint counsel for Wade at the trial deprived him of his constitutional right to due process of law. And the petition further stated that this point had not been raised by way of appeal from the conviction because of the belief that the Watson and Johnson cases made it plain that the Supreme Court of Florida 'has not power of reversal of a conviction because defendants were not represented by counsel, and for that reason failed to obtain a fair trial, except in capital cases, and this case is not a capital case.' Such was the reason given for the belief that an appeal would have been useless and of no avail. But the petition pointed out that in order to exhaust all his remedies in the state courts before applying to a federal court, Wade had pursued a writ of habeas corpus all the way through the Florida courts. 6 The District Court granted the writ and a hearing was held on May 17, 1946. Both Wade and the trial judge testified as to the events surrounding the refusal to appoint counsel. After hearing this testimony and the argument of counsel, the District Court concluded that under the circumstances the denial of Wade's request was contrary to the due process guaranteed by the Fourteenth Amendment, thereby rendering void the judgment and commitment under which Wade was held. But the Fifth Circuit Court of Appeals reversed, holding that the Fourteenth Amendment did not require the appointment of counsel in non-capital state cases unless the state law so required. 158 F.2d 614. 7 We then granted certiorari. 331 U.S. 801, 67 S.Ct. 1529, 91 L.Ed. 1825. After the case had been submitted to us on briefs, we ordered the case restored to the docket for reargument on two points: '(1) the propriety of the exercise of jurisdiction by the District Court in this case when it appears of record, in the state's motion for dismissal of the appeal on habeas corpus, that petitioner had not availed himself of the remedy of appeal from his conviction, apparently open after trial though now barred by limitation * * * (2) whether the failure of Florida to make this objection in this proceeding affects the above problem.' 8 In our view, it was proper for the District Court to entertain Wade's petition for a writ of habeas corpus and to proceed to a determination of the merits of Wade's constitutional claim. The crucial point is that Wade has exhausted one of the two alternative routes open in the Florida courts for securing an answer to his constitutional objection. It now appears that a defendant who is denied counsel in a non-capital case in Florida may attack the constitutionality of such treatment either by the direct method of an appeal from the conviction or by the collateral method of habeas corpus. Since Wade chose the latter alternative and pursued it through to the Supreme Court of Florida, he has done all that could be done to secure a determination of his claim by the Florida courts. The fact that he might have appealed his conviction and made the same claim and received the same answer does not detract from the completeness with which Florida has disposed of his claim on habeas corpus. The exhaustion of but one of several available alternatives is all that is necessary. 9 At the time the Supreme Court of Florida dismissed Wade's habeas corpus appeal, however, the propriety of the habeas corpus method of raising the right of counsel issue was anything but clear. The failure of that court to specify the reason for the dismissal made it possible to construe the action as a holding that a direct appeal from the conviction was the only remedy available to Wade. The Attorney General's motion to dismiss the habeas corpus appeal seemed to make that point and the Supreme Court might have adopted it as the sole ground of dismissal. Had that been the situation, the case before us would be in an entirely different posture. Wade would then be in the position of seeking relief in a federal court after having chosen to forego the opportunity to secure recognition of his claim by the exclusive mode designated by Florida. 10 But the doubts as to the availability of habeas corpus in Florida for the purpose at hand have been dispelled by the subsequent decision of the Supreme Court of Florida in Johnson v. Mayo, 158 Fla. 264, 28 So.2d 585. That case was a habeas corpus proceeding in which the Florida court proceeded to pass upon the merits of a claim identical with that raised by Wade. In so doing, the court relied upon the disposition of Wade's habeas corpus appeal, stating that it had been dismissed as frivolous. As the Johnson case makes clear, Wade's appeal was considered frivolous because the right to counsel in a non-capital case is counter to the settled law of Florida. Reference was made in the Johnson decision to the contrary decisions in other states and to 'the rule in the Federal Courts but we are of the view that those decisions do not control in Florida.' 158 Fla. at page 266, 28 So.2d at page 586. 11 Thus the Supreme Court of Florida announced unambiguously less than a year and a half after its dismissal of Wade's appeal that its action had been grounded on the merits of the constitutional issue tendered by Wade, rather than on a holding that a direct appeal was the only way to raise that issue. It is not for us to contradict this construction by the Florida court and to attribute the dismissal of Wade's appeal to a state ground of procedure which is negatived by both the decision and the reasoning in the later Johnson case. 12 The only real problem in this case concerning the propriety of the District Court entertaining Wade's petition relates to the effect of his failure to seek a writ of certiorari from this Court following the action of the Supreme Court of Florida on his habeas corpus appeal. It has been said that 'Ordinarily an application for habeas corpus by one detained under a state court judgment of conviction for crime will be entertained by a federal court only after all state remedies available, including all appellate remedies in the state cor ts and in this Court by appeal or writ of certiorari, have been exhausted.' Ex parte Hawk, 321 U.S. 114, 116, 117, 64 S.Ct. 448, 450, 88 L.Ed. 572. The problem is to reexamine this statement in the light of the facts of this case. 13 The requirement that state remedies be exhausted before relief i sought in the federal courts is grounded primarily upon the respect which federal courts have for the state judicial processes and upon the administrative necessities of the federal judiciary. State courts are duty bound to give full effect to federal constitutional rights and it cannot be assumed that they will be derelict in their duty. Only after state remedies have been exhausted without the federal claim having been vindicated may federal courts properly intervene. Indeed, any other rule would visit upon the federal courts an impossible burden, forcing them to supervise the countless state criminal proceedings in which deprivations of federal constitutional rights are alleged. 14 But the reasons for this exhaustion principle cease after the highest state court has rendered a decision on the merits of the federal constitutional claim. The state procedure has then ended and there is no longer any danger of a collision between federal and state authority. The problem shifts from the consummation of state remedies to the nature and extent of the federal review of the constitutional issue. The exertion of such review at this point, however, is not in any real sense a part of the state procedure. It is an invocation of federal authority growing out of the supremacy of the Federal Constitution and the necessity of giving effect to that supremacy if the state processes have failed to do so. 15 After state procedure has been exhausted, the concern in with the appropriate federal forum in which to pursue further the constitutional claim. The choice lies between applying directly to this Court for review of the constitutional issue by certiorari or instituting an original habeas corpus proceeding in a federal district court. Considerations of prompt and orderly procedure in the federal courts will often dictate that direct review be sought first in this Court. And where a prisoner has neglected to seek that review, such failure may be a relevant consideration for a district court in determining whether to entertain a subsequent habeas corpus petition. 16 But the factors which make it desirable to present the constitutional issue directly and initially to this Court do not justify a hard and fast rule to that effect, especially in view of the volume of this Court's business. Writs of certiorari are matters of grace. Matters relevant to the exercise of our certiorari discretion frequently result in denials of the writ without any consideration of the merits. The constitutional issue may thus have no bearing upon the denial of the writ. Where it is apparent or even possible that such would be the disposition of a petition for certiorari from the state court's judgment, failure to file a petition should not prejudice the right to file a habeas corpus application in a district court. Good judicial administration is not furthered by insistence on futile procedure. 17 Moreover, the flexible nature of the writ of habeas corpus counsels against erecting a rigid procedural rule that has the effect of imposing a new jurisdictional limitation on the writ. Habeas corpus is presently available for use by a district court within its recognized jurisdiction whenever necessary to prevent an unjust and illegal deprivation of human liberty. Cf. Price v. Johnston, 334 U.S. 266, 68 S.Ct. 1049, 1059. Where the matter is otherwise within the jurisdiction of the district court, it is within the discretion of that court to weigh the failure to seek certiorari against the miscarriage of justice that might result from a failure to grant relief. In short, we refuse to codify the failure to invoke the discretionary certiorari powers of this Court into an absolute denial of the district o urt's power to entertain a habeas corpus application. The prevention of undue restraints on liberty is more important than mechanical and unrealistic administration of the federal courts. 18 Fear has sometimes been expressed that the exercise of the district court's power to entertain habeas corpus petitions under these circumstances might give rise to frequent instances of a single federal judge upsetting the judgment of a state court, often the highest court of the state. But to restrict the writ of habeas corpus for such reason is to limit it on the basis of a discredited fear. Experience has demonstrated that district court judges have used this power sparingly and that only in a negligible number of instances have convictions sustained by state courts been reversed. Statistics compiled by the Administrative Office of the United States Courts show that during the fiscal years of 1943, 1944 and 1945 there was an average of 451 habeas corpus petitions filed each year in federal district courts by prisoners serving state court sentences; of these petitions, an average of but 6 per year resulted in a reversal of the conviction and a release of the prisoner. The releases thus constituted only 1.3% of the total petitions filed. In light of such figures, it cannot be said that federal judges have lightly exercised their power to release prisoners held under the authority of a state. See Ex parte Royall, 117 U.S. 241, 253, 6 S.Ct. 734, 741, 29 L.Ed. 868. 19 In the instant case, we believe that it was well within the discretion of the District Court to consider Wade's petition for a writ of habeas corpus. The Florida courts had given a full and conclusive answer to his claim that he had been denied his constitutional right to counsel. No other remedies were available in Florida. True, he did not seek certiorari following the dismissal of his habeas corpus appeal by the Supreme Court of Florida. But at the time of that dismissal, it was extremely doubtful, to say the least, whether the constitutional issue had really been decided. That doubt was such as to make it reasonably certain that this Court would have denied certiorari on the theory that an adequate state ground appeared to underlie the judgment. His failure to make this futile attempt to secure certiorari accordingly should not prejudice his subsequent petition for habeas corpus in the District Court. Otherwise he would be left completely remediless, having been unable to secure relief from the Florida courts and being barred from invoking the aid of the federal courts. 20 As to the merits of Wade's constitutional claim, the District Court made the following findings after a hearing at which Wade and the trial judge gave testimony: 'The Court has heard the evidence of the respective parties and the argument of their counsel. It appears that petitioner, at the time of his trial in the Criminal Court of Record of Palm Beach, Florida, was eighteen years old, and though not wholly a stranger to the Court Room, having been convicted of prior offenses, was still an inexperienced youth unfamiliar with Court procedure, and not capable of adequately representing himself. It is admitted by the Judge who presided at petitioner's trial on March 6, 1945 that petitioner in open Court, before trial commenced, requested said Judge to appoint counsel for him, but the request was denied and petitioner placed on trial without counsel. * * * The denial of petitioner's request in the circumstances here involved constitutes a denial of due process, contrary to the 14th Amendment of the Federal Constitution, which renders void the judgment and commitment under which petitioner is held. * * *' 21 As the Circuit Court of Appeals pointed out, the evidence at the hearing before the District Court further showed that during the progress of the trial Wade (a) was advised by the trial judge of his right to challenge jurors and excuse as many as six without reason, a right which he did not exercise; (b) was afforded an p portunity, which he accepted, to cross-examine state witnesses; (c) took the stand and testified in his own behalf; and (d) was offered the privilege of arguing his case to the jury but declined, as did the prosecuting attorney. 22 We are not disposed to disagree with the findings and conclusion of the District Court. Its determination was a purely factual one to the effect that Wade was an inexperienced youth incapable of adequately representing himself even in a trial which apparently involved no complicated legal questions. This is a judgment which is peculiarly within the province of the trier of facts, based upon personal observation of Wade. And we do not find that the District Court's determination was clearly erroneous. 23 There are some individuals who, by reason of age, ignorance or mental capacity are incapable of representing themselves adequately in a prosecution of a relatively simple nature. This incapacity is purely personal and can be determined only by an examination and observation of the individual. Where such incapacity is present, the refusal to appoint counsel is a denial of due process of law under the Fourteenth Amendment. 24 The Circuit Court of Appeals was therefore in error in reversing the District Court's judgment. It was also in error in assuming that the failure to appoint counsel in a non-capatal case in a state court is a denial of due process under the Fourteenth Amendment only if the law of the state requires such an appointment. To the extent that there is a constitutional right to counsel in this type of case it stems directly from the Fourteenth Amendment and not from state statutes. Betts v. Brady, 316 U.S. 455, 473, 62 S.Ct. 1252, 1261, 86 L.Ed. 1595. 25 Reversed. 26 Mr. Justice REED, dissenting. 27 Donald Wade was brought to trial March 14, 1945, in the Criminal Court of Record of Palm Beach County, Florida. On the same day, after proceedings before the presiding judge in which Wade represented himself, he was convicted of the crime of breaking and entering, and sentenced to five years' imprisonment. Wade did not appeal his conviction, but on March 16, 1945, having obtained the aid of counsel, he brought a petition for a writ of habeas corpus in the Circuit Court of Palm Beach County; on March 22, 1945, that court quashed the writ; an appeal from the order quashing the writ was taken to the Supreme Court of Florida and on May 14, 1945, that court dismissed the appeal without stating whether it disposed of the case on the merits or upon a procedural ground.1 However, in a later case, Johnson v. Mayo, 158 Fla. 264, 28 So.2d 585, the Florida Supreme Court indicated that its ruling in the Wade case had been upon the merits. For the purposes of this opinion, I assume that this decision was upon the merits. Wade failed to bring a writ of certiorari to this Court to review the action of the state Supreme Court. On May 8, 1946, a petition for a writ of habeas corpus was filed in the federal District Court for the Southern District of Florida. The writ was granted and a hearing set for May 17, 1946. At the hearing the court examined Wade's claim that he had been deprived of his constitutional rights by the failure of Florida to furnish him with counsel. It concluded that Wade had been deprived of those rights and ordered that he be released from the custody of the respondent, Mayo, and be remanded to the custody of the sheriff of Palm Beach County, Florida, to be held for any further proceedings which the state should take. On appeal, the Circuit Court of Appeals for the Fifth Circuit reversed the lower court. It held that the Constitution does not require that a state furnish counsel to one in the position of Wade. It based this conclusion, we think, from examination of its opinion, on Betts v. Brady, 316 U.S. 455, 62 S.Ct. 1252, 86 L.Ed. 1595, not on any ruling that state law determines the necessity for the appointment of counsel in state cases in all non-capital prosecutions.2 We granted certiorari, 31 U.S. 801, 67 S.Ct. 1529, 91 L.Ed. 1825; the case was submitted to us; on November 10, 1947, we ordered the case restored to the docket for reargument, directing that counsel discuss these questions: '(1) the propriety of the exercise of jurisdiction by the District Court in this case when it appears of record, in the state's motion or dismissal of the appeal on habeas corpus, that petitioner had not availed himself of the remedy of appeal from his conviction, apparently open after trial though now barred by limitation * * *; (2) whether the failure of Florida to make this objection in this proceeding affects the above problem.' I. 28 The first question in this case is whether Wade's failure to bring a writ of certiorari to this Court from the judgment of the Florida Supreme Court in his state habeas corpus proceeding should affect his effort to obtain release through a federal writ of habeas corpus. Or, to rephrase the problem, should certiorari to this Court be considered a part of the state remedy for purposes of the well-recognized doctrine of exhaustion of state remedies? Mooney v. Holohan, 294 U.S. 103, 55 S.Ct. 340, 79 L.Ed. 791, 98 A.L.R. 406. 29 This inquiry may be started by considering Ex parte Hawk, 321 U.S. 114, 64 S.Ct. 448, 88 L.Ed. 572. The unanimous opinion in this case was handed down January 31, 1944. Hawk had made a motion for leave to file a writ of habeas corpus in this Court. His application was denied on the ground that he had failed to exhaust the state remedies available to him. The opinion in Hawk's case, however, has been understood by this and other courts as having been designed to give direction for procedure to advise federal courts in their consideration of applications for habeas corpus brought by a person confined under a state criminal cinviction.3 One of the rules which this Court prescribed governs the issue now under consideration. 30 'Ordinarily an application for habeas corpus by one detained under a state court judgment of conviction for crime will be entertained by a federal court only after all state remedies available, including all appellate remedies in the state courts and in this Court by appeal or writ of certiorari, have been exhausted. Tinsley v. Anderson, 171 U.S. 101, 104, 105, 18 S.Ct. 805, 807, 43 L.Ed. 91; Urquhart v. Brown, 205 U.S. 179, 27 S.Ct. 459, 51 L.Ed. 760; United States ex rel. Kennedy v. Tyler, 269 U.S. 13, 46 S.Ct. 1, 70 L.Ed. 138; Mooney v. Holohan, supra, 294 U.S. at page 115, 55 S.Ct. at page 343; Ex parte Abernathy, 320 U.S. 219, 64 S.Ct. 13 (88 L.Ed. 3).'4 31 After a person, protected by the presumption of innocence, has been convicted by a state trial court and his conviction has been subjected either to direct or collateral attacks in the state courts,5 wise administration commands that this Court be asked, by appeal or certiorari, to pass upon the federal constitutional questions presented.6 It is only by such a procedure that the validity of state criminal conviction can be expeditiously and finally adjudicated.7 32 The lower federal courts have consistently followed this rule of practice. Some district judges have used form letters which they sent to convicts confined in state prisons who sought habeas corpus.8 In Gordon v. Scudder, 163 F.2d 518, the Circuit Court of Appeals for the Ninth Circuit applied the rule to a state habeas corpus proceeding in which the habeas corpus had been denied without opinion. All of the circuit courts which have considered this rule have approved it.9 33 Today the Court both limits and confuses the doctrine of exhaustion of state remedies so clearly expounded in Ex parte Hawk, supra. Certainly in habeas corpus procedure for review of state convictions is essential so that the applicant may know the way to test the constitutionality of his conviction and so that the public and its judicial system may be spared undue expense and interference from a succession of petitions that cannot be considered on the merits because of procedural defects. The serious and difficult problems of habeas corpus procedure in the federal courts cannot be solved by rules which have as their very core vagueness and uncertainty.10 34 I conclude that certiorari should be considered a part of the state procedure for purposes of habeas corpus. II. 35 The next issue is this. Can Wade, having failed to use a state remedy once available11—appeal—and having failed to take a writ of certiorari to this Court from the denial of his state habeas corpus, with no conditions existing or claimed that restricted his ability to proceed in the regular course in the handling of his case after verdict, obtain relief in a federal habeas corpus proceeding for an alleged deprivation of his constitutional right to counsel when it appears that no state remedy in which relief cn be obtained is now available?12 36 The federal courts have the power to discharge upon a writ of habeas corpus 'a prisoner * * * in custody in violation of the Constitution * * * of the United States. * * *'13 This Court held in Frank v. Mangum, that this writ is a proper procedure 'to safeguard the liberty of all persons within the jurisdiction of the United States against infringement through any violation of the Constitution * * *.'14 The dissent in the Frank case agreed with the Court's theory of the availability of habeas corpus, saying at page 346 of 237 U.S., at page 595 of 35 S.Ct., 59 L.Ed. 969: 'But habeas corpus cuts through all forms and goes to the very tissue of the structure. It comes in from the outside, not in subordination to the proceedings, and although every form may have been preserved, opens the inquiry whether they have been more than an empty shell.' As Wade alleged a deprivation of his constitutional rights, the district court had jurisdiction to entertain the petition for the writ of habeas corpus. 37 Habeas corpus is, however, a discretionary writ.15 Thus, the question presented is this: Was it proper for the district court to exercise its jurisdiction when it appeared of record that Wade had not availed himself of the remedy of appeal, open after trial though now barred by limitation and had failed to exhaust, by writ of certiorari, the state remedy of habeas corpus? An answer to this problem can best be derived from a consideration of the nature and function of habeas corpus in a federal system of government, the relevant precedents and analogies drawn from the decided habeas corpus cases, and the resolution of similar questions in related fields. 38 State judicial systems are designed to provide places of trial for offenders against the criminal laws of their respective states. State courts equally with federal courts administer justice under the authority and limitations of the Constitution of the United States, the supreme law of the land, binding the judges in every state 'any thing in the constitution or laws of any state to the contrary notwithstanding.'16 Thus, whenever a prisoner brings a petition for a writ of habeas corpus in the federal courts challenging collaterally a conviction in the state courts and asking release from state custody, serious questions of the relation between the federal and state judicial structures are raised. 'It is an exceedingly delicate jurisdiction given to the federal courts, by which a person under indictment in a state court, and subject to its laws, may, by a decision of a single judge of a federal court, upon a writ of habeas corpus, be taken out of the custody of the officers of the state, and finally discharged therefrom * * *.'17 Respect for the theory and practice of our dual system of government requires that federal courts intervene by habeas corpus in state criminal prosecutions only in exceptional circumstances. Their duty compels them to act where the state fails to provide a remedy for violations of constitutional rights but due regard for a state's system of justice admonishes federal courts to be chary of allowing the extraordinary writ of habeas corpus where the accused, without excuse, has not exhausted the remedies offered by the State to redress violations of federal constitutional rights.18 39 The desirability of discretionary limitation of the habeas corpus power of federal courts in respect to state criminal prosecutions which inheres in the dual sovereignties of the federal system is re-enforced by considerations of practical administration: (1) it is not to be assumed that state courts deliberately deny to the individual his rights under the Federal Constitution; (2) the normal paths of review—appeal and petition for certiorari—are open to correct federal constitutional errors in state criminal proceedings; (3) extravagant exercise of federal jurisdiction would furnish another technique of delay in a criminal system which often permits long periods of time to elapse between sentencing and execution of sentence. 40 Because of the above reasons, the federal courts exercise their habeas corpus jurisdiction where an individual is in the custody of a state in limited types of situations. For example: (1) where all state remedies have been exhausted; (2) where the state remedy is seriously inadequate;19 and (3) where a state attempts to interfere improperly with the Federal Government. 41 The third class of cases represents the largest group of situations in which federal courts exercise habeas corpus jurisdiction without the exhaustion of state remedies. The cases of this type which have come before this Court are examples of the use of habeas corpus to prevent state interference with the administration of a branch of the Federal Government,20 or with a federal agency,21 or with treaty rights of the United States.22 42 The second class is represented in this Court by only one case, Moore v. Dempsey, 261 U.S. 86, 43 S.Ct. 265, 67 L.Ed. 543. There exhaustion of state remedies was not required.23 'We assume in accordance with that case (Frank v. Mangum, 237 U.S. 309, 335, 35 S.Ct. 582, 590, 59 L.Ed. 969) that the corrective process supplied by the State may be so adequate that interference by habeas corpus ought not to be allowed. * * * But if the case is that the whole proceeding is a mask—that counsel, jury and judge were swept to the fatal end by an irresistible wave of public passion, and that the State Courts failed to correct the wrongs, neither perfection in the machinery for correction nor the possibility that the trial court and counsel saw no other way of avoiding an immediate outbreak of the mob can prevent this Court from securing to the petitioners their constitutional rights.'24 That Moore's case is unique, emphasizes its unusual nature; this Court has not again been compelled to resort to this extreme procedure to protect constitutional rights. 43 The greatest number of habeas corpus cases in the federal courts fall into class one. In Ex parte Hawk, supra, we stated the principle which governs these cases: 'Ordinarily an application for habeas corpus by one detained under a state court judgment of conviction for crime will be entertained by a federal court only after all state remedies available, including all appellate remedies in the state courts and in this Court by appeal or writ of certiorari, have been exhausted. * * *'25 Litigation of this category offers the best example of the general principle of federal-habeas-corpus restraint. The insistence that state remedies be exhausted is but a concise statement of the proposition that state courts must, in all but the most exceptional cases, be the forums in which all the problems incident to a state criminal prosecution are to be answered. 44 Where a state offers an adequate remedy for the correction of errors in criminal trials, that remedy must be followed. Where there is a denial of constitutional rights by the highest court of a state, a remedy exists by direct review in this Court.26 An accused should not be permitted to reserve grounds for a habeas corpus petition in federal courts which would have furnished a basis for a review in regular course in the state court; not even when those grounds are that the accused was denied a constitutional right by a state court subject to reversal by a higher state court.27 To permit such trifling with state criminal law would disrupt its efficient administration. The federal court's refusal of consideration depends on the rule that the federal courts should not utilize habeas corpus to take the place of state remedies except in extraordinary situations where otherwise the accused would be 'remediless.'28 It is not seemly that years after a conviction, when time has dulled memories, when death has stilled tongues, when records are unavailable, convicted felons, unburdened by any handicap to a normal presentation of any claim of unfairness in their trial, should be permitted to attack their sentences collaterally by habeas corpus because of errors, known to them at the time of trial. When it is shown by the record that a petitioner in a federal court for relief from a state conviction that involves a denial of constitutional rights has without adequate excuse failed to use an available state judicial remedy, although all such remedies are now barred to him by limitation, I think tha federal courts should not intervene to correct the error. 45 In Goto v. Lane, 265 U.S. 393, 44 S.Ct. 525, 68 L.Ed. 1070, this Court was asked to consider the issue of whether a group of prisoners, convicted of a crime in the territorial courts of Hawaii, had the right to raise in a habeas corpus proceeding brought in a federal district court alleged deprivations of their constitutional rights. The Court said: 'And, if the petitioners permitted the time within which a review on writ of error might be obtained to elapse and thereby lost the opportunity for such a review, that gave no right to resort to habeas corpus as a substitute.'29 The Court found no reasons which in the exercise of a sound judicial discretion, excused the petitioners from seeking review by writ of error. Consequently, it affirmed the judgment of the district court which had refused to issue the writ. This case is a persuasive precedent in the situation now before us because the state courts of the forty-eight states and the territorial courts of Hawaii stood, in 1924, in similar positions in relation to the federal judicial structure. As the scope of review of this Court in criminal cases from state courts and Hawaiian territorial courts was then the same, no valid distinctions can be drawn between Goto's case and the situation now before us.30 46 It should not be thought that the practice which I would follow represents the sole instance in our jurisprudence of the loss of the right to press constitutional questions because of failure on the part of the individual to raise those issues properly or in time. The principle that federal constitutional questions must be properly raised in state courts before they will be considered by this Court is too well established to require citation. In a case decided this Term, Parker v. Illinois, 333 . S. 571, 68 S.Ct. 708, Parker was held to have lost his right to raise federal constitutional questions because of state procedure which required that those questions be raised by direct appeal to the state Supreme Court. Parker appealed his case to the intermediate Appellate Court and, consequently lost any chance of an adjudication by this Court of those issues.31 III. 47 It seems to me that the considerations, analogies, and precedents discussed above admit of only one answer to the basic problem of this case. This petitioner had counsel in ample time to permit a petition for certiorari to this Court. There is not a suggestion in the record of any interference, through his own disabilities or otherwise, with petitioner's right to secure, through counsel of his own choice, review of his allegedly erroneous conviction.32 Therefore, I think that the District Court to whom this petition for a writ of habeas corpus from a conviction in a state court was presented should have refused cognizance of the writ, sua sponte, since the record showed that state remedies were available33 after the alleged denial of constitutional rights and that the petitioner neglected to take advantage of those remedies.34 'Available' as here used carries the connotation of ability and opportunity to take advantage of the state procedure.35 Florida's failure to object to consideration of the petition for habeas corpus because certiorari was not requested cannot have the effect of authorizing a federal court to examine into the validity of the conviction. The reason for not allowing habeas corpus in such cases does not depend upon state acquiescence but upon the federal judicial policy of non-interference with state criminal administration unless there has been complete use and final exhaustion of state remedies. 48 On the hypothesis that the decision of the Florida Supreme Court dismissing Wade's appeal from the order of the Circuit Court of Palm Beach County, Florida, was entered on the ground that the remedy in Florida for the denial of the right to counsel was by appeal instead of habeas corpus, Wade stands in no better position. If that was the real basis of the dismissal of the appeal, Wade failed to avail himself of the remedy of appeal then open to him in Florida, though now foreclosed by limitation. No doubt his counsel by motion could have obtained a ruling from the Florida Supreme Court as to whether their dismissal was on a federal or state ground in view of the then rule of this Court in Ex parte Hawk, supra, 321 U.S. at page 117, 64 S.Ct. 448, that an applicant for habeas corpus n federal courts must exhaust state remedies including appeal or certiorari to this Court. This would have permitted Wade to bring his constitutional question here for review under a regular course of procedure. If the Florida Supreme Court had refused a clarifying order, this Court would have had resources for reaching a conclusion in such a situation. See Loftus v. Illinois, 334 U.S. 804, 68 S.Ct. 1212. Consequently, I think that the judgment of the Circuit Court of Appeals should be affirmed and the case remanded to the District Court with instructions that the petition for habeas corpus be dismissed. 49 The CHIEF JUSTICE, Mr. Justice JACKSON and Mr. Justice BURTON join in this dissent. 1 Wade v. Kirk, 155 Fla. 906, 23 So.2d 163. 2 Mayo v. Wade, 5 Cir., 158 F.2d 614. 3 This Court has, in a number of instances, through its Clerk, distributed this opinion to state prisoners seeking habeas corpus relief in federal courts. Potter v. Dowd, 7 Cir., 146 F.2d 244, 248: 'The Hawk decision is the latest of the Supreme Court on the subject. It was no doubt intended to enlighten the Federal inferior courts so that the rather difficult road which they must travel will have fewer obstructions. Also, the convict who believes he has been denied rights guaranteed him by the Federal Constitution will find the proper judicial haven he is seeking.' 4 Ex parte Hawk, supra, 321 U.S. at pages 116, 117, 64 S.Ct. at page 450. 5 If a state judgment is based upon an adequate state ground, a failure to request review by this Court does not prejudice the prisoner. White v. Ragen, 324 U.S. 760, 767, 65 S.Ct. 978, 982, 89 L.Ed. 1348; Houe v. Mayo, 324 U.S. 42, 48, 65 S.Ct. 517, 521, 89 L.Ed. 739. 6 334 U.S. at pages 691, 692, 68 S.Ct. at page 1280, infra, I comment upon the delicate nature of the federal habeas corpus jurisdiction over state convictions. Those observations are relevant here. 7 334 U.S. at pages 694, 695, 68 S.Ct. at pages 1281, 1282, infra. 8 An example of such a letter appears in the record in Ex parte Hanley, 322 U.S. 708, 64 S.Ct. 1045, 88 L.Ed. 1552: 'Your petition for writ of habeas corpus has been received and examined. From such examination, it appears that, if filed, your petition would have to be dismissed for the reason that it does not appear therefrom that you have exhausted your remedies in the Supreme Court of the United States, in accordance with the suggestion contained in a recent opinion of the Supreme Court of the United States in the case of Ex parte Henry Hawk (filed January 31, 1944), (Ex parte Hawk, 321 U.S. 114, 64 S.Ct. 448, 88 L.Ed. 572) wherein the court said: "Ordinarily an application for habeas corpus by one detained under a state court judgment of conviction for crime will be entertained by a federal court only after all state remedies available, including all appellate remedies in the state courts and in this court by appeal or writ of certiorari, have been exhausted.' 'Accordingly, your petition has not been filed and is returned herewith. If, however, you desire to make a record in this court, you may return the petition (referring to this letter) with the request that it be filed, and it will be filed in the office of the clerk of this court. 'I do not wish to be understood as expressing any opinion on the merits of your case.' 9 See Lyon v. Harkness, 1 Cir., 151 F.2d 731, 733; Monsky v. Warden of Clinton State Prison, 2 Cir., 163 F.2d 978, 979; Stonebreaker v. Smyth, 4 Cir., 163 F.2d 498, 501, 502; Nusser v. Aderhold, 5 Cir., 164 F.2d 127; Makowski v. Benson, 6 Cir., 158 F.2d 158; Ross v. Nierstheimer, 7 Cir., 159 F.2d 994; Guy v. Utecht, 8 Cir., 144 F.2d 913, 915; Gordon v. Scudder, supra, 9 Cir., 163 F.2d 518; Herzog v. Colpoys, 79 U.S.App.D.C. 81, 143 F.2d 137, 138. 10 Cf. dissent in Maggio v. Zeitz, 333 U.S. 56, 81, 68 S.Ct. 401, 414. 11 'An appeal * * * may be taken only within ninety days after the judgment or sentence appealed from is entered, except that an appeal from both judgment and sentence may be taken within ninety days after the sentence is entered.' 24 Fla.Stat.Ann. § 924.09. 12 Florida provides two devices for collateral attack upon criminal convictions: habeas corpus and coram nobis. Wade has tried habeas corpus and failed. Wade v. Kirk, 155 Fla. 906, 23 So.2d 163. Coram nobis is available only to bring to the attention of the court specific facts, existing at the time of the trial, but not shown by the record and not known by the court or by the defendant or his counsel at the time of the trial. Lamb v. State, 91 Fla. 396, 107 So. 535. See House v. State, 130 Fla. 400, 177 So. 705; cf. Hysler v. Florida, 315 U.S. 411, 415, 416, 316 U.S. 642, 62 S.Ct. 688, 690, 691, 86 L.Ed. 932. The facts upon which Wade seeks relief were known, during the course of the trial, both to himself and to the trial judge. 13 28 U.S.C. §§ 451—453, 28 U.S.C.A. §§ 451—453. Under the Judiciary Act of 1789, the writ could not issue if the prisoner was held under final process based upon a judgment of a court of competent jurisdiction. Ex parte Watkins, 3 Pet. 193, 7 L.Ed. 650. Congress expanded the power of the federal courts to issue the writ in situations in which the federal Constitution has been violated by the Act of February 5, 1867. 14 Stat. 385, ch. 28; see Hawk v. Olson, 326 U.S. 271, 274, 275, 66 S.Ct. 116, 118, 90 L.Ed. 61; Frank v. Mangum, 237 U.S. 309, 330, 332, 35 S.Ct. 582, 588, 589, 59 L.Ed. 969. 14 Frank v. Mangum, 237 U.S. 309, 331, 35 S.Ct. 582, 588, 59 L.Ed. 969. 15 Ex parte Royall, 117 U.S. 241, 250 et seq., 6 S.Ct. 734, 739, 29 L.Ed. 868; In re Wood, 140 U.S. 278, 290, 11 S.Ct. 738, 742, 35 L.Ed. 505; Cook v. Hart, 146 U.S. 183, 195, 13 S.Ct. 40, 44, 36 L.Ed. 934; In re Frederich, 149 U.S. 70, 75, 13 S.Ct. 793, 794, 37 L.Ed. 653; New York v. Eno, 155 U.S. 89, 15 S.Ct. 30, 39 L.Ed. 80; In re Lincoln, 202 U.S. 178, 181, 26 S.Ct. 602, 603, 50 L.Ed. 984; Urquhart v. Brown, 205 U.S. 179, 27 S.Ct. 459, 51 L.Ed. 760; Salinger v. Loisel, 265 U.S. 224, 231, 44 S.Ct. 519, 521, 68 L.Ed. 989; Goto v. Lane, 265 U.S. 393, 403, 44 S.Ct. 525, 527, 68 L.Ed. 1070; United States ex re. Kennedy v. Tyler, 269 U.S. 13, 17, 46 S.Ct. 1, 2, 70 L.Ed. 138; Ex parte Hawk, 321 U.S. 114, 64 S.Ct. 448, 88 L.Ed. 572. 16 Const., art. VI; Robb v. Connolly, 111 U.S. 624, 637, 4 S.Ct. 544, 551, 28 L.Ed. 542. 17 Baker v. Grice, 169 U.S. 284, 291, 18 S.Ct. 323, 326, 42 L.Ed. 748. 18 See Frank v. Mangum, 237 U.S. 309, 329, 35 S.Ct. 582, 587, 59 L.Ed. 969; Ex parte Royall, 117 U.S. 241, 247, 254, 6 S.Ct. 734, 737-741, 29 L.Ed. 868; Mooney v. Holohan, supra. 19 See Ex parte Hawk, 321 U.S. 114, 118, 64 S.Ct. 448, 450, 88 L.Ed. 572. 20 In re Neagle, 135 U.S. 1, 10 S.Ct. 658, 34 L.Ed. 55; Hunter v. Wood, 209 U.S. 205, 28 S.Ct. 472, 52 L.Ed. 747 (impairment of the functions of the federal courts); In re Loney, 134 U.S. 372, 10 S.Ct. 584, 33 L.Ed. 949 (impairment of the functions of thel egislative and judicial branches of the Federal Government). 21 Boske v. Comingore, 177 U.S. 459, 20 S.Ct. 701, 44 L.Ed. 846; Ohio v. Thomas, 173 U.S. 276, 19 S.Ct. 453, 43 L.Ed. 699. 22 Wildenhus' Case, 120 U.S. 1, 7 S.Ct. 385, 30 L.Ed. 565. 23 See State v. Martineau, 149 Ark. 237, 232 S.W. 609. 24 Moore v. Dempsey, supra, 261 U.S. at page 91, 43 S.Ct. at page 266. 25 Ex parte Hawk, supra, 321 U.S. at pages 116, 117, 64 S.Ct. at page 450. 26 Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, 84 A.L.R. 527; Urquhart v. Brown, 205 U.S. 179, 27 S.Ct. 459, 51 L.Ed. 760. 27 Andrews v. Swartz, 156 U.S. 272, 276, 15 S.Ct. 389, 391, 39 L.Ed. 422; In re Wood, 140 U.S. 278, 289, 11 S.Ct. 738, 742, 35 L.Ed. 505; Ex parte Spencer, 228 U.S. 652, 33 S.Ct. 709, 57 L.Ed. 1010; See Glasgow v. Moyer, 225 U.S. 420, 430, 32 S.Ct. 753, 756, 56 L.Ed. 1147; Waley v. Johnston, 316 U.S. 101, 105, 62 S.Ct. 964, 966, 86 L.Ed. 1302; Sunal v. Large, 332 U.S. 174, 67 S.Ct. 1588, 91 L.Ed. 1982. Bowen v. Johnston, 306 U.S. 19, 27, 59 S.Ct. 442, 446, 83 L.Ed. 455: 'The rule is not one defining power but one which relates to the appropriate exercise of power.' 28 Ex parte Hawk, supra, 321 U.S. at pages 117, 118, 64 S.Ct. at page 450. See Adams v. McCann, 317 U.S. 269, 274, 63 S.Ct. 236, 239, 87 L.Ed. 268, 143 A.L.R. 435; United States ex rel. Kennedy v. Tyler, 269 U.S. 13, 17, 46 S.Ct. 1, 2, 70 L.Ed. 138. 29 Goto v. Lane, supra, 265 U.S. at page 402, 44 S.Ct. at page 527. See also Urquhart v. Brown, 205 U.S. 179, 27 S.Ct. 459, 51 L.Ed. 760; Riddle v. Dyche, 262 U.S. 333, 43 S.Ct. 555, 67 L.Ed. 1009; Craig v. Hecht, 263 U.S. 255, 277, 44 S.Ct. 103, 106, 68 L.Ed. 293. 30 The Act of April 30, 1900, which established a government for the Territory of Hawaii, provided that: 'The laws of the United States relating to appeals, writs of error, removal of causes, and other matters and proceedings as between the courts of the United States and the courts of the several States shall govern in such matters and proceedings as between the courts of the United States and the courts of the Territory of Hawaii.' 31 Stat. 158, § 86, 48 U.S.C.A. § 645. In 1925, the Circuit Court of Appeals for the Ninth Circuit was given power to review final decisions from the Supreme Court of Hawaii in all criminal cases '* * * wherein the Constitution or a statute or treaty of the United States or any authority exercised thereunder is involved * * *.' 43 Stat. 936. This power is still retained and cases from the territorial courts now come to this Court only after they have been reviewed by the Ninth Circuit Court of Appeals. 28 U.S.C. § 225, 28 U.S.C.A. § 225. 31 See also Central Union Tel. Co. v. Edwardsville, 269 U.S. 190, 46 S.Ct. 90, 70 L.Ed. 229. 32 In this the case differs from Williams v. Kaiser, 323 U.S. 471, 472, 65 S.Ct. 363, 364, 89 L.Ed. 398; Tomkins v. Missouri, 323 U.S. 485, 486, 65 S.Ct. 370, 371, 89 L.Ed. 407; Smith v. O'Grady, 312 U.S. 329, 334, 61 S.Ct. 572, 574, 85 L.Ed. 859. 33 A state can leave a procedure open through its own courts by which constitutional questions may be raised at any time. If the state court passes upon the merits, this Court can review the constitutional question upon appeal or petition for certiorari. Herndon v. Lowry, 301 U.S. 242, 247, 57 S.Ct. 732, 734, 81 L.Ed. 1066. See Lovelady v. Texas, 333 U.S. 867, 68 S.Ct. 787 (cert. granted), Id., 333 U.S. 879, 68 S.Ct. 914 (dismissed), Ex parte Lovelady, Tex.Cr.App., 207 S.W.2d 396. 34 I would not here decide whether or not this rule applies to cases which are governed by the principle of Moore v. Dempsey, supra, or to the situation in which a state attempts to interfere improperly with the Federal Government. 35 For example, if Wade had not been able to obtain counsel until too late for an appeal, appeal would not have been a remedy 'available' to him. See Price v. Johnston, 334 U.S. 266, 68 S.Ct. 1049; De Meerleer v. Michigan, 329 U.S. 663, 67 S.Ct. 596, 91 L.Ed. 584; Downer v. Dunaway, 5 Cir., 53 F.2d 586, 589, 591.
89
334 U.S. 736 68 S.Ct. 1252 92 L.Ed. 1690 TOWNSENDv.BURKE. No. 542. Argued April 27, 1948. Decided June 14, 1948. Mr. Archibald Cox, of Cambridge, Mass., for petitioner. Mr. Franklin E. Barr, of Philadelphia, Pa., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 The Commonwealth of Pennsylvania holds petitioner prisoner under two indeterminate sentences, not exceeding 10 to 20 years, upon a plea of guilty to burglary and robbery. On review here of the State Supreme Court's denial of habeas corpus,1 the prisoner demands a discharge by this Court on federal constitutional grounds. 2 Petitioner, while a fugitive, was indicted on June 1, 1945, for burglary and armed robbery. Four of his alleged accomplices had been arrested on May 18, 1945, and signed a joint confession, while a fifth had been arrested on May 21, 1945, and had also June 3, 1945, and confessed on June 4. On confessed. Petitioner was arrested on June 5, after pleading guilty to two charges of robbery and two charges of burglary and not guilty to other charges, he was sentenced. 3 Petitioner now alleges violation of his constitutional rights in that, excet for a ten-minute conversation with his wife, he was held incommunicado for a period of 40 hours between his arrest and his plea of guilty. He does not allege that he was beaten, misused, threatened or intimidated, but only that he was held for that period and was several times interrogated. He does not allege that the questioning was continuous or that it had any coercive effect. 4 The plea for relief because he was detained as he claims, unlawfully is based on McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819. But the rule there applied was one against use of confessions obtained during illegal detention and it was limited to federal courts, to which it was applied by virtue of our supervisory power. In this present case no confession was used because the plea of guilty in open court dispensed with proof of the crime. Hence, lawfulness of the detention is not a factor in determining admissibility of any confession and if he were temporarily detained illegally it would have no bearing on the validity of his present confinement based on his plea of guilty, particularly since he makes no allegation that it induced the plea. 5 Petitioner also relies on Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302, in which this Court reversed a state court murder conviction because it was believed to have been based on a confession wrung from an uncounseled 15-year-old boy held incommunicado during questioning by relays of police for several hours late at night. Even aside from the differing facts, that case provides no precedent for relief to this prisoner since, as has been said, no confession was used against him, and he does not allege that his pleas of guilty resulted from his allegedly illegal detention. 6 Petitioner also says that when he was brought into court to plead, he was not represented by counsel, offered assignment of counsel, advised of his right to counsel or instructed with particularity as to the nature of the crimes with which he was charged. This, he says, under the circumstances deprived his conviction and sentence of constitutional validity by reason of the due process clause of the Fourteenth Amendment.2 7 Only recently a majority of this Court reaffirmed that the due process clause of the Fourteenth Amendment does not prohibit a State from accepting a plea of guilty in a non-capital case from an uncounseled defendant. Bute v. Illinois, 333 U.S. 640, 68 S.Ct. 763. In that, and in earlier cases, we have indicated, however, that the disadvantage from absence of counsel, when aggravated by circumstances showing that it resulted in the prisoner actually being taken advantage of, or prejudiced, does make out a case of violation of due process. 8 The proceedings as to this petitioner, following his plea of guilty, consisted of a recital by an officer of details of the crimes to which petitioner and others had pleaded guilty and of the following action by the court: (Italics supplied). 9 'By the Court (addressing Townsend): 10 'Q. Townsend, how old are you? A. 29. 11 'Q. You have been here before, haven't you? A. Yes, sir. 12 'Q. 1933, larceny of automobile. 1934, larceny of produce. 1930, larceny of bicycle. 1931, entering to steal and larceny. 1938, entering to steal and larceny in Doylestown. Were you tried up there? No, no. Arrested inDoylestown. That was up on Germantown Avenue, wasn't it? You robbed a paint store. A. No. That was my brother. 13 'Q. You were tried for it, weren't you? A. Yes, but I was not guilty. 14 'Q. And 1945, this. 1936, entering to steal and a rceny, 1350 Ridge Avenue. Is that your brother too? A. No. 15 'Q. 1937, receiving stolen goods, a saxophone. What did you want with a saxophone? Didn't hope to play in the prison band then, did you? The Court: Ten to twenty in the Penitentiary.' 16 The trial court's facetiousness casts a somewhat somber reflection on the fairness of the proceeding when we learn from the record that actually the charge of receiving the stolen saxophone had been dismissed and the prisoner discharged by the magistrate. But it savors of foul play or of carelessness when we find from the record that, on two other of the charges which the court recited against the defendant, he had also been found not guilty. Both the 1933 charge of larceny of an automobile, and the 1938 charge of entry to steal and larceny, resulted in his discharge after he was adjudged not guilty. We are not at liberty to assume that items given such emphasis by the sentencing court, did not influence the sentence which the prisoner is now serving. 17 We believe that on the record before us, it is evident that this uncounseled defendant was either overreached by the prosecution's submission of misinformation to the court or was prejudiced by the court's own misreading of the record. Counsel, had any been present, would have been under a duty to prevent the court from proceeding on such false assumptions and perhaps under a duty to seek remedy elsewhere if they persisted. Consequently, on this record we conclude that, while disadvantage by lack of counsel, this prisoner was sentenced on the basis of assumptions concerning his criminal record which were materially untrue. Such a result, whether caused by carelessness or design, is inconsistent with due process of law, and such a conviction cannot stand. 18 We would make clear that we are not reaching this result because of petitioner's allegation that his sentence was unduly severe. The sentence being within the limits set by the statute, its severity would not be grounds for relief here even on direct review of the conviction, much less on review of the state court's denial of habeas corpus. It is not the duration or severity of this sentence that renders it constitutionally invalid; it is the careless or designed pronouncement of sentence on a foundation so extensively and materially false, which the prisoner had no opportunity to correct by the services which counsel would provide, that renders the proceedings lacking in due process. 19 Nor do we mean that mere error in resolving a question of fact on a plea of guilty by an uncounseled defendant in a non-capital case would necessarily indicate a want of due process of law. Fair prosecutors and conscientious judges sometimes are misinformed or draw inferences from conflicting evidence with which we would not agree. But even an erroneous judgment, based on a scrupulous and diligent search for truth, may be due process of law. 20 In this case, counsel might not have changed the sentence, but he could have taken steps to see that the conviction and sentence were not predicated on misinformation or misreading of court records, a requirement of fair play which absence of counsel withheld from this prisoner. 21 Reversed. 22 The CHIEF JUSTICE, Mr. Justice REED, and Mr. Justice BURTON, dissent. 1 Respondent raised no procedural or jurisdictional issues in this Court or in the State Supreme Court. Since petitioner has throughout based his claim for relief solely on alleged deprivation of federal constitutional rights, we assume that those questions were considered by the Supreme Court of Pennsylvania and are therefore open here. Herndon v. Lowry, 301 U.S. 242, 247, 57 S.Ct. 732, 734, 81 L.Ed. 1066. 2 The Supreme Court of Pennsylvania has frequently held that the state constitutional provision according defendants the right to be heard by counsel does not require appointment of counsel in noncapital cases. See, for example, Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 24 A.2d 1; Commonwealth ex rel. Withers v. Ashe, 350 Pa. 493, 39 A.2d 610. See also Betts v. Brady, 316 U.S. 455, 465, 62 S.Ct. 1252, 1257, 86 L.Ed. 1595.
01
334 U.S. 742 68 S.Ct. 1294 92 L.Ed. 1694 LICHTER et al.v.UNITED STATES. POWNALL et al. v. UNITED STATES. ALEXANDER WOOL COMBING CO. v. UNITED STATES. Nos. 105, 74, and 95. Argued Nov. 20, 21, 1947. Decided June 14, 1948. Rehearing Denied Oct. 11, 1948. [Syllabus from pages 742-744 intentionally omitted] Mr. Paul W. Steer, of Cincinnati, Ohio, for petitioners Lichter and others. Mr. Leo R. Friedman, of San Francisco, Cal., for petitioners Pownall and others. Mr. Edward C. Park, of Boston, Mass., for petitioner Alexander Wool Combing Co. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The Renegotiation Act,1 in time of crisis, presented to this nation a new legislative solution of a major phase of the problem of national defense against world-wide aggression. Through its contribution to our production program it sought to enable us to take the leading part in winning World War II on an unprecedented scale of total global warfare without abandoning our traditional faith in and reliance upon private enterprise and individual initiative devoted to the public welfare. 2 In each of the three cases before us the principal issue is the constitutionality, on its face, of the Renegotiation Act insofar as it is authority for the recovery of the excessive profits sought to be recovered by the United States from the respective petitioners. In each case the secondary issue is whether the failure of the respective petitioners to petition the Tax Court for a redetermination of the amount, if any, of their excessive profits excludes from consideration here the coverage of the Act, the amount of the profits and other comparable issues which could have been presented to the Tax Court. In each of these cases the District Court has held that the Act was constitutional and that, by failure to petition the Tax Court for their redetermination, the existing orders have become final as claimed by the Government. Each Circuit Court of Appeals has affirmed, unanimously, the judgment appealed to it. We agree with the courts below. 3 In each of these cases the United States obtained a judgment for a sum alleged to be owed to it pursuant to a determination of excessive profits under the Renegotiation Act. The determinations of excessive profits in the respective cases were made by the Under Secretary of War or by the War Contracts Price Adjustment Broad after the Revenue Act of 1943 had been approved, February 25, 1944. That Act contained, in its Title VII, the so-called Second Renegotiation Act which included provisions for the filing with the Tax Court of petitions for the redeterminations of excess profits. None of these petitioners, however, filed such a petition with the Tax Court. On the other hand, the respective petitioners have relied upon their claims that, as a matter of law, the Renegotiation Act is unconstitutional on its face insofar as it purports to authorize the judgments which have been taken against the respective petitioners. The petitioners contend also that their failures to file petitions with the Tax Court have not foreclosed their respective rights to contest here the coverage of the Act, the amount of the excess profits found against them and other comparable issues which they might have presented to the Tax Court. 4 No. 105 (The Lichter Case). 5 In May, 1945, the United States filed its complaint in the District Court of the United States for the Southern District of Ohio against the petitioners, Jacob Lichter and Jennie L. Lichter, engaged in the construction business in Cincinnati, Ohio, under the name of the Southern Fireproofing Company, a copartnership. The complaint was founded upon the determination by the Under Secretary of War, dated October 20, 1944, that $70,000 of the profits realized by petitioners during the calendar year 1942 from nine subcontracts, executed in 1942 for a total price of $710,244.16, were, under the Renegotiation Act, excessive profits. The complaint showed that the petitioners were entitled to a tax credit of $42,980.61 against such excessive profits. It alleged, moreover, that the petitioners had not, within the required period, petitioned the Tax Court for a redetermination of the order in question and had not paid or otherwise eliminated the amount of $27,019.39 thus due to the United States. 6 The petitioners admitted that the Under Secretary had made the determination as alleged; that if his order were valid the petitioners were entitled to the tax credit specified; and that they had not paid the sum demane d nor had they filed a petition with the Tax Court for a redetermination of the excessive profits, if any. They put in issue, on specifically stated grounds, the constitutionality of the Renegotiation Act insofar as it might be authority for the recovery of the profits sought to be recovered, and they put in issue the applicability to them of any requirement that they seek in the Tax Court a redetermination of the profits which they had been ordered to repay to the United States. They alleged also that: of the nine subcontracts which were made the basis of renegotiation, all were executed during the calendar year 1942; four were executed before April 28, 1942, the date of the original Renegotiation Act; none contained clauses permitting or requiring their renegotiation; only two of them were for amounts in excess of $100,000 each; these two were among those which had been executed before April 28, 1942; and no excessive profits had been in fact earned by the petitioners during 1942. Finally they alleged that the several contracts referred to were subcontracts entered into under prime contracts which had been awarded by a department of the Government as the result of competitive bidding for the construction of buildings and facilities and the subcontracts themselves had been obtained by petitioners after further competitive bidding. For these and other reasons stated in the answer the contracts were claimed to be exempt from renegotiation. 7 The United States moved for judgment on the pleadings and, in the alternative, for summary judgment. Affidavits were filed in support of those motions. These included particularly the comprehensive affidavits of Robert P. Patterson, then Under Secretary of War, and of H. Struve Hensel, then Assistant Secretary of the Navy. These affidavits set forth the general background of the Renegotiation Act and the basis for claiming that the renegotiation of war contracts was necessary in order to sustain this nation's share of the burden of winning World War II. Counterparts of these two affidavits were filed in each of the other cases before us. The petitioners, on the other hand, moved to dismiss the complaint on the grounds that it failed to state a claim upon which relief could be granted and that the profits in question were exempt from the Act. 8 The District Court made findings of fact substantially as stated in the complaint and admitted in the answer. It concluded that there was no genuine issue as to any material fact and that the United States was entitled to judgment as a matter of law for $27,019.39, with interest at six percent per annum from November 6, 1944. 68 F.Supp. 19. The Circuit Court of Appeals for the Sixth Circuit affirmed the judgment. It held expressly that the Renegotiation Act was valid on its face and that the petitioners by reason of their failure to petition the Tax Court for a redetermination of the amount of the excessive profits, if any, were barred from making their other attacks on the Secretary's determination of such excessive profits. 160 F.2d 329. Because of the basic significance of the constitutional questions involved we granted certiorari. 331 U.S. 802, 67 S.Ct. 1741, 91 L.Ed. 1825. 9 No. 74 (The Pownall Case). 10 In September, 1945, the United States filed its complaint in the District Court of the United States for the Southern District of California against the petitioners, A. V. Pownall, Grace M. Pownall, and Henes-Morgan Machinery Company, Limited, a California corporation, all three doing business in Los Angeles, California, as copartners under the name of General Products Company. The record indicates that they were there engaged in the production of precision parts, machinery and tools for use by war contractors. The complaint was founded upon a determination made by the Under Secretary of War, on behalf of the War Contracts Price Adjustment Board, dated December 27, 1944, to the effect that $628,373.14 of the profits realized by petitioners dui ng the calendar year 1943 on their contracts and subcontracts, subject to renegotiation pursuant to the Renegotiation Act, were excessive profits. The complaint showed that the petitioners were entitled to a tax credit of $514,663.95 against such profits. It alleged, moreover, that the petitioners had not, within the required period, petitioned the Tax Court for a redetermination of the order in question and had not paid the sum of $113,709.19 thus claimed by the United States. The petitioners admitted that the Under Secretary had made the determination as alleged; that the Board had adopted his order; that the appropriate tax credit was as alleged; that no petition for redetermination had been filed with the Tax Court; that the time for filing had expired; and that no payment of the amount claimed had been made. The petitioners alleged, however, that the Renegotiation Act was invalid on its face on numerous specifically stated constitutional grounds; that the Under Secretary's order was invalid in that it was based on undisclosed data and contained no findings; and that no single contract under consideration exceeded in amount the sum of $99,000. 11 The United States moved for judgment on the pleadings and, in the alternative, for summary judgment. The petitioners did the same. Under the stipulations of the parties there were no disputed issues of fact and the only questions left for decision were those as to the constitutional validity of the Act and as to its interpretation if found to be valid. 12 The District Court denied the motions of both parties. However, ruling on the merits of the cause thus before it, it found the facts to be substantially as alleged in the complaint and as stipulated. It held the Act to be valid on its face and held the unappealed determination of excessive profits to be final. It rendered judgment for the United States for $121,043.39, evidently representing $113,709.19, with interest at six percent per annum from March 13, 1945. 65 F.Supp. 147, and see findings of fact, conclusions of law and judgment of the court. The Circuit Court of Appeals for the Ninth Circuit affirmed the judgment. It followed its earlier decision in Spaulding v. Douglas Aircraft Co., 154 F.2d 419, in upholding the constitutionality of the Act and expressly holding that the petitioners, by not having petitioned the Tax Court for relief, had failed to exhaust their administrative remedies. Accordingly, it held that the District Court was without jurisdiction to consider the petitioners' contentions as to the coverage of the Act. 159 F.2d 73. We granted certiorari. 331 U.S. 802, 67 S.Ct. 1741, 91 L.Ed. 1825. 13 No. 95 (The Alexander Case). 14 In August, 1945, the United States filed its complaint in the District Court of the United States for the District of Massachusetts against the petitioner, Alexander Wool Combing Company, a Massachusetts corporation doing business at Lowell, Massachusetts, and there engaged in the business of scouring wool and combing it into tops and noils for commissions paid to it by the owners of the wool. The complaint was founded upon two determinations by the Under Secretary of War, both dated September 6, 1944. One determined that $22,500 of the profits realized by the petitioner during its fiscal year ended June 30, 1942, and the other that $45,000 of the profits realized by the petitioner during its fiscal year ended June 30, 1943, under its contracts and subcontracts which were alleged to be subject to the provisions of the Renegotiation Act, were excessive. The complaint showed that the petitioner was entitled to a tax credit of $15,020.80 against such excessive profits for the fiscal year ended June 30, 1942, and of $36,596.42 against those for the fiscal year ended June 30, 1943. The complaint alleged, moreover, that the petitioner had not, within the required periods, petitioned the Tax Court for a redetermination of either of the orders in question; that the respective periods for filing such petitions had expr ed; and that the petitioner had not paid, or otherwise eliminated, the amount of $15,882.78 thus due to the United States. The petitioner admitted the factual allegations of the complaint but denied that any amount was owing to the United States. It claimed that the determinations made by the Under Secretary were void because made without due process of law and were unenforcible as to the petitioner because, as applied to it, they were unconstitutional for several specifically stated reasons. 15 The United States moved for judgment on the pleadings or, in the alternative, for summary judgment. In support of these motions the above-mentioned affidavits of Robert P. Patterson, Under Secretary of War, and of H. Struve Hensel, Assistant Secretary of the Navy, and several others were filed. Evidence both oral and in affidavit form was submitted in opposition. The District Court stated in its opinion, 66 F.Supp. 389, 391, that the petitioner 'had no direct contracts with any department or agency of the United States. It combed wool for different private companies. It knew that some of the wool it combed for the companies was destined for use in government contracts, but it was and is ignorant as to the destination of other wool.' That court, nevertheless, rendered judgment in favor of the United States, for $15,882.78, with interest at six percent per annum from September 6, 1944. It held that the war powers of Congress were sufficient to enable it to authorize the recapture of excessive profits such as these; that the standard of 'excessive profits' was sufficient to satisfy the constitutional limitations on the power of Congress to delegate authority; that any defects in the departmental proceedings were immaterial in view of the opportunity afforded the petitioner for a trial de novo and for a redetermination of excessive profits, if any, in the Tax Court; and that petitioner's defenses on the ground of lack of coverage or of retroactivity of the application of the Renegotiation Act to the petitioner were lost to it by its failure to seek relief from the Tax Court. The Circuit Court of Appeals for the First Circuit said, per curiam: 'We think the court below adequately covered all the issues in this case and we affirm its judgment upon the grounds and for the reasons set forth in its opinion * * *.' 160 F.2d 103.2 We granted certiorari. 331 U.S. 802, 67 S.Ct. 1741, 91 L.Ed. 1825. 16 The Background. 17 We have two main issues before us: (1) the constitutionality of the Renegotiation Act on its face and (2) the finality of the determination of the excessive profits made under it in the absence of a petition filed with the Tax Court within the required time, seeking a redetermination of those profits. In the Lichter case we have issues as to profits made in the calendar year 1942, in the Pownall case as to profits made in the calendar year 1943, and in the Alexander case as to certain profits made in the fiscal year ended June 30, 1942, and as to other profits made in the fiscal year ended June 30, 1943. In each case we uphold the constitutionality of the Act as providing the necessary authorization for the judgments rendered. We also accept the finality given by the courts below to the administrative determinations made of the excessive profits, although the statutory situation as a basis for the finality of such determinations is not precisely the same in each case. By reason of the finality thus attached to the determinationsm ade as to excessive profits in these cases, we do not pass upon the issues attempted to be raised here as to the coverage of the Act, the amount of the profits, or other matters which the petitioners might have presented to the Tax Court but did not. 18 In procedure which affects property rights as directly and substantially as that authorized by the Renegotiation Act, the governmental action authorized, although resting on valid constitutional grounds, is capable of gross abuse. The very finality of the administrative determinations here upheld emphasizes the seriousness of the injustices which can result from the abuse of the large powers vested in the administrative officials. We do not minimize the seriousness of complaints which thus may be cut off without relief in the name of the necessities of war and for the sake of the defense of the nation when its survival is at stake. We re-emphasize that, under these conditions, there is great need both for adequate channels of procedural due process and for careful conformity to those channels. In total war it is necessary that a civilian make sacrifices of his property and profits with at least the same fortitude as that with which a drafted soldier makes his traditional sacrifices of comfort, security and life itself. Within procedure thus authorized by the Constitution, the Congress and the Administration, and here affirmed, resulting injustices can and should be carefully examined and as far as possible relieved. In war both the raising and the support of the armed forces are essential. Both require mobilization and control under the authority of Congress. Both are entitled also to such postwar relief as may be authorized by Congress. 19 The Renegotiation Act was developed as a major wartime policy of Congress comparable to that of the Selective Training and Service Act, 50 U.S.C.A.Appendix, § 301 et seq. The authority of Congress to authorize each of them sprang from its war powers. Each was a part of a national policy adopted in time of crisis in the conduct of total global warfare by a nation dedicated to the preservation, practice and development of the maximum measure of individual freedom consistent with the unity of effort essential to success. 20 With the advent of such warfare, mobilized property in the form of equipment and supplies became as essential as mobilized manpower. Mobilization of effort extended not only to the uniformed armed services but to the entire population. Both Acts were a form of mobilization. The language of the Constitution authorizing such measures is broad rather than restrictive. It says 'The Congress shall have Power * * * To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years; * * *.' Art. I, § 8, Cl. 12.3 This places emphasis upon the supporting as well as upon the raising of armies. The power of Congress as to both is inescapably express, not merely implied. The conscription of manpower is a more vital interference with the life, liberty and property of the individual than is the conscription of his property or his profits or any substitute for such conscription of them. For his hazardous, full-time service in the armed forces a soldier is paid whatever the Government deems to be a fair but modest compensation. Comparatively speaking, the manufacturer of war goods undergoes no such hazard to his personal safety as does a front-line soldier and yet the Renegotiation Act gives him far better assurance of a reasonable return for his wartime services than the Selective Service Act and all its related legislation give to the men in the armed forces. The constitutionality of the conscription of manpower for military service is beyond question. The constitutional power of Congress to support the armed forces with equipment and supplies is no less clear and sweeping.4 It is valid, a fortiori. 21 In view of this power 'To raise and support Armies, * * *' and the power granted in the same Article of the Constitution 'To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, * * *' the only question remaining is whether the Renegotiation Act was a law 'necessary and proper for carrying into Execution' the war powers of Congress and especially its power to support armies. 22 It is impossible here to picture adequately all that might have been 'necessary and proper' in 1942—1944 to meet the unprecedented responsibility facing Congress in this field. We do, however, catch a glimpse of it in authoritative, contemporaneous descriptions of the situation. Accordingly, we have set forth in the margin excerpts from the message of the President to the Congress upon the State of the Union, January 6, 1942,5 from a report of the Special Committee of the Senate Investigating the National Defense Program under the chairmanship of Senator Harry S. Truman, of Missouri, March 30, 1943,6 and from the affidavit of Robert P. Patterson, UnPage 762 23 der Secretary of War, dated August 3, 1945,7 in the form filed in each of the three cases before us. 24 The above-mentioned excerpts describe a demand for production of war supplies in proportions previously unimagined. They call for production in a volume never before approximated and at an undreamed of speed. The results amply demonstrated the infinite value of that production in winning the war. It proved to be a sine qua non condition of the survival of the nation. Not only was it 'necessary and proper' for Congress to provide for such production in the successful conduct of the war, but it was well within the outer limits of the constitutional discretion of Congress and the President to do so under the terms of the Renegotiation Act. Accordingly, the question before us as to the constitutionality of the Renegotiation Act is not that of the power of the government to renegotiate and recapture war profits. The only questions are whether the particular method of renegotiation and the administrative procedure prescribed conformed to the constitutional limitations under which Congress was permitted to exercise its basic powers. 25 Our first question relates to the method of adjusting net compensation for war services through the compulsory 'renegotiation' of profits under existing contracts between private parties, including recourse to unilateral orders for payments into the Treasury of the United States of such portions of those profits as were determined by the administrative officials of that Government to be 'excessive profits.' There were added the limitations that the contracts were for war goods in time of war, the ultimate payment for which was, in any event, to come from the Government and that, at the time of this impingement of the Renegotiation Act upon them, the contracts must not have been completed to the extent that final payments had been made on them. 26 One approach to the question of the constitutional power of Congress over the profits on these contracts is to recognize that Congress, in time of war, unquestionably has the fundamental power, previously discussed, to conscript men and to requisition the properties necessary and proper to enabl it to raise and support its Armies. Congress furthermore has a primary obligation to bring about whatever production of war equipment and supplies shall be necessary to win a war. Given this mission, Congress then had to choose between possible alternatives for its performance. In the light of the compelling necessity for the immediate production of vast quantities of war goods, the first alternative, all too clearly evident to the world, was that which Congress did not choose, namely, that of mobilizing the productive capacity of the nation into a governmental unit on the totalitarian model. This would have meant the conscription of property and of workmen. It would have meant the raising of supplies for the Armies in much the same manner as that in which Congress raised the manpower for such Armies. Already the nation had some units of production of military supplies in the form of arsenals, navy yards, and in the increasing number of governmentally owned, if not operated, war material plants. The production of the atomic bombs was one example of a war industry owned and operated exclusively by the Government. Faced with this ironical alternative of converting the nation in effect into a totalitarian state in order to preserve itself from totalitarian domination, that alternative was steadfastly rejected. The plan for Renegotiation of Profits which was chosen in its place by Congress appears in its true light as the very symbol of a free people united in reaching unequalled productive capacity and yet retaining the maximum of individual freedom consistent with a general mobilization of effort. 27 Somewhat crude in its initial statutory simplicity, the Renegotiation Act developed rapidly as the demand for war production increased beyond precedent. First approved April 28, 1942, less than five months after our declaration of war, the Act was adjusted and strengthened in its effectiveness and fairness by the numerous amendments made to it.8 The nation previously had experienced different, but fundamentally comparable, federal regulation of civilian liberty and property in proportion to the increasing demands of modern warfare.9 28 The demands for war equipment and supplies were so great in volume, were for such new types of products, were subject to so many changes in specifications and were subject to such pressing demands for delivery that accurate advance estimates of cost were out of the question. Laying aside as undesirable the complete governmental ownership and operation of the production of war goods of all kinds, many alternative solutions were attempted. Often these called for capital expenditures by the Government in building new plant facilities. Adhering, however, to the policy of private operation of these facilities Congress and the Administration sought to promote a policy of wide distribution of prime contracts and subcontracts, even to comparatively high cost marginal producers of unfamiliar products. Congress sought to do everything possible to retain and encourage individual intiative in the world-wide race for the largest and quickest production of the best equipment and supplies. It clung to its faith in private enterprise. The problem was to find a fair means of compensation for the services rendered and the goods purchased. Contracts were awarded by negotiation wherever competitive bidding no longer was practicable. Contracts were let at cost-plus-a-fixed fee. Escalator clauses were insterted. Price ceilings were established. A flat percentage limit on the profits in certain lines of production was tried. Excess profits taxes were imposed. Appeals were made for voluntary refunds of excessive profits. However, experience with these alternatives convinced the Government that contracts at fixed initial prices still provided the best incentive to production.10 29 On February 16, 1942, this Court in United States v. Bethlehem Steel Corp., 315 U.S. 289, 62 S.Ct. 581, 86 L.Ed. 855, pointed to the possibility of legislative relief. It said, 315 U.S. page 309, 62 S.Ct. 591, 86 L.Ed. 855. 30 'The problem of war profits is not new. In this country, every war we have engaged in has provided opportunities for profiteering and they have been too often scandalously seized. See Hearings before the House Committee on Military Affairs on H.R. 3 n d H.R. 5293, 74th Cong., 1st Sess., 590—598. To meet this recurrent evil, Congress has at times taken various measures. It has authorized price fixing. It has placed a fixed limit on profits, or has recaptured high profits through taxation. It has expressly reserved for the government the right to cancel contracts after they have been made. Pursuant to Congressional authority, the government has requisitioned existing production facilities or itself built and operated new ones to provide needed war materials. It may be that one or some or all of these measures should be utilized more comprehensively, or that still other measures must be devised. But if the Executive is in need of additional laws by which to protect the nation against war profiteering, the Constitution has given to Congress, not to this Court, the power to make them.' 31 Finally the compulsory renegotiation of contracts was authorized. The procedure outlined in the Original Renegotiation Act, April 28, 1942, was rapidly perfected. As it developed it required advance consents to such renegotiation to be written into the respective contracts and subcontracts for war goods prior to their award and finally it made express provision for a redetermination of the excessive profits, in a proceeding de novo before the Tax Court, wherever a war goods contractor or subcontractor was aggrieved by the administrative order. Throughout these developments extended congressional and public consideration was given to the issues presented.11 32 The plan proved itself readily adaptable to the needs of the time. It called for initial contract estimates based upon the best available information at the time of entering into the contracts. Production proceeded at once on the basis of those estimates. Many factors were incapable of exact advance determination. The final net compensation, however, resulted from a renegotiation made after both parties had had the benefit of actual experience under the contract. This determination of the allowable profit was guided by many relevant factors. A list of commonly relevant factors was presented in an early administrative directive. Later such a list was enacted into the statute. Each administrative determination was made subject to a redetermination in a proceeding de novo in the Tax Court provided a timely petition for it was filed by the aggrieved contractor or subcontractor. The Act always has been limited in duration to a period during and shortly following the war. In most instances the Act has resulted in a disposition of cases by agreements reached between the parties.12 The controversies which have survived to this day are, in large measure, not those dealing with the constitutionality of the general effect of the plan or even with the finality of redetermination under the prescribed administrative procedure, but are those arising out of an alleged abuse of discretion in its administration. 33 The Renegotiation Act. 34 While there have been six legislative steps13 in the development of the Renegotiation Act, the portions of it that are especially material here consist of certain language in the so-called Original Renegotiation Act contained in § 403 of the Sixth Supplemental Defense Appropriations Act, approved April 28, 1942;14 in the amendments made by the Revenue Act of 1942, October 21, 1942;15 and its further amendment and substantial expansion by § 701(b) of the Revenue Act of 1943, February 25, 1944.16 In that form it is sometimes called the Second Renegotiation Act, but the entire § 403, both in its original and amended forms may be properly cited as the 'Reneo tiation Act.'17 In the proceedings leading up to the enactment of the Original Renogiation Act, an alternative in the form of a rigid limitation of profits was rejected in favor of the more flexible definition embodied in the term 'excessive profits.'18 The War Department Directive of August 10, 1942, entitled 'Principles, Policy and Procedure to be Followed in Renegotiation' promptly stated the factors to be stressed in determining excessive profits. This directive was introduced in the hearings held by the Finance Committee of the Senate in September19 and thus was before the Senate at the time of the passage of the above-mentioned Revenue Act of 1942, October 21, 1942, which made important amendments in the Renegotiation Act. 35 The 'Joint Statement by the War, Navy, and Treasury Departments and the Maritime Commission—Purposes, Principles, Policies, and Interpretations' dealing with the Renegotiation Act was issued March 31, 1943. This was considered at the Hearings before the House Committee on Naval Affairs, 78th Cong., 1st Sess., Vol. 2, pp. 469, et seq., 1025—1039, especially 1028—1029 (1943). Finally the above-mentioned Revenue Act of 1943, 58 Stat. 21, on February 25, 1944, largely incorporated these views in § 403(a)(4)(A),20 thus indicating congressional approval of this administrative practice and further assuring continuity of it during the balance of the life of the Act. 36 Delegation of Authority Under the Renegotiation Act. 37 The petitioners contend that the Renegotiation Act unconstitutionally attempted to delegate legislative power to administrative officials. The United States does not contest the right of the courts to decide the issues as to the validity of the Act on its face in the present cases, each of which was instituted after the petitioners' respective rights to a Tax Court redetermination had been forfeited. We find no reason for not reaching here the constitutionality of the Act. Cf. Aircraft & Diesel Corp. v. Hirsch, 331 U.S. 752, 67 S.Ct. 1493, 91 L.Ed. 1796; Wade v. Stimson, 331 U.S. 793, 67 S.Ct. 1727, 91 L.Ed. 1821; Macauley v. Waterman S.S. Corp., 327 U.S. 540, 66 S.Ct. 712, 90 L.Ed. 839; Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834. 38 The constitutional argument is based upon the claim that the delegation of authority contained in the Act carried with it too slight a definition of legislative policy and standards. Accordingly, it is contended that the resulting determination of excessive profits which were claimed by the United States amounted to an unconstitutional exercise of legislative power by an administrative official instead of a mere exercise of administrative discretion under valid legislative authority. We hold that the authorization was constitutional. Certainly as spelled out in § 403(a)(4)(A)21 of the Second Renegotiated Act with respect to fiscal years ending after June 30, 1943, there can be no objection on this ground. This question, therefore, relates to the delegation of at hority as made by the Act before the effective date of the Second Renegotiation Act. The argument on this question is limited to the Lichter and Alexander cases, inasmuch as the excessive profits determined to exist in the Pownall case were so found by the War contracts Price Adjustment Board under the Second Renegotiation Act. 39 The Original Renegotiation Act,22 approved April 28, 1942, provided in § 403(b), (c), (d) and (e) for the renegotiation of all contracts and subcontracts thereafter made and also of all contracts and subcontracts theretofore made by the War Department, the Navy Department or the Maritime Commission, whether or not such contracts or subcontracts contained a renegotiation or recapture clause, provided the final payment pursuant thereto had not been made prior to April 28, 1942. The renegotiation was to be done by the Secretary of the Department concerned. For this purpose the Chairman of the Maritime Commission was included in the term 'Secretary.' The services of the Bureau of Internal Revenue were made available upon the request of each Secretary, subject to the consent of the Secretary of the Treasury, for the purposes of making examinations and determinations with respect to profits under the Section. The Secretary of each Department was authorized and directed whenever in his opinion excessive profits had been realized or were likely to re realized from any contract with such Department or from any subcontract thereunder, to require the contractor or subcontractor to renegotiate the contract price. In case any amount of the contract price was found as a result of such renegotiation to represent 'excessive profits' which had been paid to the contractor or subcontractor, the Secretary was authorized to recover them. 40 There was no express definition of the term 'excessive profits' in the Original Renegotiation Act. However, in its § 403(b),23 there was relevant statement in connection with the renegotiation clauses required to be inserted in future contracts and subcontracts for an amount in excess of $100,000 each. The Secretary was required to insert in such contracts, thereafter made by his Department, 'a provision for the renegotiation of the contract price at a period or periods when, in the judgment of the Secretary, the profits can be determined with reasonable certainty; * * *.' Contractors were also to be required to insert a like provision in their subcontracts. This statement indicated a relationship between current 'excessive profits' and those which later might be determined with 'reasonable certainty.' 41 Also, in § 403(d)24 it was provided that, in renegotiating a contract price or determining excessive profits, the Secretaries of the respective Departments should not make allowances 'for any salaries, bonuses, or other compensation paid by a contractor to its officers or employees in excess of a reasonable amount, * * *.' nor 'for any excessive reserves set up by the contractor or for any costs incurred by the contractor which are excessive and unreasonable.' 42 The amendments made to this Section by the Revenue Act of 1942,25 approved October 21, 1942, were made effective as of April 28, 1942. At the time they were approved, Congress had knowledge of the War Department Directive of August 10, 1942,26 which had been put into effect stressing certain factors which the Secretary emphasized in determining excessive profits. While Congress then made several amendments to § 403, those amendments did not alter the effect of such directive in this particular. Among the amendments that were then added there was the following purported definition of 'excessive profits': 'The term 'excessive profits' means any amount of a contract or subcontract price which is found as a result of renegotiation to represent excessive profits.' In the light of the exit ing administrative practices this at least expressed a congressional satisfaction with the existing specificity of the Act. The amendment made to § 403(c)(3)27 required the recognition of exclusions and deductions of the character afforded by certain provisions of the Internal Revenue Code. The amendment to § 403(c)(5)28 provided also that the Secretaries, by joint regulation, might prescribe the form and detail in which certain data might be filed by contractors and subcontractors bearing upon their profits under their contracts. This material concerned 'statements of actual costs of production' and 'other financial statements for any prior fiscal year or years.' Under some circumstances, in the absence of a notice from the Secretary and in the absence of the commencement of renegotiations, it was provided that 'the contractor or subcontractor shall not thereafter be required to renegotiate to eliminate excessive profits realized from any such contract or subcontract during such fiscal year or years and any liabilities of the contractor or subcontractor for excessive profits realized during such period shall be thereby discharged.' A new subsection (i)29 was added containing new exceptions and exemptions from the Act. The 'Joint Statement by the War, Navy, and Treasury Department and the Maritime Commission—Purposes, Principles, Policies, and Interpretations' issued March 31, 1943,30 similarly contributed definiteness to the current administrative practice. 43 It is in the light of these statutory provisions and administrative practices that we must determine whether the Renegotiation Act made an unconstitutional delegation of legislative power. On the basis of (a) the nature of the particular constitutional powers being employed, (b) the current administrative practices later incorporated into the Act and (c) the adequacy of the statutory term 'excessive profits' as used in this context, we hold that the authority granted was a lawful delegation of administrative authority and not an unconstitutional delegation of legislative power. 44 A constitutional power implies a power of delegation of authority under it sufficient to effect its purposes.—This power is especially significant in connection with constitutional war powers under which the exercise of broad discretion as to methods to be employed may be essential to an effective use of its war powers by Congress. The degree to which Congress must specify its policies and standards in order that the administrative authority granted may not be an unconstitutional delegation of its own legislative power is not capable of precise definition. In peace or in war it is essential that the Constitution be scrupulously obeyed,31 and particularly that the respective branches of the Government keep within the powers assigned to each by the Constitution. On the other hand, it is of the highest importance that the fundamental purposes of the Constitution be kept in mind and given effect in order that, through the Constitution, the people of the United States may in time of war as in peace bring to the support of those purposes the full force of their united action. In time of crisis nothing could be more tragic and less expressive of the intent of the people than so to construe their Constitution that by its own terms it would substantially hinder rather than help them ind efending their national safety. 45 In an address by Honorable Charles E. Hughes, of New York, on 'War Powers Under The Constitution,' September 5, 1917, 42 A.B.A.Rep. 232, 238—239, 247—248, he said: 46 'The power to wage war is the power to wage war successfully. The framers of the constitution were under no illusions as to war. They had emerged from a long struggle which had taught them the weakness of a mere confederation, and they had no hope that they could hold what they had won save as they established a Union which could fight with the strength of one people under one government entrusted with the common defence. In equipping the National Government with the needed authority in war, they tolerated no limitations inconsistent with that object, as they realized that the very existence of the Nation might be at stake and that every resource of the people must be at command. * * * 47 'The extraordinary circumstances of war may bring particular business (es) and enterprises clearly into the category of those which are affected with a public interest and which demand immediate and thorough-going public regulation. The production and distribution of foodstuffs, articles of prime necessity, those which have direct relation to military efficiency, those which are absolutely required for the support of the people during the stress of conflict, are plainly of this sort. Reasonable regulations to safeguard the resources upon which we depend for military success must be regarded as being within the powers confided to Congress to enable it to prosecute a successful war. 48 'In the words of the Supreme Court: 'It is also settled beyond dispute that the Constitution is not self-destructive. In other words, that the power which it confers on the one hand it does not immediately take away on the other. * * *'32 This was said in relation to the taxing power. Having been granted in express terms, the Court held it had not been taken away by the due process clause of the Fifth Amendment. As the Supreme Court put it in another case: 'the Constitution does not conflict with itself by conferring upon the one hand a taxing power and taking the same power away on the other by the limitations of the due process clause."33 49 'Similarly, it may be said that the power has been expres ly given to Congress to prosecute war, and to pass all laws which shall be necessary and proper for carrying that power into execution. That power explicitly conferred and absolutely essential to the safety of the Nation is not destroyed or impaired by any later provision of the constitution or by any one of the amendments. These may all be construed so as to avoid making the constitution self-destructive, so as to preserve the rights of the citizen from unwarrantable attack, while assuring beyond all hazard the common defence and the perpetuity of our liberties. These rest upon the preservation of the nation. 50 'It has been said that the constitution marches. That is, there are constantly new applications of unchanged powers, and it is ascertained that in novel and complex situations, the old grants contain, in their general words and true significance, needed and adequate authority. So, also, we have a fighting constitution. We cannot at this time fail to appreciate the wisdom of the fathers, as under this charter, one hundred and thirty years old—the constitution of Washington—the people of the United States fight with the power of unity,—as we fight for the freedom of our children and that hereafter the sword of autocrats may never threaten the world.' 51 The war powers of Congress and the President are only those which are to be derived from the Constitution but, in the light of the language just quoted, the primary implication of a war power is that it shall be an effective power to wage the war successfully. Thus, while the constitutional structure and controls of our Government are our guides equally in war and in peace, they must be read with the realistic purposes of the entire instrument fully in mind.34 52 In 1942, in the early stages of total global warfare, the exercise of a war power such as the power 'To raise and support Armies, * * *' and 'To provide and maintain a Navy; * * *,' called for the production by us of war goods in unprecedented volume with the utmost speed, combined with flexibility of control over the product and with a high degree of initiative on the part of the producers. Faced with the need to exercise that power, the question was whether it was beyond the constitutional power of Congress to delegate to the high officials named therein the discretion contained in the Original Renegotiation Act of April 28, 1942, and the amendments of October 21, 1942. We believe that the administrative authority there granted was well within the constitutional war powers then being put to their predestined uses. 53 (b) The administrative practices developed under the Renegotiation Act demonstrated the definitive adequacy of the term 'excessive profits' as used in the Act.—The administrative practices currently developed under the Act in interpreting the term 'excessive profits' appear to have come well within the scope of the congressional policy. We have referred above to the War Department Directive of August 10, 1942,35 and to the Joint Departmental Statement of March 31, 1943,36 both of which were placed before appropriate Congressional Committees. These clearly stated practices are evidence of a current correct understanding of the congressional intent. This appears from the fact that the congressional action of October 21, 1942, made effective as of April 28, 1942, was taken in the light of the above-mentioned directive and without restricting its effect. Furthermore, the congressional action taken February 25, 1944, and made effective for the fiscal years ending after June 30, 1943, substantially incorporated into the statute the administrative practice shown in the Joint Departmental Statement of March 31, 1943. It thus became an express congressional definition of the factors appropriate for consideration in determining excessive profits, whereas before it was an administrative interpretation of 'excessive profits' to the same effect. 54 (c) The statutory term 'excessive profits,' in its context, was a sufficient expression of legislative policy and standards to render it constitutional.—The fact that this term later was further defined both by administrative action and by statutory amendment indicates the probable desirability of such added definition, but it does not demonstrate that such further definition was a constitutional necessity essential to the validity of the original exercise by Congress of its war powers in initiating a new solution of an unprecedented problem. The fact that the congressional definition confirmed the administrative practice which already was in effect under the original statutory language tends to show that a statutory definition was not necessary in order to give effect to the congressional intent. 55 In 1942 the imposition of excess profits taxes was a procedure already familiar to Congress, both as an emergency procedure to raise funds for extraordinary wartime expenditures, and as one to meet the needs of peace. The recapture of excess income as applied by Congress to the railroads had been upheld by this Court in 1924. Dayton-Goose Creek R. Co. v. United States, 263 U.S. 456, 44 S.Ct. 169, 68 L.Ed. 388, 33 A.L.R. 472. The opinions of this Court in Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834; Schechter Poultry Corp. v. United States, 295 U.S. 495, 529—542, 55 S.Ct. 837, 842, 848, 79 L.Ed. 1570, 97 A.L.R. 947; and Panama Refining Co. v. Ryan, 293 U.S. 388, 413 433, 55 S.Ct. 241, 245, 253, 79 L.Ed. 446, are not in conflict with our present position. 56 The policy and purpose of Congress in choosing the renegotiation of profits as an alternative to cost-plus contracts, to flat percentage limitations of profits, and to 100% excess profits taxes was an attempt to determine a fair return on war contracts, under conditions where actual experience alone could disclose what was fair and when the primary national need was for the immediate production of unprecedented quantities of new products. The action of Congress was an expression of its well-considered judgment as to the degree of administrative authority which it was necessary to grant in order to effectuate its policy. This action of Congress came within the scope of its discretion as described by Chief Justice Hughes in Panama Refining Co. v. Ryan, supra, 293 U.S. at page 421, 55 S.Ct. at page 248, 79 L.Ed. 446: 'Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the national Legislature cannot deal directly. The Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility.' 57 It is not necessary that Congress supply administrative officials with a specific formula for their guidance in a field where flexibility and the adaptation of the congressional policy to infinitely variable conditions constitute the essence of the program. 'If Congress shall lay down by legislative act an intelligible principle * * * such legislative action is not a forbidden delegation of legislative power.' Hampton Co. v. United States, 276 U.S. 394, 409, 48 S.Ct. 348, 352, 72 L.Ed. 624.S tandards prescribed by Congress are to be read in the light of the conditions to which they are to be applied. 'They derive much meaningful content from the purpose of the Act, its factual background and the statutory context in which they appear.' American Power & Light Co. v. S.E.C., 329 U.S. 90, 104, 67 S.Ct. 133, 141, 91 L.Ed. 103. The purpose of the Renegotiation Act and its factual background establish a sufficient meaning for 'excessive profits' as those words are used in practice.37 The word 'excessive' appears twice in the Eighth Amendment to the Constitution: 'Excessive bail shall not be required, nor excessive fines imposed, * * *.' In the Original Renegotiation Act, § 403(d),38 there were expressly disallowed to the contractor in determining his profits 'compensation paid by a contractor to its officers or employees in excess of a reasonable amount, * * *' and 'any costs incurred by the contractor which are excessive and unreasonable.' 'Excessive profits are those in excess of reasonable profits.' Spaulding v. Douglas Aircraft Co., 9 Cir., 154 F.2d 419, 423. 58 The following, somewhat comparable, legislative specifications are among those which have been held to state a sufficiently definite standard for administrative action: 59 'Just and reasonable' rates for sales of natural gas, Federal Power Comm'n v. Hope Gas Co., 320 U.S. 591, 600, 601, 64 S.Ct. 281, 286, 287, 88 L.Ed. 333; 'public interest, convenience, or necessity' in establishing rules and regulations under the Federal Communications Act, 47 U.S.C.A. § 151 et seq., National Broadcasting Co. v. United States, 319 U.S. 190, 225, 226, 63 S.Ct. 997, 1013, 1014, 87 L.Ed. 1344; prices yielding a 'fair return' or the 'fair value' of property, Sunshine Coal Co. v. Adkins, 310 U.S. 381, 397, 398, 60 S.Ct. 907, 914, 84 L.Ed. 1263; 'unfair methods of competition' distinct from offenses defined under the common law, Federal Trade Comm'n v. Keppel & Bro., 291 U.S. 304, 311, 312, 314, 54 S.Ct. 423, 425, 426, 427, 78 L.Ed. 814; 'just and reasonable' rates for the services of commission men, Tagg Bros. & Morehead v. United States, 280 U.S. 420, 431, 50 S.Ct. 220, 221, 74 L.Ed. 524; and 'fair and reasonable' rent for premises, with final determination in the courts, Levy Leasing Co. v. Siegel, 258 U.S. 242, 243, 248, 250, 42 S.Ct. 289, 290, 291, 292, 66 L.Ed. 595. 60 3. Methods Prescribed and Limitations Imposed on the Administration. 61 The methods prescribed and the limitations imposed by Congress upon the contemplated administrative action are helpful. The Act is confined to the duration of the war or to a short time thereafter. Renegotiation, from the beginning, has been confined to the elimination of excessive profits from contracts and subcontracts with certain governmental departments directly related to the conduct of the war. By subsequent amendments the scope of the Act was limited by further express exceptions and exemptions. The administrative officials to whom authority was granted were clearly specified and were all officials of high governmental responsibility. Each was required to act whenever he found excessive profits existed under the conditions defined. The provisions for a redetermination of excess profits by the Tex Court de novo are discussed later. They likewise imposed important limitations on the allowable recoveries. 62 Accordingly, we hold that the delegation of authority here in issue, under the Renegotiation Act in its several forms, was a constitutional definition of administrative authority and not an unconstitutional delegation of legislative 63 power. The Renegotiation of War Contracts Was Not a Taking of Private Property for Public Use. 64 The recovery by the Government of excessive proi ts received or receivable upon war contracts is in the nature of the regulation of maximum prices under war contracts or the collection of excess profits taxes, rather than the requisitioning or condemnation of private property for public use. One of the primary purposes of the renegotiation plan for redetermining the allowable profit on contracts for the production of war goods by private persons was the avoidance of requisitioning or condemnation proceedings leading to governmental ownership and operation of the plants producing war materials. A refund to the Government of excessive earnings of railroad carriers under the recapture provisions of § 15a of the Transportation Act of 1920, 41 Stat. 488, 49 U.S.C.A. § 15a, has been sustained by this Court. Dayton-Goose Creek R. Co. v. United States, 263 U.S. 456, 44 S.Ct. 169, 68 L.Ed. 388, 33 A.L.R. 472. The collection of renegotiated excessive profits on a war subcontract also is not in the nature of a penalty and is not a deprivation of a subcontractor of his 65 property without due process of law in violation of the Fifth Amendment. The Renegotiation Act, Including Its Amendments, Has Been Properly Applied To Contracts Entered Into Before Its and Their Respective Enactments. 66 The excessive profits claimed by the Government in these cases arose out of contracts between the respective petitioners and other private parties. None arose out of contracts made directly with the Government itself. All the contracts, however, related to subject matter within the meaning of the Renegotiation Act in its respective stages. The contracts all were of the type which came to be known, under the Act, as subcontracts. All, except four in the Lichter case, were entered into after the enactment of the Original Renegotiation Act, April 28, 1942, and on those four, the final payment had not been made by that date. We therefore do not have before us an issue as to the recovery of excessive profits on any contract made directly with the Government nor on any subcontract upon which final payment had been made before April 28, 1942, although relating to war goods made or services performed after the declaration of war, December 8, 1941. Congress limited the Renegotiation Act to future contracts and to contracts already existing but pursuant to which final payments had not been made prior to the date of enactment of the original Act. These included contracts made directly with the Government and also subcontracts such as those here involved. 67 We uphold the right of the Government to recover excessive profits on each of the contracts before us. This right exists as to such excessive profits whether they arose from contracts made before or after the passage of the Act. A contract is equally a war contract in either event and, if uncompleted to the extent that the final payment has not yet been made, the recovery of excessive profits derived from it may be authorized as has been done here. 68 While the Original Renegotiation Act may not have expressly defined some of the contracts before us as subcontracts, the Act of October 21, 1942, in its amendments effective as of April 28, 1942, did so. Accordingly, the contracts entered into between private parties in the Alexander case between April 28, 1942, and October 21, 1942, come within the scope of the Renegotiation Act. 69 The Tax Court Remedy. 70 Before the amendments incorporated in it on February 25, 1944, by the Revenue Act of 1943 (the so-called Second Renegotiation Act) the Original Renegotiation Act, as theretofore amended, did not provide expressly for a review or redetermination of the initial determination of the excess profits authorized to be made by the respective Secretaries. The 1944 amendments added not merely an express statement of factors to be taken into consideration in determining excessive profits (§ 403(a)(4)(A),39 but also created a War Contracts Price Adjustment Board (§ 403(d)(1)40 to make such determinations in the future. Also, it providd expressly for petitions to be filed with the Tax Court to secure redeterminations of the orders of such Board. § 403(e)(1).41 71 It expressly stated that 'A proceeding before the Tax Court to finally determine the amount, if any, of excessive profits shall not be treated as a proceeding to review the determination of the Board, but shall be treated as a proceeding de novo.' § 403(e)(1). It provided also that 'In the absence of the filing of a petition with The Tax Court of the United States under the provisions of and within the time limit prescribed in subsection (e)(1), such order (of the Board) shall be final and conclusive and shall not be subject to review or redetermination by any court or other agency.' § 403(c)(1).42 All of the determinations in the case before us were made after February 25, 1944, and those in the Pownall case were made on behalf of the Board. The above procedure under § 403(e)(1) accordingly was open to the petitioners in the Pownall case but they did not file a petition with the Tax Court. 72 In addition to the above procedures affecting future determinations of excessive profits to be made by the Board, the Second Renegotiation Act also made express provisions, in § 403(e)(2),43 for a redetermination by the Tax Court of excessive profits determined to exist by the respective Secretaries. These provisions applied first to any determinations made by a Secretary prior to February 25, 1944, with respect to a fiscal year ending before July 1, 1943. In those instances a petition for redetermination by the Tax Court was permitted to be filed within 90 days after February 25, 1944. We have no such case before us. These provisions applied also to any determination made by a Secretary after February 25, 1944, with respect to a fiscal year ending before July 1, 1943. In that event, a petition for redetermination by the Tax Court was permitted to be filed within 90 days after the date of the redetermination. We have such situations in the Lichter and Alexander cases. 73 No petitions were filed with the Tax Court in any of the cases before us, and the time for doing so has expired. Accordingly, here, as in Aircraft & Diesel Corp. v. Hirsch, 331 U.S. 752, 771, 67 S.Ct. 1493, 1502, 91 L.Ed. 1796, we do not have before us, and we do not express an opinion upon, the finality which would have attached to a redetermination by the Tax Court if such a redetermination had been sought and made. We have only the situations presented by the respective failures of the petitioners to resort to the Tax Court in the face of the express statutory provisions made for such administrative relief. 74 As to the effect of the statute and of the course of action taken, we hold that the statute did afford procedural due process to the respective petitioners but that none of them made use of the procedure so provided for them. Consistent with the primary need for speed and definiteness in these matters, the original administrative determinations by the respective Secretaries or by the Board were intended primarily as renegotiations in the course of which the interested parties were to have an opportunity to reach an agreement with the Government or in connection with which the Government, in the absence of such an agreement, might announce its unilateral determination of the amount of excessive profit claimed by the United States. This initial proceeding was not required to be a formal proceeding producing a record for review by some other authority. In lieu of such a procedure for review, the Second Renegotiation Act provided an adequate opportunity for a redetermination of the excessive profits, if any, de novo by the Tax Court. 'The demands of due process do not require a hearing, at the initial stage or at any particular point or at more than one point in an administrative proceeding so log as the requisite hearing is held before the final order becomes effective.' Opp Cotton Mills v. Administrator, 312 U.S. 126, 152, 153, 61 S.Ct. 524, 535, 536, 85 L.Ed. 624. 75 We uphold the decisions below and the contentions of the Government to the effect that the statutory provision thus made for a petition to the Tax Court was not, in any case before us, an optional or alternative procedure. It provided the one and only procedure to secure a redetermination of the excessive profits which had been determined to exist by the orders of the respective Secretaries or of the Board in the cases before us. Failure of the respective petitioners to exhaust that procedure has left them with no right to present here issues such as those as to coverage and the amount of profits which might have been presented there. Accordingly, there is excluded from our consideration in this proceeding the contention in the Lichter case that the petitioners' subcontracts were exempt from renegotiation on the ground that they were subcontracts under prime contracts with a Department of the Government and had been awarded to them as the result of competitive bidding for the construction of buildings and facilities. There is excluded also, for example, the contention in the Pownall case that petitioners' contracts which were for amounts under $100,000 each were not subject to renegotiation. Likewise, in the Alexander case, there is excluded the petitioner's contention that it had not made excessive profits within the meaning of the statute and that its contracts for processing wool were not 'subcontracts' within the meaning of the Original Renegotiation Act. 76 For these reasons, we uphold the constitutionality of the Renegotiation Act on its face as authority for the recovery of excessive profits as ordered in the three respective cases before us, and we hold that the respective petitioners do not have the right to present questions as to the coverage of that Act, as to the amount of excessive profits adjudged to be due from them or as to other comparable issues which might have been presented by them to the Tax Court upon a timely petition to that court for a redetermination of excessive profits, if any. 77 Accordingly, in each of the cases before us, the judgment of the Circuit Court of Appeals is affirmed. 78 Affirmed. 79 Mr. Justice MURPHY concurs in the result in these cases. 80 Mr. Justice JACKSON concurs in the result in the Pownall case, but dissents in the Lichter and Alexander cases. 81 Appendix. I. 82 Excerpts from the so-called Original or First Renegotiation Act, § 403, Sixth Supplemental National Defense Appropriation Act, 1942, approved April 28, 1942, c. 247, 56 Stat. 226, 245, 246. 83 '(a) * * * For the purposes of subsections (d) and (e) of this section, the term 'contract' includes a subcontract and the term 'contractor' includes a subcontractor. 84 '(b) The Secretary of each Department is authorized and directed to insert in any contract for an amount in excess of $100,000 hereafter made by such Department (1) a provision for the renegotiation of the contract price at a period or periods when, in the judgment of the Secretary, the profits can be determined with reasonable certainty; (2) a provision for the retention by the United States or the repayment to the United States of (A) any amount of the contract price which is found as a result of such renegotiation to represent excessive 85 56 Stat. 245. price equal to the amount of the reduction in the contract price of any subcontract under such contract pursuant to the renegotiation of such subcontract as provided in clause (3) of this subsection; and (3) a provision requiring the contractor to insert in each subcontract for an amount in excess of $100,000 made by him under such contract (A) a provision for the renegotiation by such Secretary and the subcontractor of the contract price of the subcontract at a period or periods when, in the judgment of the Secretary, the profits cn be determined with reasonable certainty, (B) a provision for the retention by the United States or the repayment to the United States of any amount of the contract price of the subcontract which is found as a result of such renegotiation, to represent excessive profits, and (C) a provision for relieving the contractor from any liability to the subcontractor on account of any amount so retained by or repaid to the United States. 86 '(c) The Secretary of each Department is authorized and directed, whenever in his opinion excessive profits have been realized, or are likely to be realized, from any contract with such Department or from any subcontract thereunder, (1) to require the contractor or subcontractor to renegotiate the contract price, (2) to withhold from the contractor or subcontractor any amount of the contract price which is found as a result of such renegotiation to represent excessive profits, and (3) in case any amount of the contract price found as a result of such renegotiation to represent excessive profits shall have been paid to the contractor or subcontractor, to recover such amount from such contractor or subcontractor. Such contractor of subcontractor shall be deemed to be indebted to the United States for any amount which such Secretary is authorized to recover from such contractor or subcontractor under this subsection, and such Secretary may bring actions in the appropriate courts of the United States to recover such amount on behalf of the United States. All amounts recovered under this subsection shall be covered into the Treasury as miscellaneous receipts. This subsection shall be applicable to all contracts and subcontracts hereafter made and to all contracts and subcontracts heretofore made, whether or not such contracts or subcontracts contain a renegotiation or recapture clause, provided that final payment pursuant to such contract or subcontract has not been made prior to the date of enactment of this Act. 87 '(d) In renegotiating a contract price or determining excessive profits for the purposes of this section, the Secretaries of the respective Departments shall not make any allowance for any salaries, bonuses, or other compensation paid by a contractor to its officers or employees in excess of a reasonable amount, nor shall they make allowance for any excessive reserves set up by the contractor or for any costs incurred by the contractor which are excessive and unreasonable. For the purpose of ascertaining whether such unreasonable compensation has been or is being paid, or whether such excessive reserves have been or are being set up, or whether any excessive and unreasonable costs have been or are being incurred, each such Secretary shall have the same powers with respect to any such contractor that an agency designated by the President to exercise the powers conferred by title XIII of the Second War Powers Act, 1942, has with respect to any contractor to whom such title is applicable. * * * 88 '(e) In addition to the powers conferred by existing law, the Secretary of each Department shall have the right to demand of any contractor who holds contracts with respect to which the provisions of this section are applicable in an aggregate amount in excess of $100,000, statements of actual costs of production and such other financial statements, at such times and in such form and detail, as such Secretary may require. * * *' 89 56 Stat. 245. II. 90 Excerpts from Title VIII, Renegotiation of War Contracts, Revenue Act of 1942, approved October 21, 1942, c. 619, 56 Stat. 798, 982—985, 26 U.S.C.A.Internal Revenue Acts Beginning 1940, Revenue Act of 1942, § 801, p. 376. 91 Section 801 of the Revenue Act of 1942 amended the Section in several particulars, all effective as of April 28, 1942. Among the amendments were certain additions or changes contained in § 403(a), § 403(c) and § 403(i) and reading as follows: 92 'Sec. 801. Renegotiation of War Contracts. 93 '(a) Subsections (a), (b), and (c) of section 403 of the Sixth Supplemental National e fense Appropriation Act (Public 528, 77th Cong., 2d Sess.), are amended to read as follows: 94 'Sec. 403. (a) For the purposes of this section— 95 '(4) The term 'excessive profits' means any amount of a contract or subcontract price which is found as a result of renegotiation to represent excessive profits. 96 '(5) The term 'subcontract' means any purchase order or agreement to perform all or any part of the work, or to make or furnish any article, required for the performance of another contract or subcontract. The term 'article' includes any material, part, assembly, machinery, equipment, or other personal property. 97 'For the purposes of subsections (d) and (e) of this section, the term 'contract' includes a subcontract and the term 'contractor's includes a subcontractor. 98 '(c) (1) Whenever, in the opinion of the Secretary of a Department, the profits realized or likely to be realized from any contract with such Department, or from any subcontract thereunder whether or not made by the contractor, may be excessive, the Secretary is authorized and directed to require the contractor or subcontractor to renegotiate the contract price. When the contractor or subcontractor holds two or more contracts or subcontracts the Secretary in his discretion, may renegotiate to eliminate excessive profits on some or all of such contracts and subcontracts as a group without separately renegotiating the contract price of each contract or subcontract. 99 '(2) Upon renegotiation, the Secretary is authorized and directed to eliminate any excessive profits under such contract or subcontract (i) by reductions in the contract price of the contract or subcontract, or by other revision in its terms; or (ii) by withholding, from amounts otherwise due to the contractor or subcontractor, any amount of such excessive profits; or (iii) by directing a contractor to withhold for the account of the United States, from amounts otherwise due to the subcontractor, any amount of such excessive profits under the subcontract; or (iv) by recovery from the contractor or subcontractor, through repayment, credit or suit, of any amount of such excessive profits actually paid to him; or (v) by any combination of these methods, as the Secretary deems desirable. The Secretary may bring actions on behalf of the United States in the appropriate courts of the United States to recover from such contractor or subcontractor, any amount of such excessive profits actually paid to him and not withheld or eliminated by some other method under this subsection. The surety under a contract or subcontract shall not be liable for the repayment of any excessive profits thereon. All money recovered by way of repayment or suit under this subsection shall be covered into the Treasury as miscellaneous receipts. 100 '(3) In determining the excessiveness of profits realized or likely to be realized from any contract or subcontract, the Secretary shall recognize the properly applicable exclusions and deductions of the character which the contractor or subcontractor is allowed under Chapter 1 and Chapter 2E of the Internal Revenue Code. In determining the amount of any excessive profits to be eliminated hereunder the Secretary shall allow the contractor or subcontractor credit for Federal income and excess profits taxes as provided in section 3806 of the Internal Revenue Code. 101 '(4) Upon renegotiation pursuant to this section, the Secretary may make such final or other agreements with a contractor or subcontractor for the elimination of excessive profits and for the discharge of any liability for excessive profits under this section, as the Secretary deems desirable. Such agreements may cover such past and future period of periods, may apply to such contract or contracts of the contractor or subcontractor, and may contain such terms and conditions, as the Secretary deems advisable. * * * 102 '(5) Any contractor or subcontractor who holds contracts or subcontracts, to which the provisions of this section are applical e, may file with the Secretaries of all the Departments concerned statements of actual costs of production and such other financial statements for any prior fiscal year or years of such contractor or subcontractor, in such form and detail, as the Secretaries shall prescribe by joint regulation. Within one year after the filing of such statements, or within such shorter period as may be prescribed by such joint regulation, the Secretary of a Department may give the contractor or subcontractor written notice, in form and manner to be prescribed in such joint regulation, that the Secretary is of the opinion that the profits realized from some or all of such contracts or subcontracts may be excessive, and fixing a date and place for an initial conference to be held within sixty days thereafter. If such notice is not given and renegotiation commenced by the Secretary within such sixty days the contractor or subcontractor shall not thereafter be required to renegotiate to eliminate excessive profits realized from any such contract or subcontract during such fiscal year or years and any liabilities of the contractor or subcontractor for excessive profits realized during such period shall be thereby discharged. 103 '(6) This subsection (c) shall be applicable to all contracts and subcontracts hereafter made and to all contracts and subcontracts heretofore made, whether or not such contracts or subcontracts contain a renegotiation or recapture clause, unless (i) final payment pursuant to such contract or subcontract was made prior to April 28, 1942. 104 '(c) (Sec. 801.) Section 403 of the Sixth Supplemental National Defense Appropriation Act (Public 528, 77th Cong., 2d Sess.), is amended by adding at the end thereof the following subsections: 105 '(i) * * * 106 '(2) The Secretary of a Department is authorized, in his discretion, to exempt from some or all of the provisions of this section— 107 '(i) any contract or subcontract to be performed outside of the territorial limits of the continental United States or in Alaska; 108 '(ii) any contracts or subcontracts under which, in the opinion of the Secretary, the profits can be determined with reasonable certainty when the contract price is established, such as certain classes of agreements for personal services, for the purchase of real property, perishable goods, or commodities the minimum price for the sale of which has been fixed by a public regulatory body, of leases and license agreements, and of agreements where the period of performance under such contract or subcontract will not be in excess of thirty days; and 109 '(iii) a portion of any contract or subcontract or performance thereunder during a specified period or periods, if in the opinion of the Secretary, the provisions of the contract are otherwise adequate to prevent excessive profits. 110 'The Secretary may so exempt contracts and subcontracts both individually and by general classes or types.' 111 56 Stat. 982. III. 112 Excerpts from the so-called Second Renegotiation Act, Title VII, Renegotiation of War Contracts, passed notwithstanding the objections of the President, February 25, 1944, c. 63, 58 Stat. 21, 78 92, 50 U.S.C. (Supp. V, 1946) § 1191, 50 U.S.C.A.Appendix, § 1191, also 26 U.S.C.A. Internal Revenue Acts Beginning 1940, Revenue Act of 1943, § 701, p. 491. 113 While § 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, as expanded by § 701(b) of the Revenue Act 1943, is too long for reproduction here, the following excerpts from it are especially relevant: § 403(a)(4)(A); § 403(c)(1); § 403(d)(1); § 403(d)(4); § 403(e)(1); § 403(e)(2); § 403(l); see also, § 701(d) of the Revenue Act of 1943: 114 Sec. 701. Renegotiation of War Contracts. 115 (b) Renegotiation of War Contracts.—Section 403, as amended, of the Sixth Supplemental National Defense Appropriation Act, 1942, is amended to read as follows: 116 'Sec. 403. (a) For the purposes of this section— 117 '(4) (A) The term 'excessive profits' means the pot ion of the profits derived from contracts with the Departments and subcontracts which is determined in accordance with this section to be excessive. In determining excessive profits there shall be taken into consideration the following factors: 118 '(i) efficiency of contractor, with particular regard to attainment of quantity and quality production, reduction of costs and economy in the use of materials, facilities, and manpower; 119 '(ii) reasonableness of costs and profits, with particular regard to volume of production, normal pre-war earnings, and comparison of war and peacetime products; 120 '(iii) amount and source of public and private capital employed and net worth; 121 '(iv) extent of risk assumed, including the risk incident to reasonable pricing policies; 122 '(v) nature and extent of contribution to the war effort, including inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance; 123 '(vi) character of business, including complexity of manufacturing technique, character and extent of subcontracting, and rate of turn-over; 124 '(vii) such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted. 125 '(c) (1) Whenever, in the opinion of the Board, the amounts received or accrued under contracts with the Departments and subcontracts may reflect excessive profits, the Board shall give to the contractor or subcontractor, as the case may be, reasonable notice of the time and place of a conference to be held with respect thereto. The mailing of such notice by registered mail to the contractor or subcontractor shall constitute the commencement of the renegotiation proceeding. At the conference, which may be adjourned from time to time, the Board shall endeavor to make a final or other agreement with the contractor or subcontractor with respect to the elimination of excessive profits received or accrued, and with respect to such other matters relating thereto as the Board deems advisable. Any such agreement, if made, may, with the consent of the contractor or subcontractor, also include provisions with respect to the elimination of excessive profits likely to be received or accrued. If the Board does not make an agreement with respect to the elimination of excessive profits received or accrued, it shall issue and enter an order determining the amount, if any, of such excessive profits, and forthwith give notice thereof by registered mail to the contractor or subcontractor. In the absence of the filing of a petition with The Tax Court of the United States under the provisions of and within the time limit prescribed in subsection (e)(1), such order shall be final and conclusive and shall not be subject to review or redetermination by any court or other agency. The Board shall exercise its powers with respect to the aggregate of the amounts received or accrued during the fiscal year (or such other period as may be fixed by mutual agreement) by a contractor or subcontractor under contracts with the Departments and subcontracts, and not separately with respect to amounts received or accrued under separate contracts with the Departments or subcontracts, except that the Board may exercise such powers separately with respect to amounts received or accrued by the contractor or subcontractor under any one or more separate contracts with the Departments or subcontracts at the request of the contractor or subcontractor. Whenever the Board makes a determination with respect to the amount of excessive profits, whether such determination is made by order or is embodied in an agreement with the contractor of subcontractor, it shall, at the request of the contractor or subcontractor, as the case may be, prepare and furnish such contractor or subcontractor with a statement of such determination, of the facts used as a basis therefor, and of its reasons for such determination. Such statement shall not be used in The Tax Court of the United States as proof of the facts or conclusions stated therein. 126 '(d) (1) There is hereby created a War Contracts Price Adjustment Board (in this section called the 'Board'), which shall consist of six members. 127 '(4) The Board may delegate in whole or in part any power, function, or duty to the Secretary of a Department, and any power, function, or duty so delegated may be delegated in whole or in part by the Secretary to such officers or agencies of the United States as he may designate, and he may authorize successive redelegations of such powers, functions, and duties. 128 '(e) (1) Any contractor or subcontractor aggrieved by an order of the Board determining the amount of excessive profits received or accrued by such contractor or subcontractor may, within ninety days (not counting Sunday or a legal holiday in the District of Columbia as the last day) after the mailing of the notice of such order under subsection (c)(1), file a petition with The Tax Court of the United States for a redetermination thereof. Upon such filing such court shall have exclusive jurisdiction, by order, to finally determine the amount, if any, of such excessive profits received or accrued by the contractor or subcontractor, and such determination shall not be reviewed or redetermined by any court or agency. The court may determine as the amount of excessive profits an amount either less than, equal to, or greater than that determined by the Board. A proceeding before the Tax Court to finally determine the amount, if any, of excessive profits shall not be treated as a proceeding to review the determination of the Board, but shall be treated as a proceeding de novo. * * * 129 '(2) Any contractor or subcontractor * * * aggrieved by a determination of the Secretary made prior to the date of the enactment of the Revenue Act of 1943, with respect to a fiscal year ending before July 1, 1943, as to the existence of excessive profits, which is not embodied in an agreement with the contractor or subcontractor, may, within ninety days (not counting Sunday or a legal holiday in the District of Columbia as the last day) after the date of the enactment of the Revenue Act of 1943, file a petition with The Tax Court of the United States for a redetermination thereof, and any such contractor or subcontractor aggrieved by a determination of the Secretary made on or after the date of the enactment of the Revenue Act of 1943, with respect to any such fiscal year, as to the existence of excessive profits, which is not embodied in an agreement with the contractor or subcontractor, may, within ninety days (not counting Sunday or a legal holiday in the District of Columbia as the last day) after the date of such determination, file a petition with The Tax Court of the United States for a redetermination thereof. Upon such filing such court shall have the same jurisdiction, powers, and duties, and the proceeding shall be subject to the same provisions, as in the case of a petition filed with the court under paragraph (1), except that the amendments made to this section by the Revenue Act of 1943 which are not made applicable as of April 28, 1942, or to fiscal years ending before July 1, 1943, shall not apply. 130 '(l) This section may be cited as the 'Renegotiation Act'.' 131 '(d) (SEC. 701.) Effective Date.—The amendments made by subsection (b) shall be effective only with respect to the fiscal years ending after June 30, 1943, except that (1) the amendments inserting subsections (a)(4)(C), (a)(4)(D), (i) (1)(C), (i)(1)(D), (i)(1)(F), (i)(3), and (l) in section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, shall be effective as if such amendments and subsections had been a part of section 403 of such Act on the date of its enactment, and (2) the amendments adding subsection (d) and (e) (2) to section 403 of such Act shall be effective from the date of the enactment of this Act.' 58 Stat. 78. 132 Mr. Justice DOUGLA dissenting in part. 133 The business involved in the Lichter case relates to profits realized during the fiscal year ending December 31, 1942. As to the amounts owed under these contracts, petitioners are entitled to a hearing in the District Court. For Congress did not require that class of contracts to be taken to the Tax Court. I think a close reading of the statutes, contained in Appendix III to the Court's opinion, will bear me out. 134 Section 403(e)(1) relates to orders of the Board and provides that they may be reviewed by the Tax Court. And § 403(c)(1) provides that in the absence of the filing of such a petition with the Tax Court, the orders of the Board 'shall be final and conclusive.' 135 But we are concerned here not with orders of the Board but with an order of the Secretary. Section 403(e)(2) provides that those orders, too, may be taken to the Tax Court. But § 403(e)(2) by its terms makes inapplicable those provisions of the 1943 amendment which are not made applicable as of April 28, 1942, or to the fiscal years ending before July 1, 1943. Thus, § 403(c)(6) limits subsection (c) 'to all contracts and subcontracts, to the extent of amounts received or accrued thereunder in any fiscal year ending after June 30, 1943, whether such contracts or subcontracts were made on, prior to, or after the date of the enactment of the Revenue Act of 1943.' Hence it is clear that the provision of § 403(c)(1) which makes the orders of the Board final and conclusive in absence of the filing of a petition with the Tax Court is not applicable here. Orders of the Secretary, at least as respects 1942 business, are therefore treated differently than orders of the Board. I conclude that the purpose was to leave contracts and contractors who fell in that category with the right of access to the courts which they had enjoyed prior to the Revenue Act of 1943. In those cases jurisdiction of the Tax Court may be invoked at the option of the petitioners. 136 Macauley v. Waterman S.S. Corp., 327 U.S. 540, 66 S.Ct. 712, 90 L.Ed. 839, is not opposed to this conclusion. For that case involved an order of the Board. Wade v. Stimson, 331 U.S. 793, 67 S.Ct. 1727, 91 L.Ed. 1821, involved an order of the Secretary and related to 1942 business. But the question in issue here was not raised there, as it is not in Alexander Wool Combing Co. v. United States, decided this day. 1 The Renegotiation Act, including its amendments, is here treated as consisting of: I. Section 403, Sixth Supplemental National Defense Appropriation Act, 1942, approved April 28, 1942, c. 247, 56 Stat. 226, 245, 246. Sometimes this is called the Original or First Renegotiation Act. For relevant excerpts from its text see Appendix I, infra. II. Title VIII, Renegotiation of War Contracts, Revenue Act of 1942, approved October 21, 1942, c. 619, 56 Stat. 798, 982—985, 26 U.S.C.A. Internal Revenue Acts Beginning 1940, Revenue Act of 1942, § 801, p. 376. For relevant excerpts from its text see Appendix II, infra. III. Section 1, Military Appropriation Act, 1944, approved July 1, 1943, c. 185, 57 Stat. 347, 348. IV. An Act to prevent the payment of excessive fees or compensation in connection with the negotiation of war contracts, approved July 14, 1943, c. 239, 57 Stat. 564, 565. V. Title VII, Renegotiation of War Contracts, and Title VIII, Repricing of War Contracts, Revenue Act of 1943, passed notwithstanding the objections of the President, February 25, 1944, c. 63, 58 Stat. 21, 78—93, 50 U.S.C. (Supp. V, 1946) §§ 1191, 1192, 50 U.S.C.A.Appendix, §§ 1191, 1192; also 26 U.S.C.A. Internal Revenue Acts Beginning 1940, Revenue Act of 1943, §§ 701 and 801, pp. 491 and 508. For relevant excerpts from its text see Appendix III, infra. Sometimes this is called the Second Renegotiation Act. Section 701(b), of the foregoing Chapter 63, added to § 403 of the Sixth Sup lemental National Defense Appropriation Act, 1942, a final subsection as follows: '(l) This section may be cited as the 'Renegotiation Act." 58 Stat. 90. Section 701(d) also provided that this subsection (l) of § 403, and certain others, 'shall be effective as if such amendments and subsections had been a part of section 403 of such Act of the date of its enactment.' 58 Stat. 92. VI. An Act to extend through December 31, 1945, the termination date under the Renegotiation Act, approved June 30, 1945, c. 210, 59 Stat. 294, 295, 50 U.S.C. (Supp. V, 1946) § 1191, 50 U.S.C.A.Appendix, § 1191. 2 In addition to the opinions of the Circuit Courts of Appeals and District Courts cited in the text, see Ring Construction Corp. v. Secretary of War, 8 T.C. 1070; Cohen v. Secretary of War, 7 T.C. 1002; Stein Bros. Mfg. Co. v. Secretary of War, 7 T.C. 863. For discussions of the Renegotiation Act by this Court, stopping short of passing upon its constitutionality, see Aircraft & Diesel Corp. v. Hirsch, 331 U.S. 752, 67 S.Ct. 1493, 91 L.Ed. 1796; and Macauley v. Waterman S.S. Corp., 327 U.S. 540, 66 S.Ct. 712, 90 L.Ed. 839. 3 Among the many other provisions implementing the Congress and the President with powers to meet the vare d demands of war, the following obviously command attention: 'We the People of the United States, in Order to form a more perfect Union, * * * provide for the common defence, * * * and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.' U.S.Const. Preamble. 'The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; 'To declare War, 'To provide and maintain a Navy; 'To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, * * *.' Id. Art. I, § 8. 'The President shall be Commander in Chief of the Army and Navy of the United States, * * *.' Id. Art. II, § 2, Cl. 1. Madison said in The Federalist, Number XLI,—General View of the Powers Conferred by the Constitution: 'Security against foreign danger is one of the primitive objects of civil society. It is an avowed and essential object of the American Union. The powers requisite for attaining it must be effectually confided to the federal councils.' Hamilton said in The Federalist, Number XXIII,—The Necessity of a Government as Energetic as the One Proposed to the Preservation of the Union: 'The circumstances that endanger the safety of nations are infinite, and for this reason no constitutional shackles can wisely be imposed on the power to which the care of it is committed. This power ought to be co-extensive with all the possible combinations of such circumstances; and ought to be under the direction of the same councils which are appointed to preside over the common defence.' 4 'The Constitution grants to Congress power 'to raise and support Armies', 'to provide and maintain a Navy', and to make all laws necessary and proper to carry these powers into execution. Under this authority Congress can draft men for battle service. Selective Draft Law Cases, 245 U.S. 366, 38 S.Ct. 159, 62 L.Ed. 349, L.R.A.1918C, 361, Ann.Cas.1918B, 856. Its power to draft business organizations to support the fighting men who risk their lives can be no less.' United States v. Bethlehem Steel Corp., 315 U.S. 289, 305, 62 S.Ct. 581, 589, 86 L.Ed. 855. In writing of the power of Congress to pass a Conscription Act, President Lincoln said, with characteristic clearness: 'Whether a power can be implied when it is not expressed has often been the subject of controversy; but this is the first case in which the degree of effrontery has been ventured upon of denying a power which is plainly and distinctly written down in the Constitution. The Constitution declares that 'The Congress shall have Power * * * to raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years.' The whole scope of the conscription act is 'to raise and support armies.' There is nothing else in it. * * * '* * * Do you admit that the power is given to raise and support armies, and yet insist that by this act Congress has not exercised the power in a constitutional mode?—has not done the thing in the right way? Who is to judge of this? The Constitution gives Congress the power, but it does not prescribe the mode, or expressly declare who shall prescribe it. In such case Congress must prescribe the mode, or relinquish the power. There is no alternative. * * * The power is given fully, completely, unconditionally. It is not a power to raise armies if State authorities consent; nor if the men to compose the armies are entirely willing; but it is a power to raise and support armies given to Congress by the Constitution, without an 'if." 9 Nivolay and Hay, Works of Abraham Lincoln 75—77 (1894). The foregoing quotation is from an opinion by President Lincoln, which was not actually issued or published by him but which was quoted to the above extent by Honorable Charles Evans Hughes, of New York, in his address on 'War Powers Under the Constitution' before the American Bar Association, September 5, 11 7, 42 A.B.A.Rep. 232, 234—235. The draft was put in force both by the Union and by the Confederacy during the Civil War and its validity was sustained by the courts in both North and South. 'The power of coercing the citizen to render military service, is indeed a transcendent power, in the hands of any government; but so far from being inconsistent with liberty, it is essential to its preservation.' Burroughs v. Peyton, 16 Grat. 470, 473, 57 Va. 470, 473. See cases cited in 42 A.B.A.Rep. 234 n. 1, and see Selective Draft Law Cases, 245 U.S. 366, 38 S.Ct. 159, 62 L.Ed. 349, L.R.A.1918C, 361, Ann.Cas.1918B, 856; Jacobson v. Massachusetts, 197 U.S. 11, 29, 25 S.Ct. 358, 362, 49 L.Ed. 643, 3 Ann.Cas. 765; In re Grimley, 137 U.S. 147, 153, 11 S.Ct. 54, 55, 34 L.Ed. 636. 5 'Our own objectives are clear: The objective of smashing the militarism imposed by war lords upon their enslaved peoples; the objective of liberating the subjugated nations; the objective of establishing and securing freedom of speech, freedom of religion, freedom from want, and freedom from fear everywhere in the world. 'We shall not stop short of these objectives; nor shall we be satisfied merely to gain them and call it a day. I know that I speak for the American people—and I have good reason to believe I speak also for all the other peoples who fight with us—when I say that this time we are determined not only to win the war, but also to maintain the security of the peace which will follow. 'But modern methods of warfare make it a task, not only of shooting and fighting, but an even more urgent one of working and producing. 'Victory requires the actual weapons of war and the means of transporting them to a dozen points of combat. 'It will not be sufficient for us and the other united nations to produce a slightly superior supply of munitions to that of Germany, Japan, Italy, and the stolen industries in the countries which they have overrun. 'The superiority of the united nations in munitions and ships must be overwhelming—so overwhelming that the Axis nations can never hope to catch up with it. In order to attain this overwhelming superiority the United States must build planes and tanks and guns and ships to the utmost limit of our national capacity. We have the ability and capacity to produce arms not only for our own forces but also for the armies, navies, and air forces fighting on our side. 'And our overwhelming superiority of armament must be adequate to put weapons of war at the proper time into the hands of those men in the conquered nations, who stand ready to seize the first opportunity to revolt against their German and Japanese oppressors, and againstt he traitors in their own ranks, known by the already infamous name of 'Quislings.' As we get guns to the patriots in those lands, they too will fire shots heard 'round the world. 'This production of ours in the United States must be raised far above its present levels, even though it will mean the dislocation of the lives and occupations of millions of our own people. We must raise our sights all along the production line. Let no man say it cannot be done. It must be done—and we have undertaken to do it. 'I have just sent a letter of directive to the appropriate departments and agencies of our Government, ordering that immediate steps be taken: '1. To increase our production rate of airplanes so rapidly that in this year, 1942, we shall produce 60,000 planes, 10,000 more than the goal set a year and a half ago. This includes 45,000 combat planes—bombers, dive-bombers, pursuit planes. The rate of increase will be continued, so that next year, 1943, we shall produce 125,000 airplanes, including 100,000 combat planes. '2. To increase our production rate of tanks so rapidly that in this year, 1942, we shall produce 45,000 tanks; and to continue that increase so that next year, 1943, we shall produce 75,000 tanks. '3. To increase our production rate of antiaircraft guns so rapidly that in this year, 1942, we shall produce 20,000 of them; and to continue that increase so that next year, 1943, we shall produce 35,000 antiaircraft guns. '4. To increase our production rate of merchant ships so rapidly that in this year, 1942, we shall build 8,000,000 dead-weight tons as compared with a 1941 production of 1,100,000. We shall continue that increase so that next year, 1943, we shall build 10,000,000 tons. 'These figures and similar figures for a multitude of other imple- ments of war will give the Japanese and Nazis a little idea of just what they accomplished in the attack on Pearl Harbor. 'Our task is hard—our task is unprecedented—and the time is short. We must strain every existing armament-producing facility to the utmost. We must convert every available plant and tool to war production. That goes all the way from the greatest plants to the smallest—from the huge automobile industry to the village machine shop. 'Production for war is based on men and women—the human hands and brains which collectively we call labor. Our workers stand ready to work long hours; to turn out more in a day's work; to keep the wheels turning and the fires burning 24 hours a day, and 7 days a week. They realize well that on the speed and efficiency of their work depend the lives of their sons and their brothers on the fighting fronts. 'Production for war is based on metals and raw materials steel, copper, rubber, aluminum, zinc, tin. Greater and greater quantities of them will have to be diverted to war purposes. Civilian use of them will have to be cut further and still further and, in many cases, completely eliminated. 'War costs money. So far, we have hardly even begun to pay for it. We have devoted only 15 percent of our national income to national defense. As will appear in my Budget Message tommorrow, our war program for the coming fiscal year will cost $56,000,000,000 or, in other words, more than one-half of the estimated annual national income. This means taxes and bonds and bonds and taxes. It means cutting luxuries and other nonessentials. In a word, it means an all-out war by individual effort and family effort in a united country. 'Only this all-out scale of production will hasten the ultimate all-out victory. Speed will count. Lost ground can always be regained—lost time never. Speed will save lives; speed will save this Nation which is in peril; speed will save our freedom and civilization—and slowness has never been an American characteristic.' 88 Cong.Rec. 32, 33—34 (1942). 6 'Ever since the beginning of the last war there has been a constant effort to find an effective method of controlling war profits without impeding war production. The renegotiation law is the latest product of such efforts.T o obtain speed we have had to use contracting methods that would never have been tolerated in peacetime. We granted cost-plus-fixed-fee contracts where the specifications were not known or had to be subject to numerous changes or where there was no time to prepare detailed specifications. We also granted lump-sum contracts for many items which had never before been made in quantity and for which estimates of cost were mere guesses. This was particularly true of the billions of dollars of war contracts which were hastily 'shoveled' out early in January 1942. 'Is the renegotiation law a necessary and desirable method of counteracting the wasteful effects of such necessary practices in early wartime procurement? Is it being administered in such a way as to give effect to the statutory intent? What changes, if any, are needed? 'As to the necessity and desirability of the renegotiation law: '(1) Because of the wartime need for rapid procurement of materials of war, new materials with which there has been no previous manufacturing experience and other articles previously manufactured only in relatively small quantities, some procedure for subsequent price adjustment is necessary and desirable if excessive war profits and costs are to be avoided. '(2) Taxes alone will not do the job because (a) higher corporate tax rates are likely to encourage higher costs and discourage economical production; (b) no scheme of taxation has been devised which is sufficiently flexible to provide an incentive for efficient low-cost production; (c) a profit percentage which would fairly reward one war contractor with one type of financial structure would bankrupt a second contractor with a different financial set-up, and would provide inordinately excessive profits for a third contractor with a still different financial problem. '(3) War contractors in most cases can protect themselves against loss by escalator clauses and other contract provisions for contingencies. The people can obtain protection in many cases only through some procedure such as renegotiation. '(4) Experience has shown 'cost-plus' contracts to be worse than worthless in the effort to prevent excessive costs. They strongly tend to increase costs instead of the reversed. 'The administration of the renegotiation law during the first 10 months of its existence has been characterized by two significant accomplishments: '(1) The assembly in Government of an unusual group of able, conscientious, and patriotic lawyers, accountants, and businessmen as administrators of renegotiation; [Argument of Counsel from pages 760-762 intentionally omitted] '(2) The gradual education of war contractors as to the reasons for and importance of their adopting a policy of tailoring their own profits to levels which, in their own special situations, are fair both to them and to the Government. On the other hand, the administration of the renegotiation law and the law itself are properly subject to certain constructive criticisms: '(1) Substantial variations in administrative policy and attitude still exist among the four departments charged with responsibility for renegotiation, although this condition has been noticeably improved in recent weeks. The existence of such a condition has created wholly unnecessary confusion, uncertainty, and misunderstanding among contractors. '(2) Results of Navy renegotiations to date justify an inference that in its early proceedings the Navy Price Adjustment Board may have been too strongly influenced by a desire to achieve the same kind of mathematical exactness which results from a cost-plus-a-percentage-of-cost contract, a result which is inconsistent with the flexibility which was the basic purpose of the renegotiation law. '(3) Army administration has been rendered unnecessarily cumbersome by use of military channels in the handling of an essentially business and financial enterprise. '(4) The principles and results of renegotiation have been shrouded with entirely too much secrecy not only as to the public but as to the renegotiators themselves, causing many war contractors to be i stracted by wholly unwarranted but nevertheless natural fears of the unknown. '(5) In some cases the cost audits incident to renegotiation and taxation have been unnecessarily duplicatory. '(6) It is impossible to recover every last dollar of excessive war profits without unnecessarily interfering with war production, and overzealous administration of the vast powers delegated by this law could be seriously detrimental to war procurement.' S.Rep.No.10, Part 5, 78th Cong., 1st Sess. 1—3 (1943). 7 '5. The necessary result of this combination of circumstances is that the war procuring agencies cannot use normal methods of procurement. The pressing need for speed requires the abandonment of drawn-out negotiation and the careful surveys of all relevant factors which sound purchasing would otherwise require. Competition necessarily wanes and no longer offers an adequate guide to the prices which should be paid. Above all, the forecasting of costs of production becomes, in large measure, a matter of informed guessing rather than of real cost analysis. This is true in the case of new products, new plants, and new producers; it is likewise true, though perhaps in lesser degree, wherever the quantities to be manufactured are sharply increased over pre-war amounts. Accordingly, advance prices quoted in good faith by manufacturers in a large number of cases have little relation to costs actually experienced in the course of production. Furthermore, many manufacturers feel unable to quote firm prices without including reserves to cover many contingencies the occurrence of which might skyrocket their costs, and so overturn all their estimates. '6. These were the conditions of wartime procurement, after December 7, 1941, and the War Department had to force its procurement activities into their mold. Efforts were made, of course, to develop contractual devices which would minimize the paramount difficulty in estimating production costs. The cost-plus-fixed-fee contract was used where unavoidable, but this form has the disadvantage of removing financial incentives to efficiency and of imposing a heavy burden of auditing upon the Government and the contractor. Escalator clauses, permitting prices to be adjusted according to fluctuations in indices of labor and material costs, were also used but proved unworkable. Letters of intent, under which manufacture was commenced prior to the negotiation of a formal contract, helped to speed production, but could not, of course, solve the ultimate problem of decreasing costs and preventing excessive profits. '7. Shortly after the declarations of war, both the legislative and the executive branches of the Government realized that excessive wartime profits were certain to accrue unless counter measures were taken. The evil effect of such wartime excessive profit on the morale of the fighting forces and the civilian population, as well as the unnecessary financial burden upon the Government, could not be ignored. The example of the last war was still fresh. Many war contractors realized the dangers and inequities resulting from such excessive profit, and some of them made refunds of excessive profits or voluntarily reduced their prices. In the spring of 1942, the War Department developed cost analysis units to check, so far as practicable, on production costs, and set up a price adjustment board to negotiate with contractors for voluntary price reductions and refunds of past payments. Tentative policies as to what profits were excessive were established and meetings with contractors had. At the same time, there came into use contract clauses providing for the renegotiation or redetermination of contract prices after an initial period of production had laid a basis for the proper estimation of costs. We hoped that these means would keep incentives to efficiency alive and at the same time would tend to eliminate undue profits such as were then coming to light. '8. The Congress apparently felt, however, that these contractual measures, resting as they did upon the voluntary cooperatio of a relatively small number of war contractors, did not provide enough certainty that excessive profits would be eliminated. The Vinson-Trammel Act, limiting profits on aircraft and ship construction, had been repealed in 1940, but an effort was made to revive it. In March, 1942, the War Department and the War Production Board opposed such legislation on the ground that a flat percentage profit limitation would impede production and would be unfair to many contractors and too generous to others. After the Case amendment imposing such a flat percentage limitation on profits from war contracts had been adopted by the House of Representatives late in March, 1942, the armed services and the War Production Board offered a substitute proposal giving statutory authority to the process of voluntary renegotiation which had been developing. Congress adopted the principle of renegotiation with which the armed services were in accord (rather than the principle of a flat percentage limitation of profits), and it also endowed the procuring agencies with power to determine excessive profits when no bilateral agreement could be reached with the contractor. I believe that this addition by the Congress of the power of unilateral action was a wise and a necessary one, and that without it renegotiation would not have accomplished anything like the results that have been achieved. '12. * * * Some conception of the vast scope of the procurement activity of the armed services after the attack on Pearl Harbor can be gained from the fact that the total expenditures of the War and Navy Departments for the one fiscal year ending June 30, 1942 ($22,905,000,000) considerably exceeded the total military and naval expenditures of the Government from 1789 through the end of World War I.' Affidavit of Robert P. Patterson, Under Secretary of War, sworn to August 3, 1945. 8 See note 1, supra. 9 McKinley v. United States, 249 U.S. 397, 39 S.Ct. 324, 63 L.Ed. 668 (regulations of local activities near federal military stations); Northern Pacific R. Co. v. North Dakota, 250 U.S. 135, 39 S.Ct. 502, 63 L.Ed. 897 (seizure and operation of railroads); Hamilton v. Kentucky Distilleries and W. Co., 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194, (local liquor traffic); Central Union Trust Co. v. Garvan, 254 U.S. 554, 41 S.Ct. 214, 65 L.Ed. 403 (seizure of enemy property); Hirabayashi v. United States, 320 U.S. 81, 63 S.Ct. 1375, 87 L.Ed. 1774 (curfew regulations); Yakus v. United States, 321 U.S. 414, 64 S.Ct. 660, 88 L.Ed. 834 (Emergency Price Control Act, 50 U.S.C.A.Appendix, § 901 et seq.); Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892 (rent control); and Korematsu v. United States, 323 U.S. 214, 65 S.Ct. 193, 89 L.Ed. 194 (exclusion of civilians from west coast military area). In Hirabayashi v. United States, supra, this Court said, 320 U.S. page 93, 63 S.Ct. page 1382, 87 L.Ed. 1774. 'The war power of the national government is 'the power to wage war successfully.' See Charles Evans Hughes, War Powers Under the Constitution, 42 A.B.A.Rep. 232, 238. It extends to every matter and activity so related to war as substantially to affect its conduct and progress. The power is not restricted to the winning of victories in the field and the repulse of enemy forces. * * * Since the Constitution commits to the Executive and to Congress the exercise of the war power in all the vicissitudes and conditions of warfare, it has necessarily given them wide scope for the exercise of judgment and discretion in determining the nature and extent of the threatened injury or danger and in the selection of the means for resisting it. * * * Where, as they did here, the conditions call for the exercise of judgment andd iscretion and for the choice of means by those branches of the Government on which the Constitution has placed the responsibility of war-making, it is not for any court to sit in review of the wisdom of their action or substitute its judgment for theirs.' 10 '20. At the beginning of the limited emergency in 1939, the only applicable statutory limits on profits from the sale of military or naval supplies were contained in the Vinson-Trammel Act of March 27, 1934, as amended (34 U.S.C.A. § 494 et seq.) (relating to naval vessels) and the Merchant Marine Act of 1936, as amended (46 U.S.C.A. § 1101 et seq.) (relating to construction of merchant ships). The Act of April 3, 1939 (10 U.S.C.A. §§ 311, 312), extended percentage profit limitation to cover Army aircraft contracts. The percentage of profit allowed to contractors was lowered to approximately 8% by the Act of June 28, 1940 (50 U.S.C.A.Appendix, § 1152), but the Second Supplemental National Defense Appropriation Act, 1941, enacted September 9, 1940, provided that as to aircraft the old limitation of 12% was to prevail. '21. * * * Accordingly, the Second Revenue Act of 1940 (54 Stat. 974), containing the excess profits tax, suspended the profit limitation statutes applicable to Army and Navy contracts entered into after December 31, 1939, or uncompleted on that date by contractors and subcontractors subject to the new excess profits tax. Thereafter, until the passage of the Sixth Supplemental National Defense Appropriation Act of 1942, the only statutory provisions concerning war or defense contracts were those of the excess profits tax.' Affidavit of Robert P. Patterson, Under Secretary of War, sworn to August 3, 1945. And see Hensel and McClung, Profit Limitation Controls Prior to the Present War, 10 Law & Contemp.Prob. 187 (1943—1944). 11 The following significant congressional hearings were publicly held: Hearings before the Senate Committee on Finance on § 403 of Pub.L.No.528, 77th Cong., 2d Sess. (September 22 and 23, 1942); Hearings before a Subcommittee of the Senate Committee on Finance on § 403 of Pub.L.No.528, 77th Cong., 2d Sess. (September 29 and 30, 1942); Hearings before the Subcommittee of the House Committee on Appropriations on Mil.Est.App.Bill for 1944, 78th Cong., 1st Sess. 483—518, 571—580 (June 10, 1943); Hearings before the Subcommittee of the Senate Committee on Appropriations on H.R.2906 (Mil.Est.App.Bill for 1944), 78th Cong., 1st Sess. 22, 30—33, 125—138, 150—151 (1943); Hearings before the House Committee on Naval Affairs, pursuant to H.R.Res.30, Vol. 2, 78th Cong., 1st Sess. (June 10—30, 1943); Hearings before the House Committee on Ways and Means on H.R.2324, 2698 and 3015 (Renegotiation of War Contracts), 78th Cong., 1st Sess. (September 9—23, 1943); Hearings before the Senate Committee on Finance on H.R.3687 (Revenue Act of 1943), 78th Cong., 1st Sess. 49, 388—392, 402—424, 443—452, 465, 469, 598—601, 620—629, 669—684, 690—696, 925—926, 987—1111, 1121—1132 (November 29—December 15, 1943); Hearings before the House Committee on Ways and Means on H.R.2628 (extension of termination date of Renegotiation Act), 79th Cong., 1st Sess. (April 12—16, 1945). In addition, private hearings and interviews appear to have been had by Congressional Committees. The following major reports on the operation of the Renegotiation Act were issued by Congressional Committees: H.R.Rep.No.733, 78th Cong., 1st Sess. (October 7, 1943). Report of the Committee on Naval Affairs, pursuant to H.R.Res.30 (Renegotiation of War Contracts); Sen.Rep.No.10, Part 5, 78th Cong., 1st Sess. (March 30, 1943). Additional Report of the Special Senate Committee Investigating the National Defense Program (Renegotiation of War Contracts); Sen.Rep.No.10, Part 16, 78th Cong., 2d Sess. 40—64, 192—199 (March 4, 1944). Additional Report of the Special Senate Committee Investigating the National Defense Program (Third Annual Report); H.R.Rep.No.871, 78th Cong., 1st Sess. 75—90 (November 18, 1943), on H.R.3687 (Revenue Bill of 1943); Sen.Rep.No.627, 78th Cong., 1st Sess. 98—119 (December 22, 1943), on H.R.3687 (Revenue Bill of 1943); H.R.Rep.No. 1079, 78th Cong., 2d Sess. 34—39, 76—88 (February 4, 1944), on H.R.3687 (Conference Report on Revenue Act of 1943). See also: Renegotiation of War Contracts—Law, Dea tes and Other Legislative Materials—Compiled for the use of the House Committee on Ways and Means, 78th Cong., 1st Sess. (1943); Data on Renegotiation of Contracts, Senate Committee on Finance (December 9, 1943). 12 In its brief filed jointly in the present cases the Government has submitted the following statement as to the results of renegotiation: '11. The results of renegotiation: We are advised by the War Contracts Price Adjustment Board that as of June 30, 1947, 118,101 contractors had been assigned for renegotiation with respect to 1942 through 1946 fiscal years, and contracts aggregating over $190,000,000,000 (excluding contractors eliminated because of exemptions or non-coverage) were subjected to renegotiation. Of the total assignments, 115,535 (or 97.8%) were completed as of June 30, 1947. Out of the 115,535 completed assignments, 85,037 (or 73.6%) resulted in cancellations or clearances indicating that no excessive profits had been made or that the contractor was found to be exempt from renegotiation; 28,889 (or 25%) resulted in bilateral refund agreements between the Government and the contractor; 1,609 (or 1.4%) resulted in unilateral determinations by the Departments or the War Contracts Price Adjustment Board. Of the 30,498 assignments involving determinations of excessive profits, 1,609 (or 5.28%) were unilateral determinations and 28,889 (or 94.72%) were bilateral. 'Also as of June 30, 1947, the gross recoveries through renegotiation amounted to some $10,434,637,000, and the estimated net recovery (after deduction of the federal tax credit allowed contractors on renegotiation refunds) amounted to $3,130,391,000. Of the total gross recoveries of $10,434,637,000, some $895,493,000 (or 8.58%) were involved in unilateral determinations and the rest were recovered by voluntary agreement.' 13 See note 1, supra. 14 For relevant excerpts from its text, see Appendix I, infra. 15 For relevant excerpts from its text, see Appendix II, infra. 16 For relevant excerpts from its text, see Appendix III, infra. 17 See § 403(l) in note I, supra. 18 In the House of Representatives, the Case Amendment, providing in effect a limitation of 6% on war profits was adopted without debate. 88 Cong.Rec. 3139—3140 (1942). Before the Senate Subcommittee on Appropriations strong objection was made to this provision by the representatives of the Government and its omission was recommended by the Senate Committee on Appropriations. After ample consideration it was omitted in the Act as passed. 88 Cong.Rec. 3378—3405; 3582—3599; 3647—3662; 3666 (1942), and see H.R.Rep.No.2030, 77th Cong., 2d Sess. 8—10 (1942). 19 Hearings before the Subcommittee of the Senate Committee on Finance on Pub.L.No.528, 77th Cong., 2d Sess. 16—28 (September 29, 1942). 20 See Appendix III, infra. 21 See Appendix III, infra. 1. The Statutory Language. 22 See Appendix I, infra. 23 See Appendix I, infra. 24 See Appendix I, infra. 25 See Appendix II, infra. 26 Published as part of the material submitted by Under Secretary of War Robert P. Patterson at the Hearings on the Renegotiating of Contracts before a Subcommittee of the Senate Committee on Finance on § 403 of Pub.L.No. 528, 77th Cong., 2d Sess. 28, 34—43 (September 29, 1942). 27 See Appendix II, infra. 28 See Appendix II, infra. 29 See Appendix II, infra. 30 See Hearings before the House Committee on Naval Affairs, 78th Cong., 1st Sess., Vol. 2, pp. 469, et seq., 1025—1039, especially 1028—1029 (1943). 2. The Validity of the Delegation of Authority. 31 'The question remains: What may be deemed to be the force and effect in time of war of the restrictive provisions contained in the constitution with respect to the exercise of federal authority? It is manifest, at once, that the great organs of the National Government retain and perform their functions as the constitution prescribes. Senators and Representatives are qualified and chosen as provided in the constitution and the legislative power vested in the Congress must be exercised in the required manner. The President is still the constitutional Executive, elected in the manner provided and subject to the restraints imposed upon his office. The judicial power of the United States continues to be vested in one Supreme Court and such inferior courts as Congress has ordained. Again, apart from the provisions fixing the framework of the Government, there are limitations which by reason of their express terms or by necessary implication must be regarded as applicable as well in war as in peace. Thus one of the expressed objects of the power granted to Congress 'to lay and collect Taxes, Duties, Imposts, and Excises' is to 'provide for the common defense,' and it cannot be doubted that taxes laid for this purpose, that is, to support the army and navy and to provide the means for military operations, must be laid subject to the constitutional restrictions.' Address by Honorable Charles E. Hughes, of New York, on 'War Powers Under the Constitution,' September 5, 1917, 42 A.B.A.Rep. 232, 241—242. 32 Billings v. United States, 232 U.S. 261, 282, 34 S.Ct. 421, 424, 58 L.Ed. 596. 33 Brushaber v. Union Pacific R. Co., 240 U.S. 1, 24, 36 S.Ct. 236, 244, 60 L.Ed. 493, L.R.A.1917D, 414, Ann.Cas.1917B, 713. 34 'We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.' (Italics supplied.) U.S.Const. Preamble. 35 See notes 19 and 26, supra. 36 See note 30, supra. 37 Excessive means: 'Characterized by, or exhibiting, excess; as: a Exceeding what is usual or proper; overmuch. b Greater than the usual amount or degree; exceptional; very great.' Webster's New International Dictionary, 2d ed. (1938). 38 See Appendix I, infra. 39 See Appendix III, infra. 40 See Appendix III, infra. 41 See Appendix III, infra. 42 See Appendix III, infra. 43 See Appendix III, infra.
34
335 U.S. 188 68 S.Ct. 1443 92 L.Ed. 1898 AHRENS et al.v.CLARK, Atty. Gen. No. 446. Argued March 29, 1948. Decided June 21, 1948. Mr. James J. Laughlin, of Washington, D.C., for petitioners. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 The initial question presented in this case is the one we reserved in Ex parte Mitsuye Endo, 323 U.S. 283, 305, 65 S.Ct. 208, 220, 89 L.Ed. 243, viz., whether the presence within the territorial jurisdiction of the District Court of the person detained is prerequisite to filing a petition for a writ of habeas corpus. 2 Petitioners are some 120 Germans who are being held at Ellis Island, New York, for deportation to Germany. Their deportation has been directed under removal orders issued by the Attorney General who has found that each of them is dangerous to the public peace and safety of the United States because he has adhered to a government with which the United States is at war or to the principles thereof. These removal orders were issued, under Presidential Proclamation 2655 of July 14, 1945, 10 Fed.Reg. 8947, pursuant to the Alien Enemy Act of 1798, R.S. § 4067, 50 U.S.C. § 21, 50 U.S.C.A. § 21. The orders are challenged by these petitions for writs of habeas corpus on several grounds, the principal one being that all of them exceed the statutory authority in that they were issued after actual hostilities with Germany ceased. 3 The petitions were filed in the District Court for the District of Columbia and alleged that petitioners were confined at Ellis Island, New York, and are 'subject to the custody and control' of the Attorney General. Respondent moved to dismiss because, inter alia, petitioners were outside the territorial confines of the District of Columbia. The order of the District Court granting the motion was affirmed by the Court of Appeals. 4 The statute, 28 U.S.C. § 452, 28 U.S.C.A. § 452, provides: 5 'The several justices of the Supreme Court and the several judges f the circuit courts of appeal and of the district courts, within their respective jurisdictions, shall have power to grant writs of habeas corpus for the purpose of an inquiry into the cause of restraint of liberty. A circuit judge shall have the same power to grant writs of habeas corpus within his circuit that a district judge has within his district; and the order of the circuit judge shall be entered in the records of the district court of the district wherein the restraint complained of is had.' 6 The question at the threshold of the case is whether the words 'within their respective jurisdictions' limit the district courts to inquiries into the causes of restraints of liberty of those confined or restrained within the territorial jurisdictions of those courts. There are few cases on all fours with the present one, the precise question not having frequently arisen in the lower federal courts. But the general view is that their jurisdiction is so confined. McGowan v. Moody, 22 App.D.C. 148, 158 et seq.; In re Bickley, 3 Fed.Cas. page 332, No. 1,387. And see In re Boles, 8 Cir., 48 F. 75; Ex parte Gouyet, D.C., 175 F. 230, 233; United States v. Day, 3 Cir., 50 F.2d 816, 817; Jones v. Biddle, 8 Cir., 131 F.2d 853, 854; United States v. Schlotfeldt, 7 Cir., 136 F.2d 935, 940.1 Cf. Sanders v. Allen, 69 App.D.C. 307, 100 F.2d 717; Tippitt v. Wood, 78 U.S.App.D.C. 332, 140 F.2d 689. That is our view. 7 We start from the accepted premise that apart from specific exceptions created by Congress the jurisdiction of the district courts is territorial. See Georgia v. Pennsylvania R. Co., 324 U.S. 439, 467, 468, 65 S.Ct. 716, 731, 89 L.Ed. 1051, and cases cited. It is not sufficient in our view that the jailer or custodian alone be found in the jurisdiction. 8 Although the writ is directed to the person in whose custody the party is detained, 28 U.S.C. § 455, 28 U.S.C.A. § 455, the statutory scheme contemplates a procedure which may bring the prisoner before the court. For § 458 provides that 'The person making the return shall at the same time bring the body of the party before the judge who granted the writ.' See Walker v. Johnston, 312 U.S. 275, 61 S.Ct. 574, 85 L.Ed. 830. It would take compelling reasons to conclude that Congress contemplated the production of prisoners from remote sections, perhaps thousands of miles from the District Court that issued the writ. The opportunities for escape afforded by travel, the cost of transportation, the administrative burden of such an undertaking negate such a purpose. These are matters of policy which counsel us to construe the jurisdictional provision of the statute in the conventional sense, even though in some situations return of the prisoner to the court where he was tried and convicted might seem to offer some advantages. 9 The history of the statute supports this view. It came into the law as the Act of February 5, 1867, 14 Stat. 385. And see Act of August 29, 1842, 5 Stat. 539. Prior to that date it was the accepted view that a prisoner must be within the territorial jurisdiction of the District Court in order to obtain from it a writ of habeas corpus. See Ex parte Graham, Fed.Cas. No. 5,657, 4 Wash.C.C. 211;2 In re Bickley, 3 Fed. Cas. page 332, No. 1,387. Cf. United States v. Davis, Fed.Cas. No. 14,926, 5 Cranch C.C. 622. The bill as introduced in the Senate was thought to contain an infirmity. The objection was made on the floor that it would permit 'a district judge in Florida to bring before him some men convicted and sentenced and held under imprisonment in the State of Vermont or in any of the further States.' Cong. Globe, 39th Cong., 2d Sess. 730. As a result of that objection Senator Trumbull, who had charge of the bill, offered an amendment which added the words 'within their respective jurisdictions.' Ibid. at 790. That amendment was adopted as a satisfactory solutiono f the imagined difficulty.3 Id. Thus the view that the jurisdiction of the District Court to issue the writ in cases such as this4 is restricted to those petitioners who are confined or detained within the territorial jurisdiction of the court is supported by the language of the statute, by considerations of policy, and by the legislative history of the enactment. We therefore do not feel free to weigh the policy considerations which are advanced for giving district courts discretion in cases like this. If that concept is to be imported into this statute, Congress must do so. 10 Respondent is willing to waive the point, so that we may make a decision on the merits. But the restriction is one which Congress has placed on the power of the District Court to act. Hence it may not be waived by the parties. United States v. Griffin, 303 U.S. 226, 229, 58 S.Ct. 601, 602, 603, 82 L.Ed. 764. 11 Ex parte Mitsuye Endo, supra, 323 U.S. at page 305, 65 S.Ct. at page 220, 89 L.Ed. 243, is not opposed to this view. In that case petitioner at the time suit was instituted was within the territorial jurisdiction of the habeas corpus court but had subsequently been removed to a different district and circuit. We held, in conformity with the policy underlying Rule 45(1) of the Court, 28 U.S.C.A. following section 354, that jurisdiction of the District Court was not defeated in that manner, no matter how proper the motive behind the removal. We decided that in that situation the court can act as long as it can reach a person who has custody of the petitioner. 12 Since there is a defect in the jurisdiction of the District Court which remains uncured, we do not reach the question whether the Attorney Gee ral is the proper respondent (see §§ 455 and 458; Wales v. Whitney, 114 U.S. 564, 574, 5 S.Ct. 1050, 1054, 1055, 29 L.Ed. 277; Jones v. Biddle, supra; Sanders v. Bennett, 80 U.S.App.D.C. 32, 148 F.2d 19) and, if not, whether the objection may be waived, as respondent is willing to do. Cf. Ex parte Mitsuye Endo, supra, 323 U.S. at pages 305—307, 65 S.Ct. at pages 220, 221, 89 L.Ed. 243. 13 Affirmed. 14 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK and Mr. Justice MURPHY join, dissenting. 15 The jurisdictional turn this case has taken gives it importance for beyond the serious questions tendered on the merits of petitioners' application. They are alien enemies interned during the war as dangerous to the nation's safety. They now seek to avoid deportation from a country which takes care for personal liberties, even when its hospitality may be abused, to one which denied its own citizens such rights until its structure of tyranny fell in ruins. Whether or not petitioners have forfeited the right to continued enjoyment of our institutions and the life they foster, and whether the forfeiture has been declared and can now be executed pursuant to lawfully granted authority, are indeed important questions, upon which these petitioners are as much entitled to hearing and decision as Ludecke. Cf. Ludecke v. Watkins, 335 U.S. 160, 68 S.Ct. 1429. 16 But the Court, putting them aside for these petitioners, cuts much more sweepingly at the roots of individual freedom by its decision upon the jurisdictional issue than could any disposition of those issues. The decision attenuates the personal security of every citizen. So does any serious contraction in the availability of the writ of habeas corpus. For the first time this Court puts a narrow and rigid territorial limitation upon issuance of the writ by the inferior federal courts. Heretofore such constrictive formulations have been avoided generally, even assiduously, out of regard for the writ's great office in the vindication of personal liberty. See, e.g., Bowen v. Johnston, 306 U.S. 19, 26—28, 59 S.Ct. 442, 445—447, 83 L.Ed. 455; Ex parte Mitsuye Endo, 323 U.S. 283, 304—307, 65 S.Ct. 208, 219—221, 89 L.Ed. 243; Price v. Johnston, 334 U.S. 266, 68 S.Ct. 1049; Wade v. Mayo, 334 U.S. 672, 68 S.Ct. 1270.1 17 But today's ruling, departing from that policy, is that the writ can issue only when the place of confinement lies within the limits of the court's territorial jurisdiction. That purely geographic fact and it alone determines the court's competence to act. And this is not merely as a matter of venue or of accommodation in the exercise of authority among tribunals of coordinate power, allowing room for some adaptability to varying circumstances. It is one crucial between competence to act and total impotence. All other considerations are put to one side. Neither the jailer's presence and amenability to process nor his ability or even his willingness to produce the body can cure the court's basic infirmity, if by accident or choice the locus of confinement happens to fall beyond the physical line. 18 If this is or is to become the law, the full ramifications of the decision are difficult to foresee. It would seem that a great contraction of the writ's classic scope and exposition has taken place,2 and much of its historic efficacy may have been destroyed. For if absence of the body from the jurisdiction is alone conclusive against existence of power to issue the writ, what of the case where the place of imprisonment, whether by private or public action, is unknown? What also of the situation where that place is located in one district, but the jailer is present in and can be served with process only in another?3 And if the place of detention lies wholly outside the territorial limits of any federal jurisdiction, although the person or persons exercising restraint are cla rly within reach of such authority, is there to be no remedy, even though it is American citizens who are wrongfully deprived of their liberty and Americans answerable to no other power who deprive them of it, whether purporting to act officially or otherwise? In all these cases may the jailers stand in defiance of federal judicial power, and plead either the accident of the locus of detention outside the court's territorial limitations, or their own astuteness in so selecting the place, to nullify judicial competence? To none of these questions does the Court give answer, although it purports to reserve decision concerning one of them. Yet in all, if power to act rests solely on the body's presence, its absence4 will render the court impotent even though the jailer is within grasp of its process for compelling production and, it may be, beyond reach of the like process of any other court. For upon the test prescribed, there must be conjunction of the body's presence and the jailer's for the writ to issue. On the other hand, if relief can be given in such cases, where the conjunction does not exist, then it is not true that the federal courts have been stripped of power to afford it only when the body is held within the limits of their territorial jurisdictions, and the Court's grounding of this decision would seem neither necessary nor proper for disposition of the case. 19 By thus elevating the place of physical custody to the level of exclusive jurisdictional criterion, the Court gives controlling effect to a factor which generally has been regarded as of little or no importance for jurisdictional purposes or for the functioning of the writ in its great office as historically conceived. Perhaps the classic exposition of its nature and availability, as also of the character of the proceeding, is that of Judge Cooley, quoted in part with approval by our opinion in Ex parte Mitsuye Endo, supra: 20 'The important fact to be observed in regard to the mode of procedure upon this writ is, that it is directed to, and served upon, not the person confined, but his jailer. It does not reach the former except through the latter. The officer or person who serves it does not unbar the prison doors, and set the prisoner free, but the court relieves him by compelling the oppressor to release his constraint. The whole force of the writ is spent upon the respondent. * * * The place of confinement is therefore not important to the relief, if the guilty party is within reach of process, so that by the power of the court he can be compelled to release his grasp. The difficulty of affording redress is not increased by the confinement being beyond the limits of the state, except as greater distance may affect it. The important question is, where is the power of control exercised?'5 21 In this historic view the proceeding in habeas corpus is analogous jurisdictionally neither to one in rem or quasi in rem nor to the anomalously restricted personal action, as developed in the common law, of trespass to reality.6 Yet the Court's decision gives to this prime remedy for invasion of personal liberty an availability in the inferior federal courts hardly greater than those highly restricted proceedings possess, jurisdictionally speaking, for purposes remedial of injuries to property. Those courts indeed are deprived of powers in habeas corpus which, as Judge Cooley pointed out in relation to state tribunals,7 they may constantly exert with extraterritorial effects in the exercise of their general jurisdiction in equity. 22 This exaltation of the territorial element in jurisdiction, with such constrictive and potentially destructive consequences, the Court makes by reason of its conception of the meaning of the statutory phrase, 'within their respective jurisdictions,' 28 U.S.C. 452, 28 U.S.C.A. § 452; the legislative history of its insertion; and certain considerations of policy, relating especially to the production of persons detained by federal penal or other authorities in courts distant from the places of detention and thought to require the narrow reading given. I do not think these considerations compel so rigid a jurisdictional significance, or that this is necessary to avoid the evils the Court thus seeks to escape. 23 The jurisdictional problem as presented by the facts involves two questions. The first, the Court does not reach. But it is one I think basic to consideration of the other, a difference no doubt due to different emphasis upon the territorial element in jurisdictional matters of this sort. The question is whether the Attorney General is a proper party respondent. The answer turns on whether the petitioners are in his custody8 and thus are subject to his power of production. In my opinion they are. 24 The same principle which forbids formulation of rigid jurisdictional limitations upon the use of this prerogative writ in other respects, inconsistent with its availability for performin its office in varying circumstances, forbids limiting those who may be called upon to answer for restraints they unlawfully impose by technical niceties of the law of principal and agent, superior or subordinate in public authority, or immediacy or remoteness of the incidence of the authority or power to restrain. Jurisdictionally speaking, it is, or should be, enough that the respondent named has the power or ability to produce the body when so directed by the court pursuant to process lawfully issued and served upon him.9 25 There can be no question of the Attorney General's power to produce the petitioners in this case. For he is in complete charge of the proceedings leading up to the order directing their removal from the country;10 indeed he claims to have complete discretion to decide whether or not removal shall be directed. In view of his all-pervasive control over their fortunes, it cannot be doubted that he is a proper party to resist 'an inquiry into the cause of restraint of liberty' in their cases.11 26 Moreover, there can be no doubt of the Attorney General's amenability, in his official capacity, to process in the District of Columbia searching his official acts for lawful authority,12 nor does he claim immunity in this respect. 27 The case therefore is one in which every requisite of jurisdiction, as the writ has been conceived historically, is present. The person having custody of the body has not only the ability but the authority to produce it. He is within reach of the court's process and amenable to it for that purpose. Indeed in this case he is willing to respond and, to that end, to waive any objection he might be entitled to make to the court's exercise of its power.13 Unless therefore power is totally wanting by reason of petitioners' absence from the district, there is no insuperable obstacle to its exercise in this case. And as to this the Attorney General does not urge, he merely suggests, in view of certain dicta and decisions, wee note 18, that the power may be lacking for that reason. 28 If so, this can be only because the statutory wording, 'within their respective jurisdictions,' compels the Court's conclusions.14 The language, however, does not even purport to define 'their respective jurisdictions' in terms of where the body restrained is held. Indeed, it gives no indication that absence of the persons detained from the district which has personal jurisdiction of their custodian creates an insuperable jurisdictional defect, wit the necessary consequence that if he is beyond reach of process issued by the courts where the body is held there can be no remedy by habeas corpus in any federal court. On the contrary, the wording of the statutory phrase is as consistent with regarding 'their respective jurisdictions' as attaching when the court acquires jurisdiction over the jailer by service of process within the limits of its territorial jurisdiction, even though the place of detention is elsewhere, as it is to invert those factors of territorial limitation in the manner of the Court's construction. 29 It is true that Congress, when it added the phrase, was concerned with the problem, or rather the possibility, that the inferior federal courts might abuse their power, in issuing the writ, by requiring the production of persons detained in distant places, with the effect of maladjustment in the exercise of authority as among the different federal courts. But it does not follow, as the Court concludes, that it sought to solve those problems in a manner that would deprive all courts of power to issue the writ except those sitting in the place of detention. As will appear, Congress was dealing with an even broader possibility for abuse, and while it sought to limit authority to issue the writ, there is nothing in the statutory language, the legislative history, or the problem of statutory authorization the amendment was introduced to solve, which shows that so narrow and rigid a restriction was contemplated. 30 To put the matter in proper perspective, before turning to the legislative history and the precise problem with which it was concerned, it is important to emphasize that the alternative to the Court's holding is not that petitioners have a right to be heard in a distant court whenever the Attorney General may there be served. Rather the alternative is that their absence from the district is a circumstance which normally would induce the court to exercise its discretion to decline jurisdiction, but which may be disregarded in exceptional circumstances if the respondent so desires or if the court finds that justice in the particular circumstances so demands. 31 Even though we start from the accepted premise that for this purpose the jurisdiction of the district court is territorial, see Georgia v. Pennsylvania R. Co., 324 U.S. 439, 467, 468, 65 S.Ct. 716, 731, 89 L.Ed. 1051, we should also recall, as has already been stated, that the Attorney General is within the territorial jurisdiction of the court in which these proceedings were instituted. It is within his power to terminate the restraint of petitioners' liberty without leaving the District of Columbia. In the sense stated by Judge Cooley, his power of control is exercised within that District. We have no problem of issuing process to be served outside the Disti ct of Columbia such as might result in 'a clashing of jurisdiction between those courts, which could not easily be adjusted; and an oppression upon suitors, too intolerable to be endured,' and with which alone in my opinion the statutory phrase sought to deal.15 32 When the cases where both the custodian and his prisoner are outside the territorial jurisdiction of the court16 are separated from those where the custodian is within the jurisdiction though the prisoner is elsewhere,17 the weight of authority in the lower federal courts is opposed to the conclusion reached to day.18 With the former class this case is not concerned. But, for reasons yet to be stated, it is with that class alone, in my opinion, that the phrase 'within their respective jurisdictions' sought to deal. Moreover, other authorities have generally taken the position that jurisdiction over the custodian is sufficient regardless of the location of the party restrained.19 In the light of this prevailing conception of the problem, we turn to the Court's reasons for departing from it. 33 Principal reliance is placed on the legislative history of the 1867 amendment. But this history neither requires nor, in my opinion, justifies the Court's view. It consists in a short statement by Senator Johnson, followed by brief colloquy, which led to insertion of the phrase. Cong.Globe, 39th Cong., 2d Sess. 730, 790, 899. It seems quite clear that he was concerned about a wholly different problem, arising from the bill's broad wording before the limiting phrase was introduced.20 This was the possibility that the bill would confer power upon district judges to issue process against jailers in remote districts, and thus create departure from the usual rule, in habeas corpus cases as in others, that process does not run beyond the territorial jurisdiction of the issuing court. The Senator wished to make sure that the bill would not have that effect. And the ud erlying assumption of the entire discussion was that, without the limitation proposed the bill's unlimited language might be taken to give authority to districts courts to issue process to run throughout the country, comparable as was said to that exercised by justices of this Court, or even beyond its borders,21 and thus to bring before them jailers without regard to distance. 34 It was this possibility which led to the proposal and acceptance of the amendment, not that a jailer within the court's jurisdiction, i.e., in reach of its process issued and served within its territorial jurisdiction, might detain the body outside those limits and be required to bring it before the court when ordered. Indeed there is not a word in the legislative discussion about the latter situation, or to suggest that it was the cause either of concern or of the amendment's inclusion. Neither Senator Johnson nor anyone else seems to have had in mind the situation where the locus of detention is in one jurisdiction and the jailer is present in another, amenable to its process.22 It is this crucial fact which the Court's opinion and ruling ignore. 35 Confining the running of the court's process to its territorial jurisdiction is of course a very different thing from confining its jurisdiction to cases in which the prisoner's body is located within those limits. Most importantly, it is one much less destructive of the writ's efficacy in cases where it may be most needed, and of the historic conception of the nature and scope of the proceeding. The amendment's terms are completely satisfied, are given their full and intended effect, if they are limited to the former object. So taken, they do no more than prevent the section's otherwise unlimited phrasing from authorizing process to run without territorial limitation, cf. Georgia v. Pennsylvania R. Co., supra, 324 U.S. at pages 467, 468, 65 S.Ct. at page 731, 89 L.Ed. 1051, and authorities cited; they do not trench upon the writ's classic availability or its utility as a prime safeguard of freedom. There is no hint in either the amendment's wording or in its legislative history that it had any such restrictive purpose or effect. The entire measure was adopted in fact, not to reduce, but to expand the writ's availability.23 36 In view of this history and its effect for the statute's meaning and purpose, the considerations of policy and convenience upon which the Court relies to bolster its view can have no proper influence to give that view validity. Indeed, if the legislative history were less clear than it is against the Court's conception, a due and hitherto traditional regard for the writ's high office should dictate resolving any doubt, as between the possible constructions, against a jurisdictional limitation so destructive of the writ's availability and adaptability to all the varying conditions and devices by which liberty may be unlawfully restrained. 37 Especially is this true since no such rigid restriction is necessary to provide adequate safeguard against the evils the Court envisages. It seems to proceed upon the assumption that if jurisdiction in the District of Columbia were admitted, federal prisoners thousands of miles away would have an unqualified right to invoke it. 38 On the contrary, if the Attorney General should not waive objection to proceeding in the District of Columbia as he has done here and there were no compelling reason for overriding his objection, such as the absence of any possible remedy elsewhere, the courts of the District clearly would have discretion to decline the exercise of their jurisdiction. Indeed, in the vast majority of such cases, where remedy would be available in a more convenient forum, it would be their duty to do so and an abuse of discretion, subject to correction upon review, for them to compel the petitioner's production in such an inconvenient or otherwise inappropriate forum. See Beard v. Bennett, 72 App.D.C. 269, 114 F.2d 578, 580, 581. 39 In this view it would be only the exceptional case of detention outside the District and pursuant to authority independent of its affairs, which would require or indeed permit the exercise of jurisdiction by its courts. On the other hand, in the situations where the District has a peculiar interest that its courts shall have power in such cases, namely, those affecting its penal institutions located outside its borders, they would not be deprived of jurisdiction, as the present decision consistently applied would seem to necessitate.24 40 The Court has reserved decision upon cases where the place of confinement is not within the territorial jurisdiction of any court.25 And it has sought to distinguish Ex parte Mitsuye Endo, supra. I agree that the reservation and the distinction should be made. But I think the fact they have been found necessary goes far to destroy the validity of the present decision's grounding. 41 Cases of the type reserved have arisen recently on application for original writs of habeas corpus by petitioners detained by the military authorities in Germany and Japan. Ex parte Betz, 329 U.S. 672, 67 S.Ct. 39, 91 L.Ed. 593; Ex parte Durant, 329 U.S. 672, 67 S.Ct. 39, 91 L.Ed. 593; Ex parte Wills, 329 U.S. 672, 67 S.Ct. 40, 91 L.Ed. 593; Ex parte Cutino, 329 U.S. 672, 67 S.Ct. 40, 91 L.Ed. 594; Ex parte Walczak, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594; Ex parte McKinley, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594; Ex parte Murphy, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594. Some of those petitioners were citizens of the United States; some were civilians, others members of the armed forces. In some instances the detention was pursuant to sentences imposed by military tribunals for alleged offenses, death being the penalty in one. In other cases the petitioners claimed to be confined for indefinite periods without charge and without trial. 42 The jurisdictional questions raised by those petitions are of profound importance.26 And if any of the reasons advanced for today's decision is deemed controlling, all such questions will be resolved in the future against such petitioners. Perhaps when those cases arise the Court will ignore the reasons relied on today, just as today it ignores the reasoning relied on in Ex parte Mitsuye Endo. For if absence of the body detained from the territorial jurisdiction of the court having jurisdiction of the jailer creates a total and irremediable void in the court's capacity to act, what lawyers call jurisdiction in the fundamental sense, then it is hard to see how that gap can be filled by such extraneous considerations as whether there is no other court in the place of detention from which remedy might be had and whether a rule of this Court, Rule 45(1), can override a basic jurisdictional limitation Congress has imposed. 43 In any event, I cannot subscribe to the view that Congress has laid down a jurisdictional criterion so capricious in its consequences or so destructive of the writ's historic nature, scope and availability. As was stated at the beginning, the full ramifications of the decision are difficult to foresee. It is one thing to lay down a rule of discretion adequate to prevent flooding the courts of the District of Columbia with applications for habeas corpus from the country at large. It is entirely another to tie their hands, and those of all other inferior federal courts, with a strict jurisdictional limitation which can only defeat the writ's efficacy in many cases where it may be most needed. 44 Not the least important of these may be instances arising in the future where persons are wrongfully detained in places unknown to those who would apply for habeas corpus in their behalf. Without knowing the district of confinement, a petitioner would be unable to sustain the burden of establishing jurisdiction in any court in the land. Such a situation might arise from military detention, cf. Duncan v. Kahanamoku, 327 U.S. 304, 66 S.C. 606, 90 L.Ed. 688; Ex parte Milligan, 4 Wall. 2, 18 L.Ed. 281; In the Matter of Stacy, 10 Johns., N.Y. 328; or as a result of mass evacuation of groups from a given area in time of emergency with consequent disruption of the means of keeping personal records in order, cf. Hirabayashi v. United States, 320 U.S. 81, 63 S.Ct. 1375, 87 L.Ed. 1774; Ex parte Mitsuye Endo, supra; or possibly, though it is to be hoped not often, even from wilful misconduct by arbitrary executive officials overreaching their constitutional or statutory authority. These dangers may seem unreal in the United States. But the experience of less fortunate countries should serve as a warning against the unwarrant curtailment of the jurisdiction of out courts to protect the liberty of the individual by means of the writ of habeas corpus. 45 Accordingly, I dissent from the conclusion and judgment of the Court. Since I think the District Court had jurisdiction and since also the Attorney General has waived any objection to its exercise in this case, for reasons certainly not inadequate, I am also of the view that the case should be decided on the merits. 1 But see Ex parte Fong Yim, D.C., 134 F. 938; Ex parte Ng Quong Ming, D.C., 135 F. 378. 2 The principle which governed the decision was stated by Mr. Justice Washington as follows, Fed.Cas.No.5,657, 4 Wash.C.C. pages 211, 212: 'It is admitted, that these courts, in the exercise of their common law and equity jurisdiction, have no authority, generally, to issue process into another district, except in cases where such authority has been specially bestowed, by some law of the United States. The absence of such a power, would seem necessarily to result from the organization of the court of the United States; by which two courts are allotted to each of the districts, into which the United States are divided; the one denominated a district—and the other a circuit court. This division and appointment of particular courts, for each district, necessarily confines the jurisdiction of these local tribunals, within the limits of the respective districts, within which they are directed to be holden. Were it otherwise, and the court of one district, could send compulsory precess into any other, so as to draw to itself a jurisdiction over persons, and things, without the limits of its district, there would result a clashing of jurisdiction between those courts, which could not easily be adjusted; and an oppression upon suitors, too intolerable to be endured.' 3 The statute then read, 'That the several courts of the United States, and the several justices and judges of such courts, within their respective jurisdictions, in addition to the authority already conferred by law, shall have power to grant writs of habeas corpus in all cases where any person may be restrained of his or her liberty in violation of the constitution, or of any treaty or law of the United States; * * *.' 14 Stat. 385. 4 We need not determine the question of what process, if any, a person confined in an area not subject to the jurisdiction of any district court may employ to assert federal rights. Cf. Ex parte Betz, 329 U.S. 672, 67 S.Ct. 39, 91 L.Ed. 593; Ex parte Durant, 329 U.S. 672, 67 S.Ct. 39, 91 L.Ed. 593; Ex parte Wills, 329 U.S. 672, 67 S.Ct. 40, 91 L.Ed. 593; Ex parte Cutino, 329 U.S. 672, 67 S.Ct. 40, 91 L.Ed. 594; Ex parte Walczak, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594; Ex parte McKinley, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594; and Ex parte Murphy, 329 U.S. 672, 67 S.Ct. 41, 91 L.Ed. 594. 1 Cf. Sunal v. Large, 332 U.S. 174, dissenting opinions at pages 184, 187, 67 S.Ct. 1588, at pages 1594, 1595, 91 L.Ed. 1982. 2 See text infra at note 5. 3 Congress has not given the District Court power to direct service of the writ to be made outside the limits of the state in which the court sits, see United States ex rel. Corsetti v. Commanding Officer of Camp Upton, D.C., 3 F.R.D. 360, and it is at least questionable whether service on the turnkey would constitute service on the custodian. See United States ex rel. Goodman v. Roberts, 2 Cir., 152 F.2d 841. 4 Further questions necessarily arise concerning matters of pleading and proof of presence necessary to establish the jurisdiction. 5 In the Matter of Jackson, 15 Mich. 417, 439, 440. See Ex parte Mitsuye Endo, 323 U.S. at page 306, 65 S.Ct. at page 220, 89 L.Ed. 243. At a later point Judge Cooley's opinion continued: 'There is no inherent difficulty in the case; and the court of chancery, in the exercise of its power to compel specific performance, frequently exerts an authority over a subject matter in a foreign jurisdiction similar to that which is sought for here. I think the case presented by the petition is one in which we can give belief, and the decision in United States v. Davis, Fed.Cas.No.14,926, 5 Cranch C.C. 622, is in point, and will warrant it.T here are no conflicting decisions. The incidental remarks which have been made in some cases about the remedy applying where the imprisonment is within the state, seem to me of no significance. In none of those cases was attention directed to this particular point. * * *' (Emphasis added.) 15 Mich. at page 441. Some of the cases following this view are Emerson v. Guthner, 107 Colo. 83, 108 P.2d 866; Crowell v. Crowell, 190 Ga. 501, 9 S.E.2d 628; Shaw v. Shaw, 114 S.C. 300, 103 S.E. 526; Queen v. Barnardo, 24 Q.B.D. 283; In re Matthews, 12 I.R.C.L. 233; and see cases cited in Ex parte Mitsuye Endo, 323 U.S. at page 306, 65 S.Ct. at page 220, 89 L.Ed. 243. The same position is taken in Church, Habeas Corpus (2d Ed.) § 109. In the Endo case, although reserving the precise issue now decide, we said: 'There are expressions in some of the cases which indicate that the place of confinement must be within the court's territorial jurisdiction in order to enable it to issue the writ. See (cases cited in note 16 infra). But we are of the view that the court may act if there is a respondent within reach of its process who has custody of the petitioner. As Judge Cooley stated in the Matter of Jackson, 15 Mich. 417, 439, 440:' Then followed the matter quoted in the text ending with the words, 'The whole force of the writ is spent upon the respondent;' together with citation of other authorities to similar effect. 323 U.S. 283, 306, 65 S.Ct. 208, 220, 89 L.Ed. 243. 6 See Restatement, Conflict of Laws, § 624 Special Note (Tent. Draft No. 5, 1929); see also Proposed Final Draft No. 2, Question Suggested for Discussion, § 624; Note, 28 Ky.L.J. 462. 7 See note 5. 8 The statute provides that the 'writ shall be directed to the person in whose custody the party is detained.' Rev. Stat. § 755, 28 U.S.C. § 455, 28 U.S.C.A. § 455. 9 See cases cited in notes 5 and 17. 10 The Executive Proclamation under which the Attorney General was acting provides that all alien enemies 'who shall be deemed by the Attorney General to be dangerous to the public peace and safety of the United States because they have adhered to the aforesaid enemy governments or to the principles of government thereof shall be subject upon the order of the Attorney General to removal from the United States and may be required to depart therefrom in accordance with such regulations as he may prescribe.' Proclamation 2655, 10 Fed.Reg. 8947. This proclamation was issued pursuant to the authority conferred by the Alien Enemy Act of 1798, 1 Stat. 577. 11 Furthermore, as the Solicitor General points out in his brief, there is 'no reason why the United States cannot waive this particular objection since it has the effect merely of permitting suit against one Government officer rather than another.' 12 See Fed.Rules Civil Procedure, rule 4(f), 28 U.S.C. following § 723c, 28 U.S.C.A. following section 723c. 13 Upon the facts the situation is one in which the Government quite properly desires a speedy determination upon the merits, in order to avoid the further delay necessarily incident to reaching them by further proceedings. Whether from the viewpoint of establishing the Government's power to remove the petitioners or of terminating the restraint upon their liberties, expedition of the determination is highly desirable. 14 The 1925 amendment to the statute providing that 'the order of the circuit judge shall be entered in the records of the district court of the district wherein the restraint complained of is had' does not limit jurisdiction to grant the writ. See Ex parte Mitsuye Endo, 323 U.S. 283, 307, 65 S.Ct. 208, 220, note 26, 89 L.Ed. 243. The provision is a mere recording requirement applicable in terms only to circuit judges acting individually. Appropriately it does not apply to courts as distinguished from judges because court orders would be recorded by routine procedure, whereas an order issued by a judge in vacation would require special treatment. Since the application in this case was made to a court in session, the requirement does not apply here. But even if it did apply, and even if a recording provision enacted in 1925 could be taken to relate back to the amendment of 1867 to give meaning to the words 'within their respective jurisdictions,' the wording 'the district wherein the restraint complained of is had' could be taken as readily to mean 'wherein the power of control is exercised' as 'wherein the body is located.' Cf. the cases cited in notes 5 and 17. 15 See Ex parte Graham, Fed.Cas.No.5,657, 4 Wash.C.C. 211, 212. See note 2 of the Court's opinion. In that case, as in most of the cases cited by the Court, the custodian and the prisoner were both outside the territorial jurisdiction of the court. See notes 16, 17 and 18. 16 Ex parte Graham, Fed.Cas.No.5,657, 4 Wash.C.C. 211; In re Boles, 8 Cir., 48 F. 75; Ex parte Gouyet, D.C., 175 F. 230; Ex parte Yee Hick Ho, D.C., 33 F.2d 360; United States v. Day, 3 Cir., 50 F.2d 816 (in this case the custodian did appear in court, but only specially to challenge its jurisdiction); Jones v. Biddle, 8 Cir., 131 F.2d 853; United States v. Schlotfeldt, 7 Cir., 136 F.2d 935. 17 United States v. Davis, Fed.Cas.No.14,926, 5 Cranch C.C. 622; In re Bickley, 3 Fed.Cas. page 332, No. 1,387; McGowan v. Moody, 22 App.D.C. 148; Ex parte Fong Yim, D.C., 134 F. 938; Ex parte Ng Quong Ming, D.C., 135 F. 378; Sanders v. Allen, 69 App.D.C. 307, 100 F.2d 717. See Tippitt v. Wood, 78 U.S.App.D.C. 332, 140 F.2d 689; Burns v. Welch, 81 U.S.App.D.C. 384, 159 F.2d 29. 18 Of the cases cited in note 17 only McGowan v. Moody and In re Bickley are in accord with today's decision. And even those two cases are distinguishable. In McGowan v. Moody the principal ground of decision seems to have been that the prisoner was not in the actual custody of the Secretary of the Navy. See 22 App.D.C. at pages 163, 164. Moreover, the authority of that case is questionable in view of later decisions by the same court, see note 24 infra. Although In re Bickley does rest on the ground that the court was not 'competent to give the relief asked for' and uses the term 'jurisdiction,' it is well known that at that time the term 'jurisdiction' was often used in the sense of 'venue,' and since the custodian did not waive the defect it was not necessary for the court to reach the precise issue adjudicated today. In fact the opinion intimates that the result would have been different if the point had been 'freely conceded.' See 3 Fed.Cas. pages 333, 334. 19 See note 5. 20 The bill, prior to addition of the phrase, read pertinently as follows: 'Be it enacted, &c., That the several courts of the United States and the several justices and judges of such courts, in addition to the authority already conferred by law, shall have power to grant writs of habeas corpus in all cases where any person may be restrained of his or her liberty in violation of the Constitution or of any treaty or law of the United States * * *.' Cong. Globe, 39th Cong., 2d Sess. 730. 21 When the amendment 'within their respective jurisdictions' was suggested, Senator Johnson commented on it as follows: 'The amendment proposed by the honorable chairman is entirely satisfactory to me. I suggested the necessity of an amendment the other day because I know that the date Chief Justice of the United States decided that under the laws as they stand process issued by a judge of the Supreme Court in cases where those judges have a right to issue process extends all over the Union. That I am satisfied might lead to a practical evil. The amendment proposed by the honorable chairman is entirely satisfactory to me and removes that difficulty.' Cong.Globe, 39th Cong., 2d Sess. 790. 22 The discussion of the amendment in the Senate was limited to the statements by Senator Johnson, quoted in part in note 21, and the remarks of Senator Trumbull, who introduced the amendment as a result of Senator Johnson's statement. See Cong.Globe, 39th Cong., 2d Sess. 730, 790. 23 The Act of 1867 was an important liberalizing measure in two respects. Substantively, the statute authorized the issuance of the writ to relieve any detention in violation of the Constitution or laws of the United States. Procedurally, the remedy was extendd to all persons in state as well as in federal custody. See Note, 61 Harv.L.Rev. 657, 659. '(N)o indication has been found of intent to narrow the act. * * *' Ibid., n. 22. 24 The District of Columbia Reformatory is located at Lorton, Virginia, and the District Workhouse is at Occoquan, Virginia. Persons are confined in these institutions for violations of the District of Columbia Code. The official in charge of both institutions is a resident of the District and maintains his headquarters in the District. For obvious administrative reasons, the Court of Appeals of the District of Columbia has therefore held that applications for habeas corpus may be filed in courts of the District by inmates of those institutions even though they are confined beyond its territorial jurisdiction. Sanders v. Allen, 69 App.D.C. 307, 100 F.2d 717. See Burns v. Welch, 81 U.S.App.D.C. 384, 159 F.2d 29. Under today's ruling such petitions must hereafter be filed in the Virginia federal court to the inconvenience of the parties and of the court, which must to a certain extent apply law peculiar to the District of Columbia. It is of interest that the Court of Appeals reached this result in the face of the apparently inconsistent earlier holding in McGowan v. Moody, 22 App.D.C. 148. That case has been explained either on the ground that even though the court had jurisdiction it properly declined to exercise it because relief was available elsewhere, see Sanders v. Allen, 69 App.D.C. 307, 100 F.2d 717, 719, but cf. note 25 infra, or, at least by implication, on the ground that Secretary Moody was not a proper party respondent. See Sanders v. Bennett, 80 U.S.App.D.C. 32, 148 F.2d 19, 20, n. 2. Both of these grounds indicate that the Court of Appeals no longer regards McGowan v. Mood as authority for the proposition for which the Court cites it today. 25 The logical inconsistency of this reservation with the decision is highlighted by the citation, apparently with approval, of McGowan v. Moody, 22 App.D.C. 148, where the court expressly assumed that if it had no jurisdiction, there would be no tribunal in which relief might be had. 22 App.D.C. at page 158. In that case the petitioner sought relief against the Secretary of the Navy in behalf of a Marine imprisoned on Guam. 26 See Wolfson, Americans Abroad and Habeas Corpus, 9 F.Bar.J. 142.
01
335 U.S. 211 68 S.Ct. 1454 92 L.Ed. 1911 COMSTOCKv.GROUP OF INSTITUTIONAL INVESTORS, etc., et al., and three other cases. Nos. 451 to 454. Argued March 9, 10, 1948. Decided June 21, 1948. Rehearing Denied Oct. 11, 1948. See 69 S.Ct. 12. Mr. Maxwell Brandwen, of New York City, for petitioners. 1 Mr. Charles W. McConaughy, of New York City, for respondents, Group of Institutional Investors, etc., and others. 2 [Argument of Counsel from page 212 intentionally omitted] 3 Mr. Harry Kirshbaum, of New York City, for respondents, Bondholders group. 4 Mr. Leonard P. Moore, of New York City, for respondents, Manufacturers Trust Co., trustee. 5 Mr. Justice JACKSON delivered the opinion of the Court. 6 Since 1933 the Missouri Pacific, the New Orleans, Texas and Mexico Railway Co. and a number of affiliated railroad corporations have been in reorganization under the Bankruptcy Act, 11 U.S.C. § 205, 11 U.S.C.A. § 205. A second plan of reorganization, approved by the Interstate Commerce Commission, was before the District Court for the Eastern District of Missouri. Comstock then, in 1944, made objection to allowance of a claim of approximately 10 million dollars by the Missouri Pacific, one debtor corporation, against another, the New Orleans, which, during the 10 years of proceedings, had been unchallenged. The issues raised by his objection were severed from other problems of reorganization which do not concern us here. After full hearing the District Court made findings and wrote an opinion, In re Missouri Pacific R. Co., D.C., 64 F.Supp. 64, overruling his objections. The Circuit Court of Appeals for the Eighth Circuit affirmed. Comstock v. Group of Institutional Investors, 8 Cir., 163 F.2d 350. 7 The issues of fact, contested in a long hearing, are not before us for review. Petitioner assured us, in support of the petition for certiorari here, that 'there is no factual controversy before this Court' and 'we assume the findings of the District Court. Our challenge is directed only to the legal import of these unchallenged facts.' 8 Much of petitioner's argument seems to depart from these assumptions and to invite us to reach conclusions from the voluminous record in the case, contrary to those reached by the two courts below. This we cannot do. A seasoned and wise rule of this Court makes concurrent findings of two courts below final here in the absence of very exceptional showing of error. Stuart v. Hayden, 169 U.S. 1, 18 S.Ct. 274, 42 L.Ed. 639; Brainard v. Buck, 184 U.S. 99, 22 S.Ct. 458, 46 L.Ed. 449; First National Bank v. Littlefield, 226 U.S. 110, 33 S.Ct. 78, 57 L.Ed. 145; Baker v. Schofield, 243 U.S. 114, 37 S.Ct. 333, 61 L.Ed. 626; Second Russian Insurance Co. v. Miller, 268 U.S. 552, 45 S.Ct. 593, 69 L.Ed. 1088; Texas & N.O.R. Co. v. Brotherhood of R. & S. S. Clerks, 281 U.S. 548, 50 S.Ct. 427, 74 L.Ed. 1034; Page v. Arkana § Natural Gas Corp., 286 U.S. 269, 52 S.Ct. 507, 76 L.Ed. 1096; Pick Mfg. Co. v. General Motors Corp., 299 U.S. 3, 57 S.Ct. 1, 81 L.Ed. 4; Virginian R. Co. v. System Federation No. 40, 300 U.S. 515, 57 S.Ct. 592, 81 L.Ed. 789; United States v. O'Donnell, 303 U.S. 501, 58 S.Ct. 708, 82 L.Ed. 980; Anderson v. Abbott, 321 U.S. 349, 64 S.Ct. 531, 88 L.Ed. 793, 151 A.L.R. 1146; Allen v. Trust Co., 326 U.S. 630, 66 S.Ct. 389, 90 L.Ed. 367; United States v. Dickinson, 331 U.S. 745, 67 S.Ct. 1382, 91 L.Ed. 1789. No. such error is claimed by petitioner. 9 Since we are concluded by such concurrent findings, we can do no better than to adopt the statement of facts made in the opinion of the Court of Appeals, 163 F.2d 350, 352, on the basis of which petitioner's propositions of law are predicated and must be decided. The essential facts so recited are: 10 'It appears that the Missouri Pacific acquire the controlling interest in the capital stock of the New Orleans at the end of 1924 and at times relevant here owned from 58 to 93 percent of the total $15,000,000 par value of such stock, and from January, 1925, until simultaneous commencement of reorganization proceedings in bankruptcy of both corporations in 1933, it managed the affairs of the New Orleans through Missouri Pacific officers who were given corresponding positions in the New Orleans corporation. An expansion program for both companies was carried on and throughout the course of operations the Missouri Pacific made advancements for improvements and betterments to the New Orleans. Some were repaid, but in February 1933, the New Orleans filed its application with the Interstate Commerce Commission under Section 20a(2) of the Transportation Act, 49 U.S.C.A. § 20a(2), showing that it was indebted to the Missouri Pacific for an accumulation of such advances over a period of years remaining unpaid in the sum of $10,355,226.78, and that it had been requested by the Missouri Pacific to issue demand notes therefor in the amount of $9,955,226.78 to the Missouri Pacific. It had partially complied by issuing one such note for $400,000.00, and one for.$2,498,500, and after hearing the Commission made its finding as required by the statute,1 49 U.S.C.A. § 20a(2), and authorized New Orleans to issue to the Missouri Pacific a note for the remaining $7,456,726.78. So that at the time of the bankruptcy of the New Orleans on the same date as that of the Missouri Pacific the notes of the New Orleans to the Missouri Pacific in the sum of $10,355,226.78 were outstanding and unpaid. Under authorization of the Interstate Commerce Commission, granted after hearing, the Missouri Pacific had pledged two of the notes aggregating $9,955,226.78 as security for loans made to it by the Reconstruction Finance Corporation. An additional pledge was made to Railroad Finance Corporation. 11 'After appointment of the trustees for the railroads and on August 29, 1938, an officer of the Missouri Pacific filed claim for that company against the New Orleans for the amount of the notes, plus an item of advancement of $210,000.00, aggregating the amount of $10,565,226.78, describing the consideration as 'cash advances for operation, interest payments, etc., at various times from March 1929 to February 1933, both inclusive.' The items which made up the total $10,565,226.78 were clearly specified and evd ence of the validity of the debt as consideration for the notes was adduced before the Commission at an early stage of these Section 77 proceedings (11 U.S.C.A. § 205), and the obligation was deemed to be valid and ahead of New Orleans' stockholder interest in all of the accountings, computations and adjustments resulting in the plan of reorganization determined by the Commission and approved by the court in 1940. It has also been so considered by the Commission in the plan of reorganization before the court at the time of the hearing and order now appealed from. 12 'It appears that in 1926 the Missouri Pacific issued and caused to be sold to the public its 5 1/4% Secured Serial Bonds in the amount of $13,156,000, secured by the pledge of.$1000.00 par value of New Orleans capital stock for each.$1000.00 principal amount of outstanding bonds, so that the officers who were put in charge of the affairs of both corporations came under fiduciary obligation to the creditors and the stockholders of each company to handle honestly the affairs of each. 13 'Comstock owns some of said 5 1/4% Secured Serial Bonds so secured by the pledge of the New Orleans capital stock, and by virtue of his ownership of said bonds he has an interest as a creditor of the Missouri Pacific in the payment of his bonds and the interest thereon, and also an interest in the capital stock of the New Orleans pledged to secure the bonds. On November 22, 1944, he filed his objections to the plan of reorganization and plea for equitable treatment on the basis of those interests. Certain of his objections contained charges of mismanagement of the Missouri Pacific to his detriment as a bondholding creditor of that corporation, but the separately numbered objections here involved relate to wrongs which he alleges were done by the Missouri Pacific to the New Orleans to the detriment of his interest in the pledged stock of that company. 14 'By his objections 'Numbered 19 and related objections,' Comstock charged that during the period when the affairs of the New Orleans were controlled by its majority stockholder the Missouri Pacific, between the end of 1924 and the bankruptcy in 1933, the Missouri Pacific management caused the New Orleans to pay dividends illegally out of capital and to improvidently declare and pay dividends unjustified by the business and condition of the New Orleans; improperly loaned money to it for the purpose of enabling it to pay dividends; involved it (the New Orleans) in expansion and improperly made advancements to it and caused it to assume indebtedness growing out of expansion; caused it to be operated with unfair advantage to the Missouri Pacific and loss to itself, and generally mismanaged it and committed spoliation and waste of its property and interests to the financial detriment of the New Orleans and for the benefit of the Missouri Pacific. There is also a charge that the trustee for the New Orleans, who is also trustee for the Missouri Pacific, failed to perform his duties as trustee for the New Orleans, to the detriment of New Orleans stock interest. Although an Exhibit 'A' attached to the objections assumed to set forth details, the charges remained sweeping and general in form with few exceptions.2 15 'The objector prayed that the Missouri Pacific claim for $10,565,227 and interest against the New Orleans be disallowed; that it be determined that the New Orleans was not indebted to the Missouri Pacific, and in the alternative, that all claims of the Missouri Pacific against the New Orleans be subordinated in the reorganization to the New Orleans capital stock interest. 16 'The allegations of breaches of obligations on the part of the Missouri Pacific were traversed in pled ings of other parties in interest. The main burden of producing witnesses and evidence to justify the handling of the affairs of the New Orleans by the Missouri Pacific during the period of Missouri Pacific management and to prove the $10,565,226.78 indebtedness of the New Orleans to the Missouri Pacific was carried at the trial by the Group of Institutional Investors Holding First and Refunding Mortgage Bonds of Missouri Pacific Railroad Company and The Protective Committee for the holders of General Mortgage Bonds of Missouri Pacific Railroad Company. They recognized fully the fiduciary nature of the obligation which law and equity attributed to the Missouri Pacific by reason of its pledge of the capital stock of the New Orleans to secure the 5 1/4% Serial Bonds while the New Orleans was under its management as majority stockholder, and that by the terms of the pledge the Missouri Pacific was entitled to receive itself only the dividends (lawfully and properly declared) of the New Orleans stock was required as to the corpus of said stock to honestly manage the corporate affairs and to exercise honest judgment and good faith to preserve the stock interest inviolate. 17 'Comstock did not question or deny that the New Orleans had executed its negotiable promissory notes to the Missouri Pacific which were outstanding at the time of the trial drawing interest, and conceded that the Reconstruction Finance Corporation as an innocent holder thereof in pledge could hold the New Orleans for their face amount and interest, but his contention was that by reason of its wrongdoings the Missouri Pacific either had no valid claim or that such claim as it had should be subordinated to the capital stock interest. He did not assert or tender evidence to show that any specified individuals working for the New Orleans or the Missouri Pacific, or both companies, had misappropriated or wrongfully diverted to their own use any of the assets or business of the New Orleans to the detriment of stockholders. He tendered no evidence to show that the plan of Missouri Pacific system expansion, including expansion and improvement of the New Orleans, and for the financing thereof, adopted and carried through by the Missouri Pacific, was in itself fraudulent or reckless and improvement. As to the New Orleans, the plan contemplated that the Missouri Pacific would advance money to the New Orleans for betterments and additions on short time loans, and that at intervals when the indebtedness became of sufficient size bond issues would be sold to refund it. The worst of the depression came coincidentally with the time when such refunding was expected to be made and made the refunding impossible. 18 'From testimony frankly given by himself, and on the face of the record, it clearly appears as to the case Comstock presented to the court on the objections herein involved that after the report of the Senate subcommittee which criticized the Missouri Pacific management of the New Orleans, and in 1940, Comstock bought a few of the 5 1/4% Serial bonds at about 10 cents on the dollar and then employed an accountant to make studies of the accounts, records and reports of Missouri Pacific management of the New Orleans and based his charges on the accountant's studies. He tendered no extraneous or newly discovered evidence. As the period of Missouri Pacific alleged mismanagement of the New Orleans (1925 to 1933) had expired many years before Comstock acquired his interest in New Orleans stock, a court would not ordinarily have felt obliged at his instance to try the merits of charges of mismanagement committed in long past years and claimed to be provable by contemporaneous records which were at all times accessible. It would not sanction such buying into a lawsuit. 19 'But here the plan for Missouri Pacific reorganization was before the court to be approved or disapproved, according to whether it was or was not fair and equitable. The proposed plan included as one of its essential postulates tha the New Orleans was indebted to the Missouri Pacific in a sum which with accumulated interest amounted to around eighteen million dollars. No judicial determination upon the validity of the debt had ever been made in any adversary proceedings throughout the thirteen year course of the Section 77 proceedings and bonds like Comstock's are outstanding in many hands aggregating some $13,500,000. Although the court was of opinion that not only Comstock but all other owners of the Missouri Pacific 5 1/4% Serial Bonds secured by New Orleans stock who had at all times trustee representation and in great part representation by counsel, had been guilty of laches in failing for so many years to assert and present proof and try out before the Commission and the court the alleged invalidity of the debt almost entirely evidenced by the notes,3 it concluded that judicial adjudication should be made as to the debt and that the court should, and therefore it did, hear the evidence covering the whole period of management of the New Orleans by the Missouri Pacific, and it tried out the whole case and all the charges presented by Comstock on the merits. 20 'The expert accountant called by Comstock produced a large number of exhibits which he had prepared from the books, records and reports of the individual companies and explained in connection with them the inferences he had drawn from his studies and expressed his opinions tending to support the Comstock charges. He centered his attack largely on that part of the accounting system of the railroads through which the New Orleans and its fourteen subsidiary railroads had been treated as a unit for financing purposes and the financial condition indicated by consolidated balance sheets. By disregarding the system character of all the Gulf Coast Lines held under New Orleans ownership he inferred a much less favorable financial position for the New Orleans than was shown by its consolidated balance sheets. He had no personal knowledge of the railroad operations or transactions covered by his testimony. 21 'The Group of Institutional Investors Holding First and Refunding Mortgage Bonds of Missouri Pacific and The Protective Committee for the holders of General Mortgage bonds of Missouri Pacific to sustain the burden of Missouri Pacific defense called as their witnesses on the trial the railroad men who had engaged, each in his own department, in all of the transactions and railroad operations and the records made thereof throughout the period involved, and they testified of and concerning matters with which they were intimately familiar. Also Mr. William Wyer, who after his graduation from Yale and Massachusetts Institute of Technology served in railroad construction and operation for the government during World War I, and in U.S. Railroad Administration during Federal Control, and afterwards in various positions in the Division of Operations, Division of Accounts and Assistant to the Comptroller. From 1920 to 1927 he occupied important positions with the Southern Railroad Company and the Denver Rio Grande and Western, the latter being 'fifty percent. owned by the Missouri Pacific so it was considered a part of the Missouri Pacific System.' In February, 1929, he became Assistant to the Chairman of the Board of Directors of the Missouri Pacific who was also Chairman of the Board of the New Orleans, and later in the year he became Secretary and Treasurer of the Missouri Pacific and an officer on all the subsidiaries, except as to the Texas and Pacific he was such officers for only six years. He handled a great many of the financial matters involving the Missouri Pacific and the New Orleans under the supervision of the Chairman of the Board of the Missouri Pacific. In 1933 he started studies which have provided substantially all of the studies upn which the various plans of reorganization have been based. He was at the time of testifying the chief executive officer of the Central Railroad of New Jersey. He was thoroughly informed and conversant with the Missouri Pacific policies of system operation and of expanding and financing, and with the railroad operations and the financial transactions upon which the validity or invalidity of the debt in controversy depend, as well as the accounting and reporting system maintained for disclosing and reporting them. He had an important part in what was done, was in touch with substantially the whole course of the management of the New Orleans under attack and he gave his extensive testimony upon direct and cross examination with obvious understanding of its relevancy and importance. His testimony, supported by many accounting and summarizing exhibits, was to the effect that Missouri Pacific management of New Orleans was honest and was beneficial to New Orleans. 22 'Judge Moore, presiding at the trial, has exercised the jurisdiction in these Section 77 proceedings through most of their course, and his questions, comments and directions reflect his close attention to and understanding of the testimony and its application through the trial. His written opinion is reported In re Missouri Pac. R. Co., D.C., 64 F.Supp. 64. His findings of facts and conclusions of law were drawn with care and thoroughness, and appear to us to be responsive to all the issues presented by the objections here involved and the evidence that was adduced, and the appellant has not called our attention to any refusal on the part of the court to make findings in respect to any other issues claimed to have been presented. The vast extent of the railroad business carried on by the Missouri Pacific and the New Orleans during the long past period of alleged mismanagement and the intricate corporate structures of the railroads, inevitably presented most serious problems in the attempts of accountants to picture what their course of operations and financial transactions had been. The New Orleans had in some respects the character of a holding company in that it operated itself only a small fraction (around 11%) of the railroad mileage of its railroad system but owned the stocks and securities of some fourteen other railroad companies and was the only one of the group of railroads comprising its railroad system which had any relatively substantial amount of securities outstanding in the hands of the public. For financing purposes the individual roads in the group were dependent upon the New Orleans which, acting for the group in respect to financing, presented the necessary unitary functioning principal. There was fundamental controversy as to what inferences should be drawn from the available accounts to establish the true financial condition of the New Orleans at different times within the period and to establish and present the financial results of the railroad operations that were carried on. Mr. Wyer testified that the identified consolidated balance sheets compiled under direction of the Missouri Pacific and New Orleans officers were the summarizing records which were submitted to the Board of Directors to keep its members informed in the discharge of their duties. It was through the use of the consolidated balance sheets that the New Orleans and its affiliated railroads were treated as a unit in the financing of the companies throughout Missouri Pacific management. Though he could not say what went on in the minds of others, his testimony leaves no room to doubt that the Board members well understood how the computations were arrived at and that the members relied on them in the usual course of the financing of the business. He was intimately familiar with all phases of the accounting in which they culminate, and although he admitted that perfection was never attained, his testimony together with that of the railroad officers and employees who did the work, fuly justified the trial court's reliance upon the consolidated balance sheets in his findings and conclusions. But the disputes and conflicts of testimony in respect to the accounts and the inferences to be drawn were all issues of fact. The court recognized fully all the burden of obligation imposed by law upon the Missouri Pacific in respect to its management of the New Orleans and that if the Comstock charges could be proved and the indebtedness in issue was invalid or ought not in equity to be enforced against New Orleans stockholders, the then pending plan of reorganization could not stand. 23 'Comstock's contention that the court erroneously put the burden of proving his charges on him rather than requiring the Missouri Pacific to proceed first to disprove them, is without merit. As the execution of the promissory notes was admitted and at least formal proof of all of the items of advancements making up the debt had been in the record of the Section 77 proceedings for many years before the hearing, the court required only that all the records of the transactions that were questioned be made available for the hearing so that there was the equivalent of a full disclosure by the Missouri Pacific before Comstock was required to proceed with his proof of the charges. In its findings the court stated the facts as it found them to be proven by the whole evidence. It found in detail and in effect that the Missouri Pacific had administered the affairs of the New Orleans in good faith to the advantage of that company; had made the advancements to it for proper purposes; had not caused dividends to be paid out of capital or improvidently in bad faith, and that the asserted indebtedness arose from advancement made by Missouri Pacific to New Orleans for betterments and additions and was valid and should be allowed in items specified, and that the plan of reorganization based as it was in part on recognition of the existence of the debt in question, was fair and equitable and conformable to the requirements of law regarding the participation of the various classes of creditors and stockholders.' 24 We are confronted at the outset with petitioner's delay and conduct and its effect on the duty of this Court and that below to pass on the merits of his objections. Comstock, apparently with general knowledge of the conduct he alleges to be a wrong toward the securities which he now holds, bought them at about 10 cents on the dollar nearly seven years after the alleged misconduct had ended. Thus, it was not Comstock who was a victim of any wrongdoing but those in whose hands the securities depreciated to the low point at which Comstock bought. It is apparent that Comstock bought a grievance to exploit and to reap the advantage of its rectification. Those who realized the loss through sales to Comstock could, in no event, the indemnified in this proceeding. From every viewpoint, the delay in asserting these claims is unusual. The District Court found it also prejudicial due to the death of six named witnesses and participants, among others, whose testimony would be important. While it considered the objections barred by laches, it nonetheless adjudged their merits. 25 We think that, in the reorganization proceeding, the courts may entertain on their merits objections to a plan even if made by one who might be barred from asserting a cause of action in his own behalf, if the subject matter of the objection is such that it goes beyond the objector's individual interests and affects the fairness and equity of the plan. In view of the amount and position of the claim involved, we do not disagree with the Court of Appeals that such was the case here. 26 It also is true, as the court below indicates, that this objector made no effort to exhaust or to avail himself of administrative remedies in support of his objection. Neither the objection nor the evidentiary support for it were laid before the Interstate Commerce Commission in its hearings on successive plans of reora nization. The requirement that the Commission 'hold public hearings, at which opportunity shall be given to any interested party to be heard and following which the Commission shall render a report' to the court is not provided without a purpose and is not to be ignored by persons with claims or objections to be heard. This issue involved matters with which the Commission and its staff are especially qualified to deal. It has had no opportunity to express a view on this issue, which was allowed to go by default before it, and the courts do not have the benefit of the Commission's informed judgment on the matter involved. To by-pass the Commission and make the court the original forum for such contentions is not to be encouraged. 27 But the court did not refuse to hear the objections on their merits. In view of the functions cast upon the court in such cases, we cannot say that it may not, in its discretion, consider objections on their merits even though they have not been presented to the Commission. Some circumstances might be disclosed to indicate a remand for their consideration by the Commission. They might indicate that the courts would withhold approval, not out of deference to the objecting parties' rights but because of the broad responsibility laid upon the court for the equity and fairness of the plan as a whole. The court will be diligent to protect itself and the public from approval of unfair plans, even by default, and may take for its own use evidence no party would have a right to force upon it. The court below evidently considered the circumstances of this case to warrant such inquiry into the merits, and we do not require whether the discretion was wisely exercised. 28 The case on the merits presents, as to several different and complicated transactions, a single question of law. It is said that our decision in Taylor v. Standard Gas & Electric Co., 306 U.S. 307, 618, 59 S.Ct. 543, 83 L.Ed. 669, requires that the claim of Missouri Pacific against the New Orleans be disallowed and petitioner's objections sustained. In that case this Court reformulated for application to reorganization cases a wholesome equity doctrine to the effect that a claim against a debtor subsidiary be disallowed or at least subordinated when the claimant corporation has wholly dominated and controlled the subsidiary and in the transactions creating the debt has breached its fiduciary duty and acted both to its own benefit and to the detriment of the debtor. As we later said of the decision, 'This was based on the equities of the case—the history of spoliation, mismanagement, and faithless stewardship of the affairs of the subsidiary by Standard to the detriment of the public investors.' Pepper v. Litton, 308 U.S. 295, 308, 60 S.Ct. 238, 246, 84 L.Ed. 281. 29 Petitioner asks us to declare the same result in this case despite explicit and unchallenged findings that, in its dealings with New Orleans during the period involved, 'the Missouri Pacific acted in good faith and with due regard to its obligations, legal and equitable, to the New Orleans and its security holders,' that the 'effect of the control by the Missouri Pacific of the Gulf Coast Lines was beneficial and advantageous to the New Orleans and the holders and pledges of its securities,' that all dividends in question 'were paid either out of the earned surplus of the New Orleans available for dividends or out of the net income of the New Orleans after payment of all prior charges against income,' and that the subordination of the claim as asked 'would unjustly enrich the holders of the capital stock of the New Orleans and the holders of the Secured Serial Bonds,' as well as other more detailed findings to the same effect. 30 In the case before us there was domination of the subsidiary, a relationship between corporations which the law has not seen fit to proscribe. By the application of long-standing principles of equity this Court fashioned the rule in the Taylor case to prevent a fiduciary i such a position from enriching itself by breach of its trust. It is not mere existence of an opportunity to do wrong that brings the rule into play; it is the unconscionable use of the opportunity afforded by the domination to advantage itself at the injury of the subsidiary that deprives the wrongdoer of the fruits of his wrong. On the findings in this case, the claim of Missouri Pacific was the outgrowth of complicated but legitimate good faith business transactions, neither in design or effect producing injury to the petitioner or the interests for which he speaks. 31 Special emphasis has been placed on the fact that under control of the Missouri Pacific dividends were paid by the subsidiary at a time when it was borrowing money represented by this claim. It is clear from the findings that the dividends were paid out of current earnings or surplus, and not in violation of law or contract. Only in 1929 did New Orleans earn currently sufficient to pay its dividends. Nevertheless in all three years there was sufficient earned surplus legally to permit dividends. Heavy investments in improvements may require borrowings for dividends; but no law or public policy requires a corporation to finance capital additions out of earnings or to pass dividends because of low current earnings when past earnings are available for dividend purposes. These past earnings may be used to compensate the capital that produced them, and capital additions may be made from funds borrowed or raised by issues of capital securities, so long as the authorizations required in the case of railroads are obtained. No question is raised as to the authority to borrow. 32 While the contemporaneous borrowing to pay for capital additions, and payment of dividends, is not in itself illegal, it would, of course, come under the ban of the Taylor decision if it were carried out in breach of good faith for the advantage of the holding company to the detriment of the subsidiary. But the findings of good faith, fair dealing and freedom from fraud or overreaching over the dividend policy as well as other questioned transactions. Such being the facts, the allowance of the claim is not error of law. 33 The findings here do not stop with holding that the questioned transactions were intended to and did benefit the system as a whole. An over-all benefit to the system might be attained at the injury of one of its units and the security holders of that unit. But here the finding of good faith and of benefit applies to the New Orleans and its security holders as well as to the system generally. The finding is unequivocal that the control of Missouri Pacific not only 'was in good faith and with due regard to its obligations, legal and equitable, to the New Orleans and its security holders,' but also that its control of the Gulf Coast Lines 'was beneficial and advantageous to the New Orleans and the holders and pledgees of its securities.' The criticised transactions are thus not only exonerated of evil or illegal intent but are also established as beneficial rather than injurious to the interests which now challenge them. The findings to that effect are entitled to special weight where, as here, they are based on the District Judge's complete familiarity with the case. Reconstruction Finance Corporation v. Denver & Rio Grande Western R. Co., 328 U.S. 495, 533, 66 S.Ct. 1282, 1301, 1302, 1384, 90 L.Ed. 1400. Affirmed by the Circuit Court of Appeals, they are, under the rule concerning concurrent findings, and on the basis of our grant of certiorari, conclusive in this Court. 34 Disallowance of petitioner's objections on such findings was not error of law. In this view of the case we need not consider questions tendered as to validity or effect of the issuance of notes or of their pledge. 35 The judgment below in No. 451 is affirmed. 36 Affirmed. 37 Petitions in Nos. 452, 453 and 454, were addressed to dismissals by the Court of Appeals from the same order as No. 451 but taken in different names. Thep etitions were filed as safeguards against procedural objections to review of the order. The writs in these cases are dismissed. 38 Writs dismissed. 39 Mr. Justice MURPHY, with whom Mr. Justice BLACK, Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE agree, dissenting. 40 The rule that makes concurrent findings of fact by two courts below binding on us in the absence of some very exceptional error is a wise one. But it is not a rule to be applied in a blind manner simply because a case involves a complex factual situation. In my view, there is an exceptional error involved in the conclusions reached by the District Court and affirmed by the Circuit Court of Appeals, an error that is apparent on the face of the District Court's findings. And since this error is not sufficiently illuminated by the opinion of the Circuit Court of Appeals, 163 F.2d 350 as quoted by the majority in this Court, I deem it essential to make an independent statement of the relevant facts as found by the District Court. 41 This case grows out of the joint reorganization of the Missouri Pacific Railroad Company and affiliated railroad corporations under § 77 of the Bankruptcy Act, 11 U.S.C. § 205, 11 U.S.C.A. § 205. It involves a claim of $10,565,226.78 filed by the Missouri Pacific against one of its subsidiaries which was also undergoing reorganization and the application to that claim of the so-called Deep Rock doctrine enunciated in Taylor v. Standard Gas & Electric Co., 306 U.S. 307, 618, 59 S.Ct. 543, 83 L.Ed. 669. 42 It is unnecessary for present purposes to detail the long, complicated and still unfinished proceedings which have marked the reorganization of the Missouri Pacific railway system. The instant proceeding is directly related to a revised plan of reorganization approved in 1944 by the Interstate Commerce Commission. The District Court below then heard objections to the plan by various parties in interest. Included among them was the petitioner Comstock. He stated that he owned $80,000 principal amount of the 5 1/4% Secured Serial Gold Bonds of the Missouri Pacific. His objections were filed on behalf of himself, of fourteen other public investors holding in excess of $900,000 additional principal amount of these bonds, and of all other owners and holders of the bonds. A committee of these bondholders, representing an additional $315,000 principal amount of the bonds, also joined in Comstock's objections. Of the total principal amount of these bonds publicly outstanding, about 11 1/2% were specifically represented by Comstock. 43 Comstock's objection No. 19, which is our sole concern, related to the validity and priority of a $10,565,226.78 claim filed by the Missouri Pacific (hereinafter called MOP) against its subsidiary New Orleans, Texas and Mexico Railway Co. (hereinafter called NOTM) in the joint reorganization proceedings. It appears that MOP had acquired the controlling interest in NOTM's common stock in 1924 and had completely dominated and controlled NOTM until the reorganization proceedings began in 1933. MOP's claim against NOTM was based upon 'cash advances for operation, interest payments, etc., at various times from March, 1929, to February, 1933, both inclusive.' Most of the NOTM stock which MOP held was pledged as security for the class of MOP 5 1/4% secured bonds which Comstock owned, the pledge constituting 82% of the outstanding shares of NOTM's sole class of stock. MOP sought to put its claim against NOTM ahead of the claims of the holders of these MOP bonds who looked to the NOTM common stock for security. The revised plan of reorganization gave effect to MOP's desire in this respect. 44 A separate hearing was held by the District Court on Comstock's objection No. 19. After carefully considering the voluminous and complicated evidence adduced at this hearing, the court entered a separate order overruling the objection and holding that the $10,565,226.78 claim should be allowed in full; with interest, this claim now aggregates more than $18,000,0 0. The court further held that this claim, so allowed, was entitled to priority over the claims of the public investors holding MOP 5 1/4% secured bonds. In addition, the court felt that objection No. 19 was not timely and should be barred from consideration under the doctrine of laches. 45 At the same time, the District Court entered another order overruling the other objections raised by Comstock and the other parties in interest and approving the revised plan of reorganization. An opinion was then filed detailing the reasons for the two orders. In re Missouri Pacific R. Co., D.C., 64 F.Supp. 64. Comstock appealed from the order dismissing his objection No. 19.1 The Eighth Circuit Court of Appeals affirmed the District Court's action on this objection, holding that the findings of that court were not clearly erroneous. Comstock v. Group of Institutional Investors, 163 F.2d 350. At the suggestion of the Interstate Commerce Commission, the Circuit Court of Appeals then remanded the revised plan of reorganization back to the Commission for reconsideration and revision. Wright v. Group of Institutional Investors, 8 cir., 163 F.2d 1022. The Commission has not yet disposed of the matter. I. 46 For somewhat different reasons than those advanced by the Court, I agree that a judicial consideration of Comstock's objection No. 19 is not now precluded by the doctrine of laches. 47 The joint reorganization proceedings commenced in 1933. Comstock did not purchase any of the MOP 5 1/4% secured bonds until 1940, soon after a Senate subcommittee investigating railroads issued a report criticizing the MOP management of NOTM. S.Rep. No. 25, Part 9, 76th Cong., 3d Sess. He then bought some of the bonds at about 10 cents on the dollar and employed an accountant to study the relationships between MOP and NOTM prior to 1933. Not until 1943 did Comstock suggest that there might have been some irregularities on the part of MOP. And not until November, 1944, when he filed his objection No. 19 to the revised plan of reorganization, did he really press his allegations. 48 Prior to Comstock's objection, more than a decade of the reorganization process had produced no charge or revelation of impropriety as to MOP's $10,565,226.78 claim against NOTM. Numerous investigations and hearings had been held during that long period concerning the pre-reorganization administration of the affairs of MOP and its subsidiaries. The public holders of the MOP 5 1/4% secured bonds and other creditors had ample opportunity to question the allowance of the claim. But no charges were made until after Comstock purchased his bonds and conducted his own investigation. Many of the events to which objection No. 19 relates took place more than twenty years ago; and some of the persons who had personal knowledge of those events and who might have been able to testify in regard thereto are now dead. 49 I do not believe, however, that the doctrine of laches is properly applicable to the facts of this case. The District Court had before it a revised plan of reorganization of MOP and its subsidiaries, a plan which recognized that NOTM was indebted to MOP and which permittedM OP to collect that debt without subordination to other creditors. That court was duty bound to test this portion of the plan by the fair and equitable rule and to approve it only if the rule was found to be satisfied. American United Mut. Life Ins. Co. v. Avon Park, 311 U.S. 138, 145, 146, 61 S.Ct. 157, 161, 162, 85 L.Ed. 91, 136 A.L.R. 860. The court's duty was nonetheless existent because an attack on the MOP claim came late in the day. Comstock's objection served only to emphasize the circumstances surrounding this indebtedness and to give the court an opportunity to inquire into the matter more fully than it might otherwise have done. Moreover, the fact that this objection had not previously been raised and adjudicated in the § 77 proceedings added to the appropriateness of a judicial determination of the validity of the debt at this juncture. Only by examining the matter now could the court be certain whether the treatment accorded the debt the reorganization plan was fair and equitable. 50 The motives which led Comstock to acquire his bond holdings and to raise his objection No. 19 are not pertinent to the performance of the District Court's duty of testing the fairness of the reorganization plan. Nor is it decisive under these circumstances that the objection might have been raised earlier by Comstock or some other bondholder. It is enough that the matter was presented in an appropriate fashion at a time when the court was compelled to pass judgment upon the reorganization plan and at a time when no prejudicial change in the position of other parties had yet occurred. 51 In this connection, it is noteworthy that that the Interstate Commerce Commission at an early stage in the § 77 proceedings held that the validity of the MOP claim is a matter 'for litigation in the Courts.' Thus Comstock would likely have been unsuccessful had he attempted to secure a determination of his objection by the Commission before going to court. The Court today, however, expressly holds that the Deep Rock issues raised by Comstock involve matters over which the Commission has jurisdiction and with which it is especially qualified to deal. See Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958. On this phase of the case, I am in agreement with the Court. The Commission should determine the applicability of the Deep Rock doctrine to railroad reorganization plans which it formulates. But since the Commission had previously refused to adjudicate the merits of the MOP claim and since Comstock's objection has been thoroughly aired in the District Court, it is inappropriate to remand the case now to the Commission for an expression of its views. 52 Despite the claimed difficulties due to the age of the pertinent events and the death of some of the witnesses, the District Court was able to give a comprehensive treatment to Comstock's objection and to render an informed judgment on the fairness of MOP's claim against NOTM. Many of the issues revolved about written evidence and statistics. And the court was able to draw upon its intimate knowledge of the MOP-NOTM relationships, knowledge gained from long association with the reorganization proceedings. Hence the court could and did perform fully its function as to that portion of the revised reorganization plan with which objection No. 19 was concerned. 53 In this situation, the desirability and necessity of determining the fairness and equitableness of MOP's claim far outweigh any possible inconvenience caused by the late presentation of the matter. II. 54 In Taylor v. Standard Gas & Electric Co., supra, this Court established the principle that where a parent corporation has not only dominated but has mismanaged a subsidiary corporation, which is presently in bankruptcy or reorganization, and where the parent has a claim which is intimately related to the mismanagement, a court may refuse to permit the parent to assert the claim as a creditor except in subordination to the claims of the subsidiary's other creditor and preferred stockholders. This principle, which has become known as the Deep Rock doctrine, is equitable in nature. As explained in Pepper v. Litton, 308 U.S. 295, 308, 60 S.Ct. 238, 246, 84 L.Ed. 281, the doctrine was applied in the Taylor case on the basis of 'the equities of the case—the history of spoliation, mismanagement, and faithless stewardship of the affairs of the subsidiary by Standard to the detriment of the public investors.' 55 The fulcrum of Comstock's objection No. 19 is the Deep Rock doctrine. The argument is that the items constituting the $10,565,276.78 claim filed by MOP against NOTM are impregnated with MOP's alleged mismanagement of NOTM and that the claim should therefore be subordinated to the claim of the public investors in the MOP 5 1/4% secured bonds, who are secured by MOP's pledge of the NOTM common stock. 56 It is no answer to Comstock's claim that the District Court found that the transactions giving rise to the MOP claim were carried out in good faith. The equities which form the Deep Rock doctrine relate not alone to matters of bad faith. They are also concerned with the essential fairness and propriety of transactions from an objective standpoint. Pepper v. Litton, supra, 308 U.S. at page 306, 60 S.Ct. at page 245. Like negligence, inequity may be present where there is the utmost subjective good faith. If there is mismanagement and if there is undue harm to the creditors and preferred stockholders of the subsidiary, the Deep Rock doctrine dictates subordination of the parent's claim. And if there be good faith on the part of the parent's officers, if hardly justifies ignoring the injury to the subsidiary's creditors and stockholders. Equity looks in all directions. Only in that way can the various interests in the corporate community be adequately protected. 57 Moreover, the issues raised by Comstock are not resolved by the District Court's finding that operational benefits accrued to NOTM and its subsidiaries by virtue of the transactions underlying MOP's cliam. These transactions were undoubtedly tied in with the expansion program which MOP was undertaking during this period. But a breach of fiduciary obligations is not to be condoned by the presence of accompanying benefits where the subsidiary's assets are depleted to the injury of the stockholders and creditors of the subsidiary. 58 Nor does the fact that MOP, the parent, is insolvent bar an application of the Deep Rock doctrine to the facts of this case. The insolvency of the parent and the consequent effect of subordination upon the parent's innocent creditors are certainly factors to be considered. See Consolidated Rock Products Co. v. DuBois, 312 U.S. 510, 524, 61 S.Ct. 675, 684, 85 L.Ed. 982; Prudence Realization Corp. v. Geist, 316 U.S. 89, 97, 62 S.Ct. 978, 983, 86 L.Ed. 1293. But they are not necessarily decisive in all cases. The equities of a particular situation may turn upon something more than the solvency or insolvency of the parent. It may well be that a balancing of competing equities reveals that it is unjust to permit the advantages arising from the parent's breach of fiduciary duties to adhere to the benefit of the innocent creditors of the insolvent parent. Some other innocent parties may have an overriding interest which justifies subordination of the claim. Or the claim itself may be so tainted with inequity and unenforceability as to require subordination regardless of the parent's insolvency. And so the Deep Rock doctrine is as broad and as narrow as the equities in each case. 59 In this instance, I believe that the public holders of the MOP 5 1/4% secured bonds have a sufficiently direct and overriding interest in the financial well-being of NOTM to justify subordinating the MOP claim should it appear that this claim is intimately associated with a breach of MOP's fiduciary duties. MOP secured these bonds with a pledge of the NOTM common stock and expressly undertook not to impeach the pledge. Any wrongful conduct by MOP which dimii shed the size of NOTM assets would impair the value of the NOTM stock. Subordination of the claim would thus tend to make the NOTM stock more valuable and to make possible a realization of MOP's express pledge to its bondholders. True, creditors of MOP other than the bondholders would be unable to benefit from whatever could be collected on the claim. But they were not the recipients of a pledge of NOTM stock and they lacked the immediate interest that the bondholders had in a proper performance of MOP's fiduciary duties. The indirect loss they would suffer by subordination is outweighed by the direct injury to the bondholders as a result of allowing the claim. 60 It is therefore essential to study the various transactions in detail to determine whether they represent the type of mismanagement by a parent which leads to subordination of the resulting claim against the subsidiary. III. 61 The District Court found that during the period from March, 1929, to February, 1933, MOP advanced to NOTM the net sum, after deducting principal payments, of $10,565,226.78—which constitutes the claim in issue. Included in these advances was the greater portion of the $2,795,000 loaned to NOTM between November 30, 1928, and November 27, 1931, to make additions and improvements to the railroad properties of NOTM and other related subsidiaries. But each time one of these advances was made, there was an almost simultaneous payment of a dividend by NOTM on its stock, which was largely owned by MOP. This phenomenon is demonstrated in the following table: Dates of Dividends by NOTM Advances 62 by MOP Total Amount to 63 Advances Dividends to NOTM amount MOP 64 Nov. 30, 1928.. Dec. 1, 1928. $300,000 $259,576 $233,231 65 Feb. 28, 1929.. Mar. 1, 1929. 250,000 259,576 234,237 66 Aug. 31, 1929. Sept. 3, 1929. 275,000 259,576 239,429 67 Nov. 29, 1929.. Dec. 1, 1929. 310,000 259,576 241,529 68 Feb. 28, 1930.. Mar. 1, 1930. 260,000 259,576 242,072 69 May 31, 1930... June 1, 1930. 275,000 259,576 242,212 70 Nov. 29, 1930.. Dec. 1, 1930. 300,000 259,576 243,360 71 Feb. 25, 1931. Feb. 28, 1931. 75,000 259,576 243,510 72 May 27, 1931... June 1, 1931. 200,000 259,576 244,387 73 Aug. 29, 1931. Aug. 31, 1931. 250,000 259,576 244,527 74 Nov. 27, 1931. Nov. 30, 1931-. 300,000 259,576 244,527 75 Dec. 1, 1931. ------------- Reference is made in this respect to the relationship which MOP bears to the various companies in the Gulf Coast Lines system (hereinafter called GCL). In 1924, MOP acquired a controlling interest in NOTM and thereby inherited complete control of the GCL system, the rail lines of which are interlaced with others in the MOP system. NOTM at all times has been primarily a holding company owning all the stocks and bonds of the fourteen subsidiary companies constituting the GCL group, NOTM itself operating only about 11% of the total GCL mileage. Of the GCL operating companies, the St. Louis, Brownsville and Mexico Railway Co. (hereinafter called Brownsville) is the most important, operating about one-third of the GCL mileage and group's income during the period in question. NOTM is the only one of the GCL contributing from 61% to 84% of the group which has securities outstanding in the hands of the public. 76 According to the District Court fini ngs, MOP's policy in advancing the $2,795,000 to NOTM was to reimburse NOTM's treasury for additions and betterments to the properties of GCL system. NOTM acted as banker for that system. The GCL subsidiaries were not in a position from 1925 to 1930 to finance their own improvements except out of earnings and by borrowing from NOTM. Most of their freight revenues were cleared through NOTM; as these items were received by NOTM, they were credited against the obligations created by the loans from NOTM to the subsidiaries. But since the total requirements of the subsidiaries for operating expenses, dividends and improvements were in excess of the receipts, the unpaid accounts mounted. Finally MOP had to begin loaning money to NOTM to cover these accounts. It is in this way that MOP's advances are said to have been directed toward the improvement program of the GCL system. 77 It is vigorously denied that these MOP advances were in any way used to pay for the almost simultaneous dividends from NOTM to MOP, such a contention being termed 'superficial' and contrary to 'basic principles of accounting.' In support of that denial, an illustration is used. Assume that NOTM receives $200,000 cash from net earnings on January 31, when it is known that this amount will be needed to pay a bill for a new freight yard for a subsidiary. NOTM also knows that on April 1 a $100,000 cash dividend to MOP will be due. Instead of borrowing to pay for the new freight yard, NOTM uses the $200,000 cash for that purpose. Then, three days prior to the dividend date, NOTM borrows $100,000 from MOP to reimburse the NOTM treasury in part for the investment in the new freight yard. This saves NOTM about two months' interest on $100,000 of the money spent for the freight yard. The fact that a $100,000 cash dividend is paid three days after the $100,000 loan is thought to be a mere coincidence, the dividend and the loan having no connection. 78 But in this illustration it is obvious that NOTM has insufficient cash to finance both the $200,000 freight yard and the $100,000 dividend. It has to borrow money for one purpose or the other. But to say that it here borrows $100,000 to help pay for the freight yard is unrealistic. NOTM has enough cash to pay for the freight yard and it uses the cash just for that purpose. Two months later it has the choice of (1) borrowing $100,000 and paying the dividend, or (2) not borrowing the money and not paying the dividend. It chooses the former course of action. By such action, NOTM has borrowed money to pay a dividend. 79 The foregoing illustration indicates what the record in this case amply demonstrates—namely, that the MOP advances found by the District Court to have been for the payment of GCL improvements were in reality advances for the payment of dividends by NOTM, dividends which for the most part went to MOP. Considered as a separate entity, NOTM rarely had enough income from the time MOP acquired control in 1924 to the start of reorganization in 1933 to pay the regular dividends; loans were essential if MOP was to continue to receive its share of these dividends. Year Net Income Dividends 1925............. $839,679.00. $1,038,198 1926............ 1,393,806.58. 1,038,198 1927.............. 937,098.90. 1,038,198 1928.............. 742,058.00. 1,038,198 1929............ 1,153,257.54. 1,038,198 1930.............. 854,139.71. 1,038,198 1931............* 399,487.80. 1,038,198 80 1932.......... (- 951,607.76). None statement from the files of the railroad itself shows that for the period 1926 through 1930 the N.O.T. & M.'s net income was overstated (through understatement of depreciation) by more than $411,000. If the railroad's depreciation had been adequately charged, it would have shown a deficit for the 6 years 1926—1931 of $321,000 after fixed charges. Yet during this period the Missouri Pacific took $5,580,000 in dividends out of the N.O.T. & M.' S.Rep. No. 25, Part 9, 76th Cong., 3d Sess., pp. 2—3. 81 The consolidated pricture of NOTM and its GCL subsidiaries was equally indicative of the lack of an ability to pay dividends to MOP without borrowing. Year Net Income Dividends 1925............. $2,547,633. $1,038,198 1926.............. 1,783,287. 1,038,198 1927............ (- 202,438). 1,038,198 1928................ 956,433. 1,038,198 1929................ 845,064. 1,038,198 1930................ 674,950. 1,038,198 1931........... (- 1,122,422). 1,038,198 82 Care was taken, however, to avoid the appearance of borrowing from MOP to pay dividends to MOP, a practice of doubtful legality. Whenever it was found that NOTM had inadequate income to meet a prospective dividend payment, MOP officers would direct Brownsville, NOTM's principal subsidiary, to take steps to declare a dividend on its stock, all of which was held by NOTM. Usually this dividend was the precise amount by which NOTM lacked money to pay its own dividend.2 But Brownsville invariably was unable to make a cash payment of its dividends to NOTM and many of its pre-1931 dividend declarations were considered collected by NOTM only at the expense of leaving unpaid Brownsville's debts to NOTM for essential supplies. These paper dividend declarations were capped in 1931 when Brownsville was ordered to declare dividends to NOTM of $4,155,000; in that year Brownsville earned but $398,000. The Bureau of Accounts of the Interstate Commerce Commission in 1936 informed NOTM that these 1931 dividends were declared at a time when NOTM was aware that Brownsville 'was without funds to pay it, and even on the basis of past experience the earnings of the company, had business continued good, would not have been adequate to make the payment until some future date.' This fact rendered the dividends improper under Commission rules. And while it was too late to correct the income accounts of NOTM which had already been closed, NOTM was directed to write off the unpaid portion of the 1931 dividends (some $1,400,000) through profit and loss. 83 This 1931 incident grew out of the fact that NOTM was operating that year at a great loss. It began that year with a profit-and-loss balance of only $709,000 and operated at a loss of $606,000. It also had to charge off $875,000 to correct its former inadequate depreciation accruals. By the end of 1931, NOTM would have shown a debit profit-and-loss balance of $772,000 or more. MOP, of course, was demanding payment of the usual $1,038,000 dividend for the year. 'The problem was solved as it had been solved in previous years—by milking the Brownsville. But this time the milking would have to be thorough. * * * The solution found was to cause the Brownsville to declare an extraordinary dividend of $3,500,000—a dividend seven times the par value of the stock upon which it was declared. Other Brownsville dividends to the N.O.T & M. brought the total for the year to $4,155,000, enough to fill up the N.O.T.M.'s profit-and-loss deficit and to enable the latter to declare a $1,038,000 dividend in favor chiefly of the Missouri Pacific.' S.Rep. No. 25, Part 9, 76th Cong., 3d Sess., p. 10. 84 Thus the Brownsville dividend declarations gave NOTM earned surpluses on paper without giving it any cash with which to pay its dividends to MOP. Dividends declared by Brownsville were entered as income to NOTM even though they were not paid. An ostensible legal basis was thereby established for a declaration of dividends to MOP. NOTM would then borrow money from MOP to pay for those dividends. This again was largely a paper transaction. The earned surplus upon which the Court today places great reliance in affirming the District Court's findings was but a figment of the MOP imagination. 'The intricate accounting devices evolved by railroad and holding company officials in an attempt to legalize dividend payments unjustified by earnings resulted, both in 1930 and 1931, in the payment of N.O.T. & M. devidends out of capital, a procedure disguised in 1930 behind faulty bookkeeping and in 1931 behind an out-and-out violation of Interstate Commerce Commission accounting regulations.' S.Rep. No. 25, Part 9, 76th Cong., 3d Sess., p. 14. 85 By advancing to NOTM $2,795,000, MOP received back $2,654,000 in dividends within a few days after the various loans, making a total net advance of $141,000. MOP's cash position was unaffected by these various transactions, the NOTM dividends merely giving it a paper profit and loss balance out of which to declare its own dividends. Hence MOP, like NOTM, was forced to borrow money; it did so from outside sources. Yet MOP now seeks to claim nearly all of the $2,795,000 plus interest, an aggregate of about $4,795,000, for engaging in these bookkeeping transactions and for extending credit to the extent of $141,000. 86 NOTM's fiscal affairs in this respect have certainly not 'been conducted with an eye single to its own interests' within the meaning of the Deep Rock doctrine. Taylor v. Standard Gas & Electric Co., supra, 306 U.S. at page 323, 59 S.Ct. at page 550. Now can these transactions be said to meet the test of 'inherent fairness' and the requirement of an 'arm's length bargain,' which are essential ingredients of that doctrine. Pepper v. Litton, supra, 308 U.S. at pages 306, 307, 60 S.Ct. at page 245. Here, as in the Taylor case, dividends were declared in the face of the fact the NOTM had not the cash available to pay them and was, at the time, borrowing in large amounts from MOP. And see In re Commonwealth Light & Power Co., Cir., 141 F.2d 734, 738. Compelling a subsidiary to pay dividends under these circumstances is the type of mismanagement by a parent which leads to the subordination of the resulting indebtedness. IV. 87 Another part of the $10,565,226.78 MOP claim related to an intercompany adjustment of $1,261,009.84 made during October, 1932, at the height of the depression and shortly before the § 77 proceedings began. 88 The International-Great Northern Railroad Co. (hereinafter called the I-GN) was a subsidiary of NOTM, although not deemed a part of the GCL system. I-GN had advanced cash or delivered materials to ten of NOTM's GCL subsidiaries; as of October 31, 1932, these ten companies were indebted to I-GN in the sum of $1,261,009.84 on account of these transactions. On the same date, I-GN was indebted to MOP in an amount in excess of $1,261,009.84. 89 It was known at this time that the I-GN claims against the NOTM subsidiaries were presently uncollectible. It was also apparent that NOTM was in better financial health than I-GN. MOP, which was then in need of loans from outside sources, sought to improve its own financial condition by shifting debtors. It did this by increasing its claim against NOTM by $1,261,009.84 and by decreasing its claim against I-GN by that same figure. To make this bookkeeping shuffle possible, I-GN credited NOTM and its other subsidiaries with the payment of the $1,261,009.84 debt which those subsidiaries owed. MOP then credited I-GN with payment of a like amount, crediting it against I-GN's debt to MOP. NOTM thereby found itself obligated to pay MOP an additional $1,261,009.84. Appropriate entries were made, of course, in the journals of the affected companies. 90 NOTM had not previously been liable to pay this amount to MOP; nor did it receive anything of value from MOP in return for assuming the debt. Yet no valid reason is suggested why NOTM should have been forced to shoulder this obligation, thereby decreasing the assets available to its creditors and stockholders. Certainly it was not essential, as has been claimed, that NOTM acquire the debt to protect its ownership and control of its GCL subsidiaries. NOTM was invulnerable in that respect, owning all the securities of the subsidiaries, and the addition of this debt added no new protection. The contention is also made that NOTM owed a fiduciary obligation to I-GN, its subsidiary, and that it was NOTM's duty to relieve I-GN of any uncollectible items owed by other NOTM subsidiaries. The fiduciary obligation grows out of the fact that NOTM owned all the securities of its GCL subsidiaries. This contention is closely allied to the theory that NOTM and the subsidiaries are a single financial entity and that it is immaterial which company within that entity is liable for the debt. But the close relationship of NOTM and its GCL subsidiaries does not legitimatize the intercompany adjustment from an equitable point of view. In this situation, we are dealing with the rights of creditors and stockholders who are directly interested in the financial well-being of NOTM as an enterprise separate and distinct from its subsidiaries. Hence it is necessary here to recognize and give effect to the corporate distinctions between NOTM and its GCL subsidiaries. 91 The resulting picture is one of a bookkeeping write-up of NOTM indebtedness at a time when NOTM was on the threshold of reorganization. NOTM received nothing whatever to compensate for the increase in its debt structure. The increase served only to enable MOP, the parent, to possess what was thought to be a more favorable vorable creditor's position. Such treatment of a subsidiary's debt structure does not square with a parent's fiduciary position. A subsidiary is entitled to be saddled by a parent only with those debts which may fairly be allocated to it, debts which grow out of legitimate business transactions. To transfer debts promiscuously from one subsidiary to another merely to augment the parent's creditor status is to inflict an injustice upon the creditors and stockholders of the subsidiary to which the debt is shifted. It is a type of mismanagement of a subsidiary which properly calls the Deep Rock doctrine into operation, causing the subordination of the parent's claim for the amount of the transferred debt. V. 92 The remainder of the $10,565,226.78 claim concerned the advances made by MOP to NOTM to acquire five Texas 'feeder' railroad lines at a cost of over $5,500,000. 93 Comstock's contention in this respect is that the acquisition of these lines was for the sole benefit of MOP and I-GN, rather than for NOTM or the GCL system. Reference is made to a statement of the Interstate Commerce Commission that these 'feeder' lines 'were really acquired for the benefit of the entire MOP system. They have usually been operated at a deficit since acquisition.' Missouri Pacific R. Co. Reorganization, 239 I.C.C. 7, 71. Moreover, some of the 'feeder' lines are said not to connect at all with the lines of NOTM or its GCL subsidiaries. And it is thought that some of the MOP advances were used to cover operating deficits of the acquired property. Such is the basis of the objection to the recognition of MOP's claim against NOTM for the cost of the 'feeder' lines. 94 There is nothing in the record to support an application of the Deep Rock doctrine to this aspect of MOP's claim. The use of NOTM to acquire subsidiary rail lines which have subsequently been operated at a loss does not necessarily indicate improper action by MOP; a mere mistake in business judgment may be all that was involved. And the fact that the acquisition may have been primarily for the benefit of some part of the MOP system other than the GCL companies does not necessarily mean that the acquisition was outside the legitimate scope of the functions of NOTM, a holding company in the MOP system. 95 Indeed, the main thrust of Comstock's objection to this segment of the MOP claim is directed toward the entire history of MOP's management of NOTM. The thought is that the relationship of the parent and the subsidiary has been so complex and so saturated with mismanagement as to warrant subordination of the entire claim of the parent without bothering to differentiate between particular transactions. See Taylor v. Standard Gas & Electric Co., supra, 306 U.S. at page 323, 59 S.Ct. at page 550. But the record does not support such an approach to the MOP-NOTM relationship. There have been, as we have seen, two examples of mismanagement on MOP's part that warrant the application of the Deep Rock doctrine. But those situations are separable in nature from the other transactions between MOP and NOTM. And the Deep Rock doctrine is not one that operates to bar an entire parental claim if only a separable portion of it is inequitable. It is only where, as in the Taylor case, the parent-subsidiary relationship has been so complex that it is impossible to restore the subsidiary to the position it would have been in but for the parent's mismanagement that the entire claim may be subordinated without distinguishing the good transactions from the bad. Such is not the situation in this case. VI. 96 From the findings of the District Court and the uncontested facts in the record, I can only conclude that of the $10,565,226.78 MOP claim, the portion of the $2,795,000 relating to dividend advances during the period in question and the $1,261,009.84 relating to the intercompany bookkeeping transaction should be subordinated to the claims of the pledgees of NOTM stock. In holding otherwise, the District Court committed an error which this Court should not overlook. 1 "* * * that the issue by the New Orleans, Texas & Mexico Railway Company of a note or notes in an aggregate amount not exceeding $7,456,726.78, as aforesaid, (2) is for a lawful object within its corporate purposes, and compatible with the public interest, which is necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose.' New Orleans, Texas & Mexico Railway Company Notes, Finance Docket No. 9817; 189 I.C.C. 600, 601, (1933) (R. 20839 20840).' 2 'The exhibit 'A' also included excerpts from a report of a sub-committee of the United States Senate on the subject of Missouri Pacific System—Inter Company Dividends and Advances, published about July 29, 1940, which criticized Missouri Pacific management of the New Orleans.' 3 'There was also at all times a substantial minority stockholding interest in the New Orleans with means to keep informed of the affairs of the regulated railroad corporation.' 1 The leading party opposing Comstock on this appeal was the Group of Institutional Investors, holding first and refunding mortgage bonds of MOP. This group represented less than 10% of such bonds and admitted that it had 'no financial interest in the controversy revolving about' the MOP claim, its only interest being to expedite a reorganization plan then under consideration. But this group offered the only evidence in the District Court in support of the MOP claim. Another party was the NOTM mortgage and income bondholders committee, which also admitted it had no direct interest in the MOP claim litigation. Other parties included MOP, the MOP common and preferred stockholders committees, the MOP trustee, Alleghany Corporation, and certain groups of creditors and indenture trustees. These parties are now respondents before us. * $2,795,000 $2,855,336 $2,653,021 * It is contended by the respondents that this figure should be reduced to $2,082,456, since the first two advances in November 1928, and February 1929, were repaid and since the excess of the advances over the dividends should not be counted. It is said, however, that MOP's action in making these loans and receiving back the dividends followed a natural pattern of a company devoted to improving the properties of its subsidiaries, there being merely a 'near coincidence as to the dates of certain dividends and advances.' * After deduction of $3,155,000 for that portion of the dividends on Brownsville stock held by NOTM which was unpaid in 1931. After studying these dividends from NOTM to MOP, the subcommittee of the Senate Committee on Interstate Commerce investigating railroads (composed of Senators Wheeler and Truman) concluded as follows: 'The N.O.T. & M. itself never earned enough to pay these dividends. In none of the 6 years, 1926 through 1931, did the N.O.T. & M. earn more than $605,000 (exclusive of dividends from its subsidiary,t he St. Louis, Brownsville & Mexico). In 3 of the 6 years, the road showed a deficit after fixed charges. For the 6-year period considered as a whole its stated net income totaled a bare $90,000 (as against dividend declarations totaling $6,300,000). 'Even the $90,000 net income figure was a considerable overstatement. Each year the N.O.T. & M. regularly included in its operating expenses a certain sum for depreciation of its equipment. Consistently, year after year, the amount charged for depreciation was inadequate. A 2 The method by which MOP would bring about the Brownsville declaration of dividends is shown by the following typical exchange of letters between NOTM and MOP officials: 'Houston, January 10, 1931. 'Mr. L. W. Baldwin: The net income of the NOT&M for the three months ending November 30th, 1930, reflects a deficit of $56,613.10, which is $316,188.85 short of quarterly dividend requirements of the NOT&M due December 1st, 1930. 'I am attaching hereto statement showing result of operations for the months of September, October, and November 1930. 'Following past practice, we will arrange for Mr. Cole to list for action at the next meeting of the Board of Directors of the StLB&M (Brownsville), a resolution providing that dividend be declared out of the surplus of the StLB&M in favor of the NOT&M. 'H. R. Safford. 'F.' The reply to the foregoing letter follows: 'St. Louis, Mo., January 13, 1931. M r. Safford: Referring to your letter of January 10th, file 482—2, with reference to declaring dividend out of the surplus of the St. Louis, Brownsville & Mexico Railway Company in favor of the New Orleans, Texas & Mexico Railway Company. 'It will be satisfactory to handle this in line with your letter. 'L. W. Baldwin, 'Per C.D.P.' On June 17, 1931, Brownsville declared a dividend of $316,188.85, the precise amount of the NOTM deficit; the dividend was declared effective as of November 30, 1930, one day prior to the dividend date for NOTM's stock.
78
335 U.S. 106 68 S.Ct. 1349 92 L.Ed. 1849 UNITED STATESv.CONGRESS OF INDUSTRIAL ORGANIZATIONS et al. No. 695. Argued April 28, 29, 1948. Decided June 21, 1948. Mr. Jesse Climenko, for appellant. Messrs. Charles J. Margiotti, of Pittsburgh, Pa., and Lee Pressman, of Washington, D.C., for appellees. Mr. Justice REED delivered the opinion of the Court. 1 This appeal presents a problem as to the constitutionality of § 313 of the Federal Corrupt Practices Act of 1925, as amended by § 304 of the Labor Management Act of 1947, 2 U.S.C.A. § 251. Section 313 of the Federal Corrupt Practices Act now reads as stated in the margin.1 2 An indictment was returned at the January 1948 term in the District Court of the United States for the District of Columbia on two counts charging in count I the Congress of Industrial Organizations and in count II its President, Philip Murray, with violation of § 313 of the Federal Corrupt Practices Act because of the publication and distribution in the District of Columbia of an issue, Vol. 10, No. 28, under date of July 14, 1947, of 'The CIO News,' a weekly periodical owned and published by the CIO at the expense and from the funds of the CIO and with the consent of its President, Mr. Murray. The number of 'The CIO News' in question carried upon its front page a statement by Mr. Murray as President of the CIO, urging all members of the CIO to vote for Judge Ed Garmatz, then a candidate for Congress in Maryland at a special election to be held July 15, 1947. The statement said it was made despite § 313 in the belief that the section was unconstitutional because it abridged rights of free speech, free press and free assemblage, guaranteed by the Bill or Rights. 3 The defendants moved to dismiss the indictment on the ground that § 313 as construed and applied and upon its face abridged as to the CIO and its members and Mr. Murray freedom of speech, press and assembly and the right to petition the government for a redress of grievances in violation of the Constitution; that the classification of labor organizations was arbitrary and the provisions vague in contravention of the Bill of Rights; and that the terms of the section were an invasion of the rights of defendants, protected by the Ninth and Tenth Amendments. The District Court sustained the motion to dismiss on the ground that as 'no clear and present danger to the public interest can be found in the circumstances surrounding the enactment of this legislation' the asserted abridgment of the freedoms of the First Amendment was unjustified.2 77 F.Supp. 355, 358. In the order granting the motion to dismiss, the District Court defined its ruling as follows: 4 '* * * that that portion of Section 313 of the Corrupt Practices Act, as amended by Section 304 of the Labor-Management Relations Act, 1947, which prohibits expenditures by any labor organization in connection with any election at which Presidential and Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, is unconstitutional.' 5 We accepted jurisdiction of the Government's appeal under the Criminal Appeals Act. 18 U.S.C. § 682, 18 U.S.C.A. § 682; 68 S.Ct. 746. 6 The briefs and arguments submitted to us support and attack the constitutionality of § 313 of the Federal Corrupt Practices Act on its face—at least so far as unconstitutionality is declared in the above order. We do not admit any duty in this Court to pass upon such a contention on an appeal under the Crimn al Appeals Act except in cases of logical necessity. United States v. Petrillo, 332 U.S. 1, 67 S.Ct. 1538, 91 L.Ed. 1877. Although the case turned below on the constitutionality of the provision, the Criminal Appeals Act does not require us to pass upon the constitutionality of a federal statute where the indictment does not state an offense under its terms. United States v. L. Cohen Grocery Co., 225 U.S. 81, 88, 97, 41 S.Ct. 298, 299, 302, 65 L.Ed. 516, 14 A.L.R. 1045. Compare United States v. Carbone, 327 U.S. 633, 66 S.Ct. 734, 90 L.Ed. 904. Our first obligation is to decide whether the indictment states an offense under § 313. As we hereafter conclude that this indictment does not charge acts embraced within its scope, this opinion is limited to that issue. 7 Indictment.—The presently essential parts of the indictment are set out in the margin.3 It will be noted that paragraph (3) does not allege the source of the CIO funds. The paragraph indicates on its face that 'The CIO News' was a regularly published weekly periodical of which the challenged issue was Vol. 10, No. 28. The funds used may have been obtained from subscriptions of its readers or from portions of CIO membership dues, directly allocated by the members to pay for the 'News,' or from other general or special receipts. 8 We do not read the indictment as charging an expenditure by the CIO in circulating free copies to nonsubscribers, nonpurchasers or among citizens not entitled to receive copies of 'The CIO News,' as members of the union. The indictment, count I, paragraph (3), charged the CIO with making expenditures from its funds for 'the cost of distribution' of the paper, in paragraph (6) (a), with paying approximately $100 for postal charges for the challenged issue and 'causing said article to be distributed in the Third Congressional District of the State of Maryland and elsewhere in connection with the special election held in that Congressional District on the fifteenth day of July 1947.' In paragraph (6)(b) there are allegations about certain extra copies. These are set out in the marginal note 3 supra. The extras we assume were published pursuant to the order of Mr. Murray in the article.4 We conclude that the indictment charges nothing more as to the extras than that extra copies of the 'News' were published for distribution and were distributed in regular course to members or purchasers and that no allegation has be n made of expenditures for 'free' distribution of the paper to those not regularly entitled to receive it. 9 Scope of Section 313.—The construction of this section as applied to this indictment turns on the range of the word 'expenditure,' added to the section by § 304 of the Labor Management Act of 1947, as indicated in note 1, supra. 'Expenditure' as here used is not a word of art. It has no definitely defined meaning and the applicability of the word to prohibition of particular acts must be determined from the circumstances surrounding its employment. The reach of its meaning raised questions during Congressional consideration of the bill when it contained the present text of the section. Did it cover comments upon political personages and events in a corporately owned newspaper? 93 Cong.Rec. 6438. Could unincorporated trade associations make expenditures? Id., 6439. Could a union-owned radio station give time for a political speech? Id., 6439. What of comments by a radio commentator? Id., 6439. Is it an expenditure only when A is running against B or is free, favorable publicity for prospective candidates illegal? Id. 6440. What of corporately owned religious papers supporting a candidate on moral grounds? The Anti-Saloon League? Id., 6440. 10 The purpose of Congress is a dominant factor in determining meaning.5 There is no better key to a difficult problem of statutory construction than the law from which the challenged statute emerged. Remedial laws are to be interpreted in the light of previous experience and prior enactments.6 Nor, where doubt exists, should we disregard informed congressional discussion.7 11 Section 304 of the Labor Management Relations Act of 1947 is not a section without a history. Its earliest legislative antecedent was the Act of January 26, 1907, which provided: 12 'That it shall be unlawful for any national bank, or any corporation organized by authority of any laws of Congress, to make a money contribution in connection with any election to any political office. It shall also be unlawful for any corporation whatever to make a money contribution in connection with any election at which Presidential and Vice-Presidential electors or a Representative in Congress is to be voted for or any election by any State legislature of a United States Senator. * * *' 34 Stat. 864—65. 13 This legislation seems to have been motivated by two considerations. First, the necessity for destroying the influence over elections which corporations exercised through financial contribution.8 Second, the feeling that corporate officials had no moral right to use corporate funds for contribution to political parties without the consent of the stockholders.9 14 The next important legislation was The Federal Corrupt Practices Act, 1925. This statute was the legislative response to the decision of this Court in Newberry v. United States, 256 U.S. 232, 41 S.Ct. 469, 65 L.Ed. 913. Cf. United States v. Classic, 313 U.S. 299, 61 S.Ct. 1031, 85 L.Ed. 1368. The Newberry case held that federal limitation upon expenditures by candidates was unconstitutional as applied to expenditures made in the course of a primary election for the Senate.10 While that case did not directly concern itself with the Act of 1907, it was widely construed to have invalidated all federal corrupt practices legislation relating to nominations. Therefore, the 1925 Act reenacted the earlier prohibitions against corporate contributions for political purposes with two significant changes. The phrase 'money contribution' of 1907 was changed to read 'contribution,'11 and primaries and conventions were expressly excluded from the scope of the legislation.12 15 The statute immediately preceding § 304 in time was the War Labor Disputes Act of 1943.13 This Act extended, for the duration of the war,14 the prohibitions of the Act of 1925 to labor organizations. Its legislative history indicates congressional belief that labor unions should then be put under the same restraints as had been imposed upon corporations. It was felt that the influence which labor unions exercised over elections through monetary expenditures should be minimized,15 and that it was unfair to individual union members to permit the union leadership to make contributions from general union funds to a political party which the individual member might oppose.16 16 When Congress began to consider the Labor Management Act of 1947 it had as a guide the 1944 presidential election, an election which had been conducted under the above amendment to the Act of 1925. In analyzing the experience of that election, a serious defect was found in the wording of the Act of 1925. The difficulty was that the word 'contribution' was read narrowly by various special congressional committees investigating the 1944 and 1946 campaigns.17 The concept o 'contribution' was thought to be confined to direct gifts or direct payments.18 Since it was obvious that the statute as construed could easily be circumvented through indirect contributions, § 304 extended the prohibition of § 313 to 'expenditures.'19 17 The Labor Management Relations Act of 1947 was the subject of extensive debates in Congress. Embracing as it did a number of controversial issues, the discussion necessarily covered a wide range. It is not surprising therefore, to find congressional explanation of the intended scope of the specific provision of § 304, in issue here, scanty and indecisive. We find, however, in the Senate debates definite indication that Congress did not intend to include within the coverage of the section as an expenditure the costs of the publication described in the indictment. As we have stated above, there are numerous suppositional instances of acts by corporations or unions that approach the border line of the expenditures that are declared unlawful by § 313 of the Corrupt Practices Act. As we are dealing on this appeal with the scope of § 313 as applied to an indictment that charges certain allegedly illegal acts, we propose to confine our examination of legislative history to the statements that tend to show whether the congressional purpose was to forbid the challenged publication. For example, Senator Taft, the Chairman of the Committee on Labor and Public Welfare, and one of the conferees for the Senate, answered inquiries as follows; (93 Cong.Rec. 6437, 6438, 6440): 18 'Mr. Barkley. Suppose the particular publication referred to by the Senator from Florida is published and paid for by subscriptions paid to the publication by the membership of that railway labor organization? 19 'Mr. Taft. That will be perfectly lawful. That is the way it should be done. 20 'Mr. Barkley. And suppose it is not paid for by union funds collected from the various labor unions? 21 'Mr. Taft. That will be perfectly proper. 22 'Mr. Barkley. The Senator from Ohio referred to the law prohibiting the making of direct or indirect contributions by corporations as a justification for making the same provision in the case of labor unions. Let us consider the publication of a corporation which, day after day, takes a position against one candidate and in favor of another candidate, and does so in its editorials. The editorials occupy space in that newspaper or publication, and the space costs a certain amount of money. Is that a direct or an indirect contribution to a campaign; and if it is neither, what is it? 23 'Mr. Taft. I would say that is the operation of the newspaper itself. 24 'Mr. Barkley. That is true; it is the operation of the newspaper. But I gathered the impression that in referring to the present law prohibiting the making of contributions, directly or indirectly by corporations, the Senator inferred that if a corporation publishes a newspaper—as most of them do—and uses the editorials in that publication in advocacy of or opposition to any candidate, at least that is a direct contribution to the campaign. It could not be anything else. 25 'Mr. Taft. I do not think it is either a direct or an indirect contribution. I do not think it is an expenditure of the sort prohibited, because it seems to me it is simply the ordinary operation of the particular corporation's business. 26 'Mr. Barkley. Mr. President, let me ask the Senator this question: Let us suppose a labor organization publishes a newspaper for the information and benefit of its members, and let us suppose that it is published regularly, whether daily or weekly or monthly, and is paid for from a fund created by the payment of dues into the organization it rer esents. Let us assume that the newspaper is not sold on the streets, and let us assume further that a certain subscription by the month or by the year is not charged for the newspaper. Does the Senator from Ohio advise us that under this measure such a newspaper could not take an editorial position with respect to any candidate for public office without violating this measure? 27 'Mr. Taft. If it is supported by union funds, I do not think it could. If the newspaper is prepared and distributed and circulated by means of the expenditure of union funds, then how could a line be drawn between that and political literature or pamphlets or publications of that nature? It is perfectly easy for a labor union to publish lawfully a bona fide newspaper and to charge subscriptions for that newspaper, either by itself or as a corporation. 28 'Mr. Ball. In the case of most union papers, as I understand, the subscriptions from the union members are collected along with the dues, but they are an earmarked portion of the dues which the union collects and remits to the paper in the form of subscriptions. I take it that would be in a different category from the case where the union makes a blanket subscription and an appropriation out of union dues. 29 'Mr. Taft. I think if the paper is, so to speak, a going concern, it can take whatever position it wants to. 30 'Mr. Magnuson. Teamsters' unions publish newspapers dealing with matters in which such unions are interested. The same is true of many other unions. If the pending measure becomes a law, from now on such unions will be prohibited from advocating in their newspapers the support of any political candidates. 31 'Mr. Taft. That is correct, unless they sell the papers they publish to their members, if the members desire to buy them. In such a case there would be no expenditure for such a purpose of union funds. 32 'Mr. Magnuson. Mr. President, if the Senator will yield, let me ask him another question. All the funds of labor unions come from dues paid by their members. All the activities of the unions are based upon expenditure of funds provided by dues. That money is in the union's treasury. If the pending bill should become law it would mean that all labor organs which are now in existence would, from now on, be prohibited from participating in a campaign, favoring a candidate, mentioning his name, or endorsing him for public office? 33 'Mr. Taft. No; I do not think it means that. The union can issue a newspaper, and can charge the members for the newspaper, that is, the members who buy copies of the newspaper, and the union can put such matters in the newspaper if it wants to. The union can separate the payment of dues from the payment for a newspaper if its members are willing to do so, that is, if the members are willing to subscribe to that kind of a newspaper. I presume the members would be willing to do so. A union can publish such a newspaper, or unions can do as was done last year, organize something like the PAC, a political organization, and receive direct contributions, just so long as members of the union know what they are contributing to, and the dues which they pay into the union treasury are not used for such purpose.' Senator Ellender, also one of the conferees made this statement: 34 'May I say to the Senator from Florida it is only in the event that union funds are used for political contributions that a union becomes liable. Mr. Green can talk all he wants to, if he pays for his own time or if the members of the union desire to make individual contributions for such a purpose. For another thing, most unions operate and manage newspapers, and the most of them are maintained by advertisements or by subscriptions from members of the union and from other sources. The proceeds from such newspapers are not union funds. In such cases these newspapers can print anything they desire, and they will not violate the law, so long as union funds are not used to pay for the operatin of those newspapers for political purposes.' 93 Cong.Rec.6522. 35 Application.—With this summary of the development of and quotation of excerpts from discussion in Congress concerning § 313, we turn to its interpretation and a determination as to whether it covers the circumstances charged in the indictment. Some members of the Court, joining in this opinion, do not place the reliance upon legislative history that this opinion evidences, but reach the same conclusion without consideration of that history. From what we have previously noted, it is clear that Congress was keenly aware of the constitutional limitations on legislation and of the danger of the invalidation by the courts of any enactment that threatened abridgment of the freedoms of the First Amendment. It did not want to pass any legislation that would threaten interferences with the privileges of speech or press or that would undertake to supersede the Constitution. The obligation rests also upon this Court in construing congressional enactments to take care to interpret them so as to avoid a danger of unconstitutionality.20 36 If § 313 were construed to prohibit the publication, by corporations and unions in the regular course of conducting their affairs, of periodicals advising their members, stockholders or customers of danger or advantage to their interests from the adoption of measures or the election to office of men, espousing such measures, the gravest doubt would arise in our minds as to its constitutionality.21 In so far as some of the many statements made on the floor of Congress may indicate the thought, at the time, by certain members of Congress that the language of § 313 carried a restrictive meaning in conflict with that which we have adopted, we hold that the language itself, coupled with the dangers of unconstitutionality, supports the interpretation which we have placed upon it. 37 When Congress coupled the word 'expenditure' with the word 'contribution,' it did so because the practical operation of § 313 in previous elections showed the need to strengthen the bars against the misuse of aggregated funds gathered into the control of a single organization from many individual sources. Apparently 'expenditures' was added to eradicate the doubt that had been raised as to the reach of 'contribution,' not to extend greatly the coverage of the section.22 One can find indications in the exchanges between participants in the debates that informed proponents and opponents thought that § 313 went so far as to forbid periodicals in the regular course of publications from taking part in pending elections where there was not segregated subscription, advertising or sales moneys adequate for its support. Of course, a periodical financed by a corporation or labor union for the purpose of advocating legislation advantageous to the sponsor or supporting candidates whose views are believed to coincide generally with those deemed advantageous to such organization is on a different level from newspapers devoted solely to the dissemination of news but the line separating the two classes is not clear. In the absence of definite statutory demarcation, the location of that line must await the full development of facts in individual cases. It is one thing to say that trade or labor union periodicals published regularly for members, stockholders or purchasers are allowable under § 313 and quite another to say that in connection with an election occasional pamphlets or dodgers or free copies widely scattered are forbidden. Senator Taft stated on the Senate floor that funds voluntarily contributed for election purposes might be used without violating the section and papers supported by subscriptions and sales might likewise be published.23 Members of unions paying dues and stockholders of corporations know of the practice of their respective organizations in regularly publishing periodicals. It would require explicit words in an act to convince us that Congress intended to bar a trade journal, a house organ or a newspaper, published by a corporation, from expressing views on candidates or political proposals in the regular course of its publication. It is unduly stretching language to say that the members or stockholders are unwilling participants in such normal organizational activities, including the advocacy thereby of governmental policies affecting their interests, and the support thereby of candidates thought to be favorable to their interests. 38 It is our conclusion that this indictment charges only that the CIO and its president published with union funds a regular periodical for the furtherance of its aims, that President Murray authorized the use of those funds for distribution of this issue in regular course to those accustomed to receive copies of the periodical and that the issue with the statement described at the beginning of this opinion violated § 313 of the Corrupt Practices Act. 39 We are unwilling to say that Congress by its prohibition against corporations or labor organizations making an 'expenditure in connection with any election' of candidates for federal office intended to outlaw such a publication. We do not think § 313 reaches such a use of corporate or labor organization funds. We express no opinion as to the scope of this section where different circumstances exist and none upon the constitutionality of the section. 40 Our conclusion leads us to affirm the order of dismissal upont he ground herein announced. It is so ordered. 41 Affirmed. 42 Mr. Justice FRANKFURTER, concurring. 43 In a government operating under constitutional limitations there are obvious advantages in knowing at once the legal powers of the government. The desire to secure these advantages explains the strong efforts of some of the ablest members of the Philadelphia Convention to associate the judiciary through a Council of Revision in the legislative process.1 The efforts failed because the disadvantages of such a role by the judiciary were deemed greater than the advantages. And it cannot be too often recalled that the first Chief Justice and his Associates felt constrained to withhold even from the Father of his country answers to questions regarding which Washington was most anxious to have illumination from the Supreme Court, pertaining as they did to the President's powers during the Napoleonic conflict. See 3 Johnston, Correspondence and Public Papers of John Jay (1891) 486—89, and 10 Sparks, Writings of Washington (1847) 542—45; and see Thayer, Legal Essays (1908) 53—54. 44 Accordingly, the fact that it would be convenient to the parties and the public to know promptly whether a statute is valid, has not affected 'rigid insistence' on limiting adjudication to actual 'cases' and 'controversies.' To that end the Court has developed 'for its own governance in the cases confessedly within its jurisdiction, a series of rules under which it has avoided passing upon a large part of all the constitutional questions pressed upon it for decision.' Mr. Justice Brandeis, concurring, in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 345, 346, 56 S.Ct. 466, 482, 80 L.Ed. 688. See also, more recently, Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725; Alma Motor Co. v. Timken-Detroit Axle Co., 329 U.S. 129, 67 S.Ct. 231, 91 L.Ed. 128; United Public Workers of America v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754; Rescue Army v. Municipal Court, 331 U.S. 549, 67 S.Ct. 1409, 91 L.Ed. 1666. 45 A case or controversy in the sense of a litigation ripe and right for constitutional adjudication by this Court implies a real contest—an active clash of views, based upon an adequate formulation of issues, so as to bring a challenge to that which Congress has enacted inescapably before the Court. The matter was thus put by an authoritative commentator: 'The determination of constitutional questions has been associated with the strictly judicial function and so far as possible has been removed from the contentions of politics. These questions have been decided after full argument in contested cases and it is only with the light afforded by a real contest that opinions on questions of the highest importance can safely be rendered.' Charles Evans Hughes, The Supreme Court of the United States (1928) 32. Time has not lessened the force of the reason for this requirement of abstention as indicated by Chief Justice Marshall: 'No questions can be brought before a judicial tribunal of greater delicacy than those which involve the constitutionality of a legislative act. If they become indispensably necessary to the case, the court must meet and decide them; but if the case may be determined on other points, a just respect for the legislature requires, that the obligation of its laws should not be unnecessarily and wantonly assailed.' Ex parte Randolph, 20 Fed.Cas. page 242, at page 254, No. 11558, 2 Brock, 447, 478—79 (C.C.D.Va. 1833). 46 In order that a contest may fairly invite adjudication it is not necessary that the parties should be personally inimical to one another. On the other hand, the fact that the outward form of a litigation has not been contrived by pre-arrangement of the parties does not preclude want of a real contest whc h is essential to this Court's exercise of its function, one of 'great gravity and delicacy', in passing upon the validity of an act of Congress. Ashwander v. Tennessee Valley Authority, supra, 297 U.S. at page 345, 56 S.Ct. at page 482, 80 L.Ed. 466 and cases cited in footnote 3. This prerequisite may be lacking though there be entire disinterestedness on both sides in their desire to secure at the earliest possible moment an adjudication on constitutional power. It may be lacking precisely because the issues were formulated so broadly as to bring gratuitously before the Court that for which there is no necessity for decision, or because they invite formulation of a rule of constitutional law broader than is required by the precise facts of the situation or the terms of the assailed legislation. See Liverpool, N.Y. & P.S.S. Co. v. Commissioners of Emigration, 113 U.S. 33, 39, 5 S.Ct. 352, 355, 28 L.Ed. 899; see also, Statement of the United States of America as Amicus Curiae, in Burco, Inc. v. Whitworth, 297 U.S. 724, 56 S.Ct. 670, 80 L.Ed. 1008; Government's Brief in Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153. 47 We are concerned here not with derogatory implications of collusion, nor have we a case of mootness with its technical meaning of a non-existent controversy. The circumstances bring the present record within those considerations which have led this Court in the past 'for its own governance of cases confessedly within its jurisdiction' to avoid passing on grave constitutional questions because the questions involving the power of Congress come before us not so shaped by the record and by the proceedings below as to bring those powers before this Court as leanly and as sharply as judicial judgment upon an exercise of congressional power requires. 48 This case is here under the unique jurisdiction of the Criminal Appeals Act of 1907, as amended, whereby decisions of District Courts raise almost abstract questions of law regarding the invalidity or construction of criminal statutes, in that they do not come here in the setting of normal adjudications on the merits of a controversy Compare United States v. Petrillo, 332 U.S. 1, 67 S.Ct. 1538, 91 L.Ed. 1877, with the subsequent adjudication on the merits in United States v. Petrillo, D.C., 75 F.Supp. 176. It is most important that such a decision result from due weighing of the considerations which alone can justify the invalidation of an Act of Congress. This implies that there be presented to a District Court the most effective and the least misapprehending legal grounds for supporting what Congress has enacted, while at the same time constitutional adjudication is sedulously resisted by presenting to the District Court alternative constructions of what Congress has written so as to avoid, if fairly possible, invalidation of the statute. The decision of the District Court in this case comes to us wanting in both respects. 49 According to the District Court, the Government conceded that § 304 of the Taft-Hartley Act is an abridgment of 'rights guaranteed by the First Amendment' but contended that 'Congress has power under Article I, Section 4 of the Constitution to abridge First Amendment rights if it considers such a course necessary in maintaining the purity and freedom of elections.' This representation of the Government's argument below is made in the opinion of the District Court not once, not twice, but thrice.2 At the bar of this Court it was urged on behalf of the Government that the District Court misconceived the arguments of the Government, that what the District Court attributed to the Government is not what the Government argued below. But ordinary English words have lost all meaning if the District Judge does not say unequivocally and three times that that is what the Government has argued. It cannot be whistled away as a gauche manner of saying that inasmuch as utterance may under certain circumstances be restricted, § 304 is not in violation of the First Amendment. That may have been the argument put to the court below, but plainly enough that court did not so understand it. Who is to say how the lower court would have dealt with the problem of constitutionality before it, if the argument had been pitched differently than in the way in which it reached the court, or if the court's misapprehension had been corrected? No effort was made, by the familiar process of a petition for rehearing or for a clarification of the court's opinion, to see to it that the lower court manifested an understanding of the Government's contentions by not attributing an erroneous position to the Government. See, for instance, petition for rehearing in Morgan v. United States, 304 U.S. 1, 23, 58 S.Ct. 773, 82 L.Ed. 1129. 50 Again, the defendants did not urge below, as is ordinarily the way of defendants, a construction of the statute which would afford them the rights they claim—but would secure those rights not by declaring an Act of Congress unconstitutional but by an appropriate restriction of its scope. On its own motion, this Court now gives a construction to the statute which takes the conduct for which defendants were indicted out of the scope of the statute without bringing the Court into conflict with Congress. Who can be confident that such a construction, which salvages the statute and at the same time safeguards the constitutional rights of the defendants, might not have commended itself to the District Court and eventually brought a different case, if any, before this Court for review? 51 I cannot escape the conclusion that in a natural eagerness to elicit from this Court a decision at the earliest possible moment, each side was at least unwittingly the ally of the other in bringing before this Court far-reaching questions of constitutionality under circumstances which all the best teachings of this Court admonish us not to entertain. 52 But since my brethren find that the case calls for adjudication, I join in the Court's opinion. I do so because of another rule of constitutional adjudication which requires us to give a statute an allowable construction that fairly avoids a constitutional issue. See my dissenting opinion in Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 1375. 53 Mr. Justice RUTLEDGE, with whom Mr. Justice BLACK, Mr. Justice DOUGLAS and Mr. Justice MURPHY join, concurring in the result. 54 If § 313 as amended1 can be taken to cover the costs of any political publication by a labor union, I think it comprehends the 'expenditures' made in this case. By reading them out of the section, in order not to pass upon its validity, the Court in effect abdicates its function in the guise of applying the policy against deciding questions of constitutionality unnecessarily.2 I adhere to that policy. But I do not think it u stifies invasion of the legislative function by rewriting or emasculating the statute. This in my judgment is what has been done in this instance. Accordingly I dissent from the construction given to the statute and from the misapplication of the policy. I also think the statute patently invalid as applied in these circumstances. I. 55 The Court's interpretation of the section and the indictment are not entirely clear to me. But, as I understand the ruling, it is only that § 313 does not forbid labor unions to take part in pending elections,3 by publishing and circulating newspapers in regular course among their membership, although the costs of publication are paid from the union's general funds regardless of their source, i.e., whether from subscriptions, advertising revenues and returns from per copy sales, or from union dues and other sources. 56 The line of coverage is marked without reference to the source from which the union derives the funds so expended,4 but by whether others than members of the union receive free copies of the publication; and by whether the publication is 'in regular course' or only in casual or occasional distributions. Apparently, in the latter event, circulation limited to the membership would fall within the prohibition as well as free (and perhaps also paid) distribution outside that circle. 57 The construction therefore comes down to finding that Congress did not intend to forbid these expenditures, though made from union funds, since they were made: (1) to sustain the publication of the union's political views; (2) in the regular course of publishing and distributing a union newspaper; (3) with distribution limited substantially5 to union members and not including outsiders. It is because applying § 313 to this type of expenditure would raise 'the gravest doubt' of the section's constitutionality that the Court holds the section inapplicable. 58 If such an interpretation were tenably supportable on any other basis, I should be in accord with this happy solution. But neither the langauge of the section nor its history affords such a basis, unless indeed it may be that the wording is so broad, comprehensive, and indefinite that any possible construction which would apply to a union's publication of its political views would be subject to equally grave constitutional doubt, and therefore was not intended to be covered. 59 Indeed, so far as the present opinion concludes, that may be the case. For it does not hold that distribution outside the circle of membership, even in regular course, is forbidden or, if so, the prohibition would be constitutionally permissible. Neither does it rule that either consequence would follow from casual or occasional distribution within or without that circle. At the most it is indicated that the section more probably or possibly covers those situations than the one now eliminated. But there seems to be no corresponding intimation that the section would be valid in such coverage. 60 In fact the opinion points to no situation, relating to a union's expression of political views, which certainly could be taken as included and validly so. This, of course, comes down to excluding the present circumstances, not to save the statute because there are other applications clearly and validly covered, but because there are such applications which may or may not be covered and which, if covered, may be equally or nearly as doubtful constitutionally. Such a course of construction, if followed in each instance of indictment on particular facts, would mean that the section could not apply in any instance of publication, because each would present 'the gravest doubt' of constitutionality and therefore would be excluded. 61 The language of § 313, as amended, is sweepingly comprehensive. Insofar as presently pertinent it forbids labor unions as well as corporations '* * * to make a contribution or expenditure in connection with any election at which * * * (the designated federal officers)6 are to be voted for,' including primaries, conventions or caucuses held to select such candidates. (Emphasis added.) 62 The crucial words are 'expenditure' and 'in connection with.' Literally they cover any expenditure whatever relating at any rate to a pending election, and possibly to prospective elections or elections already held. The broad dictionary meaning of the word 'expenditure' takes added color from its context with 'contribution.' The legislative history is clear that it was added by the 1947 amendment expressly to cover situations not previously included within the accepted legislative interpretation of 'contribution.'7 The coloration added is therefore not restrictive; it is expansive. See note 9. And in the absence of any indication of restriction, light on the scope of coverage can be found only in the legislative history. 63 When one turns to that source, he finds a veritable fog of contradictions relating to specific possible applications,8 contradictions necessarily bred among both proponents and opponents of the amendment from the breadth and indefiniteness of the literal scope of the language used. But in one important respect the history again is clear, namely, that the sponsors and proponents had in mind three principal objectives. 64 These were: (1) To reduce what had come to be regarded in the light of recent experience as the undue and disproportionate influence of labor unions upon federal elections; (2) to preserve the purity of such elections and of official conduct ensuing from the choices made in them against the use of aggregated wealth by union as well as corporate entities; and (3) to protect union members holding political views contrary to those supported by the union from use of funds contributed by them to promote acceptance of those opposing views.9 Shortly, these objects may be designated as the 'undue influence,' 'purity of elections,' and 'minority protection' objectives. They are obviously interrelated, but not identical. And the differences as well as their combination become important for deciding the scope of the section's coverage and its validity in specific application. 65 With those objects in mind as throwing light on the section's coverage under the broad language employed, we turn to the legislative history on that subject. The Government centers the discussion, both on coverage and on constitutionality, around the 'minority protection' objective. And the legislative discussion, taking place almost exclusively in the Senate and dominated largely by the Labor Management Act's sponsor in that body, also took this purpose as the central theme.10 66 The discussion ranged around a great variety of possible specific applications,11 with concentration upon both the scope and the validity of the provision. The Senate sponsor responded to a flood of inquiries with candor and so far as possible with precision and certainty concerning particular situations under his view of the section's criterion,12 although in numerous instances he was equally candid in stating doubt or disability to give positive opinions, at times in the absence of further facts.13 67 What is most significant for the question of coverage, however, and for the Court's construction in this case, is the fact that in making his responses to the numerous and varied inquiries he tested coverage invariably or nearly so by applying the very criterion the Court now discards, namely, the source of the funds received and expended in making the political publication. 68 That is, in his view that the primary purpose of the amendment was 'minority protection,' the line drawn by the section was between expenditure of funds received by the union expressly for the purpose of the publication and earmarked for that purpose and, on the other hand, expending funds not so limited by the person or source supplying them.14 There was strong opposition to the provision and spirited exchange between proponents and critics of the measure concerning its wisdom and its constitutionality. But there was no disagreement among them that the sponsor's test was the intended criterion. Indeed the legislative discussion was stated explicitly to be for the purpose of making plain beyond any question that this was so.15 Although there were many differences over whether specified types of activity would fall under the criterion's ban and doubts concerning others, the purpose succeeded. There was no divergence from the view that political comment by a union paper or other instrumentality using nonsegregated funds was within the section's coverage. When this was the source of the expenditure it violated the intended prohibition of the section whether or not the publication was in regular course and whether or not it went to others than members and persons accustomed to receive it. 69 If therefore the sponsor's steadfast view can have weight to determine the coverage of a statute indefinite in its terms, Wright v. Vinton Branch, 300 U.S. 440, 57 S.Ct. 556, 81 L.Ed. 736, 112 A.L.R. 1455; United States v. Dickerson, 310 U.S. 554, 60 S.Ct. 1034, 84 L.Ed. 1356; United States v. American Trucking Ass'n, 310 U.S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345; United States v. Wrightwood Dairy Co., 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726, this case is brought squarely within the prohibition of § 313. This is conclusively established by the excerpts from the legislative discussion quoted in the Court's opinion. Others to the same effect are added to this one as an appendix. 70 Moreover in his message vetoing the Labor Management Act of 1947 the President stated that § 313 'would prevent the ordinary union newspaper from commenting favorably or unfavorably upon candidates or issues in national elections.' H.R.Doc. No. 334, 80th Cong., 1st Sess. 9. In the debate preliminary to the overriding of the veto, none of the legislators in charge of the measure gave any indication that they differed with the Presidet 's interpretation. Nor could they have differed, for the statement in the veto message gave effect to their clearly expressed views as to the section's coverage in the specific instance stated. 71 Thus, in the face of the legislative judgment, reiterated after veto, and of the Chief Executive's in making his veto, this Court sets aside the one clearly intended feature of the statute apart from its general objectives. I doubt that upon any matter of construction the Court has heretofore so far presumed to override the plainly and incontrovertibly stated judgment of all participants in the legislative process with its own tortuously fashioned view. This is not construction under the doctrine of strict necessity. It is invasion of the legislative process by emasculation of the statute. The only justification for this is to avoid deciding the question of validity. II. 72 We are concerned in this case with the constitutionality of § 313 as amended only insofar as it may be applied in restriction or abridgment of the rights of freedom of speech, press and assembly secured by the First Amendment.16 Other applications are not in question. There can be little doubt of Congress' power to regulate the making of political contributions and expenditures by labor unions, as well as by other organizations and individuals, in the interest of free and pure elections and the prevention of official corruption, by appropriate measures not trenching on those basic rights. But when regulation or prohibition touches them, this Court is duty bound to examine the restrictions and to decide in its own independent judgment whether they are abridged within the Amendment's meaning.17 That office cannot be surrendered to legislative judgment, however weighty, although such judgment is always entitled to respect. 73 As the Court has declared repeatedly, that judgment does not bear the same weight and is not entitled to the same presumption of validity, when the legislation on its face or in specific application restricts the rights of conscience, expression and assembly protected by the Amendment, as are given to other regulations having no such tendency.18 The presumption rather is against the legislative intrusion into these domains. For, while not absolute, the enforced suffender of those rights must be justified by the existence and immediate impendency of dangers to the public interest which clearly and not dubiously outweigh those involved in the restrictions upon the very foundation of democratic institutions, grounded as those institutions are in the freedoms of religion, conscience, expression and assembly. Hence doubtful intrusions cannot be allowed to stand consistently with the Amendment's command and purpose,19 nor therefore can the usual presumptions of constitutional validity, deriving from the weight of legislative opinion in other matters more largely within the legislative province and special competence, obtain. It is in the light and spirit of these principles that the validity of § 313 as claimed to be applicable here must be determined. 74 At the u tset the Government admits that § 313, in prohibiting expenditures in connection with any federal election, does 'bring into play' the rights of freedom of speech, press and assembly. This is a necessary consequence of its construction of the section and the presently attempted application. But it is claimed no unconstitutional abridgement is involved. This, because it is said Congress has power to act to preserve the freedom and purity of federal elections under Art. I, § 4, of the Constitution,20 and of official action. Thus it is claimed the First Amendment's guaranties are balanced by this other constitutional provision; and Congress' exercise of the authority granted by it is entitled to the same weight and presumptive validity in placing limits upon the freedoms as attaches in their favor in other connections. Accordingly, the usual preeminence accorded to the First Amendment liberties disappears, it is said, and the legislative judgment, having rational basis in fact and policy, becomes controlling. 75 Apart from the question whether the same argument might not be applicable to all other powers granted to Congress by the Constitution, to destroy the principles stated for securing the preferential status of the First Amendment freedoms, the argument ignores other equally settled corollary principles. These are that statutes restrictive of or purporting to place limits to those freedoms must be narrowly drawn to meet the precise evil the legislature seeks to curb, Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352; Thornhill v. Alabama, 310 U.S. 88, 60 S.Ct. 736, 84 L.Ed. 1093; Schneider v. State, 308 U.S. 147, 60 S.Ct. 146, 84 L.Ed. 1093; De Jonge v. Oregon, 299 U.S. 353, 57 S.Ct. 255, 81 L.Ed. 278; Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148, and that the conduct proscribed must be defined specifically so that ths person or persons affected remain secure and unrestrained in their rights to engage in activities not encompassed by the legislation. Blurred signposts to criminality will not suffice to create it. Cantwell v. Connecticut, supra; Stromberg v. California, 283 U.S. 359, 51 S.Ct. 532, 75 L.Ed. 1117, 73 A.L.R. 1484; cf. Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430; Winters v. New York, 333 U.S. 507, 68 S.Ct. 665. 76 Section 313 falls far short of meeting these requirements, both in its terms and as infused with meaning from the legislative history. This is true whether the section is considered in relation to one or another of the evils said to be its targets or with reference to all of them taken together. 77 If the evil is taken to be the corruption of national elections and federal officials by the expenditure of large masses of aggregated wealth in their behalf, the statute is neither so phrased nor so limited, even in its legislative construction. Indeed the Government does not explicitly argue corruption per se arising from union expenditures for publication in the same sense as gave rise to the original and later legislation against corporate contributions down to the War Labor Disputes Act of 1943. And very little in the legislative history directly suggests this evil, although there are inferences implicit in some statements that it was not entirely out of mind.21 So also with the Government's argument.22 78 The Government stresses the 'undue influence' of unions in making expenditures by way of publication in support of or against candidates and political issues involved in the campaign rather than corruption in the gross sense. It maintains that large expenditures by unions in publicizing their official political views bring about an undue, that is supposedly a disproportionate sway, of electoral sentiment and official attitudes. In short, the 'bloc' power of unions has become too great, in influencing both the electorate and public officials, to permit further expenditure of their funds in directly and openly publicizing their political views. And the asserted evil is to be uprooted by prohibition of union expenditures as such, not by regulation specifically drawn to meet it. 79 There are, of course, obvious differences between such evils and those arising from the grosser forms of assistance more usually associated with secrecy, bribery and corruption, direct or subtle. But it is not necessary to stop to point these out or discuss them, except to say that any asserted beneficial tendency of restrictions upon expenditures for publicizing political views, whether of a group or of an individual, is certainly counterbalanced to some extent by the loss for democratic processes resulting from the restrictions upon free and full public discussion. The claimed evil is not one unmixed with good. And its suppression destroys the good with the bad unless precise measures are taken to prevent this. 80 The expression of bloc sentiment is and always has been an integral part of our democratic electoral and legislative processes. They could hardly go on without it. Moreover, to an extent not necessary now to attempt delimiting, that right is secured by the guaranty of freedom of assembly, a liberty essentially coordinate with the freedoms of speech, the press, and conscience. Cf. Bowe v. Secretary of the Commonwealth, 320 Mass. 230, 251, 252, 69 N.E.2d 115, 167 A.L.R. 1447. It is not by accident, it is by explicit design, as was said in Thomas v. Collins, supra, 323 U.S. at page 530, 65 S.Ct. at page 322, 89 L.Ed. 430, that these freedoms are coupled together in the First Amendment's assurance. They involve the right to hear as well as to speak, and any restriction upon either attenuates both. 81 There is therefore an effect in restricting expenditures for the publicizing of political views not inherently present in restricting other types of expenditure, namely, that it necessarily deprives the electorate, the persons entitled to hear, as well as the author of the utterance, whether an individual or a group, of the advantage of free and full discussion and of the right of free assembly for that purpose. 82 The most complete exercise of those rights is essential to the full, fair and untrammeled operation of the electoral process. To the extent they are curtailed the electorate is deprived of information, knowledge and opinion vital to its function. To say that labor unions as such have nothing of value to contribute to that process and no vital or legitimate interest in it is to ignore the obvious facts of political and economic life and of their increasing interrelationship in modern society. Cf. DeMille v. American Federation of Radio Artists, 31 Cal.2d 137, 187 P.2d 769. That ostrichlike conception, if enforced by law, would deny those values both to unions an thus to that extent to their members, as also to the voting public in general. To compare restrictions necessarily resulting in this loss for the public good to others not creating it is to identify essentially different things. The cases are not identical. The loss inherent in restrictions upon expenditures for publicizing views is not necessarily involved in other expenditures. 83 It is this very difference, of course, which brings into play the First Amendment's prohibitions and the principles giving them presumptive weight against intrusions or encroachments upon the area the Amendment reserves against legislative annexation. It is this difference, the very fact that the restriction seeks to contract the boundaries of expression and the right to hear previously considered open, which forces upon its authors the burden of justifying the contraction by demonstrating indubitable public advantage arising from the restriction outweighing all disadvantages, thus reversing the direction of presumptive weight in other cases. 84 If therefore it is an evil for organized groups to have unrestricted freedom to make expenditures for directly and openly publicizing their political views and information supporting them, but cf. Bowe v. Secretary of the Commonwealth, supra, 320 Mass. at page 252, 69 N.E.2d at page 130, 167 A.L.R. 1447, it does not follow that it is one which requires complete prohibition of the right. Ibid. That is neither consistent with the Amendment's spirit and purpose, ibid., nor essential to correction of the evil, whether it be considered corruptive influence or merely influence of undue or disproportionate political weight. 85 It is not necessary now to consider whether restricting the rights of individuals, singly or in organized relationships, to publicize their political views, rights often essential to their survival and always to their well being, can be accommodated, in some instances, with the Amendment's purpose or justified because in legislative judgment those persons unless restricted acquire 'undue influence' in the electoral process. For 'undue influence' in this connection may represent no more than convincing weight of argument fully presented, which is the very thing the Amendment and the electoral process it protects were intended to bring out. And one may question how far legislators may go in accurately assessing undue or disproportionate weight as distinguished from making substantially accurate findings and conclusions concerning corruption. 86 But even if the right to sway others by persuasion is assumed to be subject to some curtailment, in the interest of preventing grossly unbalanced presentations, that right cannot be wholly denied, Bowe v. Secretary of the Commonwealth, supra, 320 Mass. at page 252, 69 N.E.2d at page 130, 167 A.L.R. 1447; nor can it be restricted beyond what is reasonably and clearly necessary to correct an evil so gross and immediate that the correction indubitably outweights the loss to the public interest resulting from the restriction. 87 Here the restriction in practical effect is prohibition, not regulation, when it is considered with respect to the objects of suppressing corruption and 'undue influence.' It is not a limitation it is a prohibition upon expenditure of union funds in connection with a federal election. Unions can act and speak today only by spending money, as indeed is true of nearly every organization and even of individuals if their action is to be effective. As was said in the course of the Senate debates, the interdiction applies to 'a dollar, or 50 cents, or $500 or $1,000.' 93 Cong.Rec. 6438. There is no showing, legislative or otherwise, of corruption so widespread or of 'undue influence' so dominating as could possibly justify so absolute a denial of these basic rights. The statute, whether in terms or as given meaning by the legislative history, is not narrowly drawn to meet the precise evils of corruption or 'undue influence,' if these were the controlling object of the legislation. Nor, as will appear, were the restrictions specifically defined, if they can be considered to have been defined at all, so as to leave the union secure and unrestrained in the right to engage in activities within the region of the First Amendment's coverage but not encompassed by the legislation. 88 As has been stated, it was the 'minority protection' idea which became the dominantly stressed one in the Senate debates, although at the most § 313 on its face gave only slight suggestion of this purpose. Nor was there indication in the section's terms that its prohibition turns on the source from which the funds expended were derived. The language bearing on this case 'expenditure in connection with an election' and no more. Literally all union expenditures in that connection were outlawed. There is not a word to suggest that unions could spend their funds in that manner if contributed expressly for the purpose or derived from such sources as advertising revenues, subscriptions, etc., received in connection with publication of a paper in regular course or otherwise. The limitation of the prohibition to funds received generally, i.e., without specific designation for use in political publicity, is almost wholly a construction of the Senate sponsor, so far as appears from the legislative history. 89 Notwithstanding accepted canons of statutory construction, it certainly would be going far to expect laymen, or even lawyers, to read a statute so lacking in specificity concerning its basic criterion with any semblance of understanding of its limitations. 90 The lawyer might indeed read the Congressional Record and conclude that the source of the funds used was the crux. But even he would be left in broad and deep doubt whether it would turn multitudinous situations one way or the other. If the section is taken nevertheless to have been intended to draw the sponsor's line of distinction, the restriction it makes remains a drastic one. The effect is not merely one of minority protection. It is also one of majority prohibition. Cf. DeMille v. American Federation of Radio Artists, supra. Under the section as construed, the accepted principle of majority rule which has become a bulwark, indeed perhaps the leading characteristic, of collective activities is rejected in favor of atomized individual rule and action in matters of political advocacy. Ibid. Union activities in political publicity are confined to the use of funds received from members with their explicit designation given in advance for the purpose.23 Funds so received from members can be thus expended and no others. Even if all or the large majority of the members had paid dues with the general understanding that they or portions of them would be so used, but had not given explicit authorization, the funds could not be so employed.24 And this would be true even if all or the large majority were in complete sympathy with the political views expressed by the union or on its behalf with any expenditure of money, however small. 91 It is true that the union could ask and in many instances secure the required explicit assents. It seems to be suggested that this might be done by expressly designating a specific portion of the dues for political uses, possibly though not at all clearly by by-law or constitutional provision, possibly by earmarking upon statements of dues payable. But it is not made clear whether the member coud refuse to pay the earmarked portion and retain membership or would have to pay it to remain in that status. If the latter is true, the section affords little real 'minority protection'; if the former, the dissentient is given all the benefit derived from the union's political publicity without having to pay any part of its cost. This is but another of the important and highly doubtful questions raised on the section's wording and construction. 92 The section does not merely deprive the union of the principle of majority rule in political expression.25 Cf. DeMille v. American Federation of Radio Artists, supra. It rests upon the presumption that the majority are out of accord with their elected officials in political viewpoint and its expression and, where that presumption is not applicable, it casts the burden of ascertaining minority or individual dissent not upon the dissenters but upon the union and its officials. The former situation may arise, indeed in one notable instance has done so. But that instance hardly can be taken to be a normal or usual case. Unions too must often operate under the electoral process and the principle of majority rule. Nor in the latter situation does it seem reasoanble to presume dissent from mere absence of explicit assent, especially in view of long-established union practice. 93 If merely 'minority or dissenter protection' were intended, it would be sufficient for securing this to permit the dissenting members to carry the burden of making known their position and to relieve them of any duty to pay dues or portions of them to be applied to the forbidden uses without jeopardy to their rights as members. This would be clearly sufficient, it would seem, to protect dissenting members against use of funds contributed by them for purposes they disapprove, but would not deprive the union of the right to use the funds of concurring members, more often than otherwise a majority, without securing their express consent in advance of the use.26 94 Again, in view of these facts, the section is more broadly drawn than is necessary to reach the intended evil. Moreover, this demonstrates, in my opinion, that 'minority protection' was not the only or perhaps the dominant object of its enactment. That object was rather to force unions as such entirely out of political life and activity, including for presently pertinent purposes the expression of organized viewpoint concerning matters affecting their vital interests at the most crucial point where the expression would become effective. Cf. Thomas v. Collins, supra, 323 U.S. at pages 536, 537, 65 S.Ct. at page 325, 326, 89 L.Ed. 430; Board of Education v. Barnette, 319 U.S. 624, 642, 63 S.Ct. 1178, 1187, 87 L.Ed. 1628, 147 A.L.R. 674; Bridges v. California, 314 U.S. 252, 269, 62 S.Ct. 190, 196, 86 L.Ed. 192, 159 A.L.R. 1346. And so we come back to the conjunction of objectives which, taken together, are claimed to sustain the section's validity. 95 It would be a vr y great infringement of individual as well as group freedoms, affecting vast numbers of our citizens, if labor unions could be deprived of all right of expression upon pending political matters affecting their interests. But we need not now decide whether § 313 has gone so far.27 96 For if we assume that the objects said to have been the motivation for enacting § 313 can sustain substantial limitations upon the rights of free expression and assembly, they cannot support the sweeping and highly indefinite restrictions placed upon them, whether by the section as drawn, as legislatively construed, or as sought to be applied. It is difficult to conceive a statute affecting those rights more lacking in precision, more broad in the scope of doubt and uncertainty of its reach. 97 We have only the broad and indefinite words 'expenditure in connection with any election.' Apart from the literal sweep of 'expenditure' and the large area of doubt created by efforts to confine it, what is 'in connection with'?28 What is a forbidden because a political comment?29 What sorts of union activities outside of publishing a newspaper with unsegregated funds would fall under the ban?30 98 The catalogue of doubt and uncertainty need not be extended. Throughout the preceding discussion, both of coverage and of validity, instances have been noted which demonstrate its encyclopedic scope. The case is not one where a hard core of certain prohibition has been formed, with only a fringe of doubt narrow in scope at its outer boundary. Indeed the difference between the view now taken by the Court and that taken by the Senate and presumably by the House shows that even the core is soft. To the gambles of the statute itself are added those of guessing not only at its perimeter but at its very center. Nor have these been lessened by today's decision other than by eliminating the one application the legislative discussion had sought to make clear. 99 Vagueness and uncertainty so vast and all-pervasive seeking to restrict or delimit First Amendment freedoms are wholly at war with the long-established constitutional principles surrounding their delimitation. They measure up neither to the requirement of narrow drafting to meet the precise evil sought to be curbed nor to the one that conduct proscribed must be defined with sufficient specificity not to blanket large areas of unforbidden conduct with doubt and uncertainty of coverage. In this respect the Amendment's policy adds its own force to that of due process in the definition of crime to forbid such consequences. Cf. Winters v. New York, supra. If the statute outlaws all union expenditures for expression of political views, it is a bludgeon ill-designed for curbing the evils said to justify its enactment, without also curbing the rights. If the section does less, the exact thing forbidden is too loosely defined and the consequent cloud cast over the things not proscribed but within the Amendment's bearing is far too great. In this aspect and in view of the criminal sanctions imposed, the section serves as a prior restraint upon the freedoms of expression and of assembly the Amendment was designed to secure. Only a master, if any, could walk the perilous wire strung by the section's criterion. 100 The force of these considerations is vastly multiplied when it is recalled that, unless they were effective to nullify the section in its application to publicizing activities, the broadly prohibitive and blanketing consequences would be applicable also to all similar corporate political expressions, possibly not excepting even those of the regularly conducted corporate press.31 This would be true, for instance, if the Senate sponsor's contrary view should meet the same fate in this Court that his view of the section's application to the presently involved situation has met. Moreover, in the sponsor's view special editions and apparently free distribution by such corporate publishers, containing political items, would appear to fall under the ban. 101 The argument for applying and sustaining the section in its presently attempted application has gone largely upon the assumption that it would be valid as applied to similar corporate publications, excepting possibly the regular press. The assumption is one not justified by any decision of this Court, which has the final voice in such matters. There are of course important legal and economic differences remaining between corporations and unincorporated associations, including labor unions, which justify large distinctions between them in legal treatment. But to whatever extent this may be true, it does not follow that the broadside and blanketing prohibitions here attempted in restriction of freedom of expression and assembly would be valid in their corporate applications. Corporations have been held within the First Amendment's protection against restrictions upon the circulation of their madia of expression. Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660. It cannot therefore be taken, merely upon legislative assumption, practice or judgment, that restrictions upon freedoms of expression by corporations are valid. Again, those matters cannot be settled finally until this Court has spoken. 102 Finally, if § 313 is taken in the Court's construction, in my opinion its constitutionality stands in no better case. For I know of nothing in the Amendment's policy or history which turns or permits turning the applicability of its protections upon the difference between regular and merely casual or occasional distributions. Indeed pamphleteering was a common mode of exercising freedom of the press before and at the time of the Amendment's adoption. It cannot have been intended to tolerate exclusion of this form of exercising that freedom. Nor does making the difference between distribution to dues-paying members only and distribution to outsiders or the public, whether with or without price, make a constitutional difference. The Amendment did not make its protections turn on whether the hearer or reader pays, or can pay, for the publication or the privilege of hearing the oral or written pronouncement. Neither freedom of speech and the press nor the right of peaceable assembly is restricted to persons who can and do pay. 103 A statute which, in the claimed interest of free and honest elections, curtails the very freedoms that make possible exercise of the franchise by an informed and thinking electorate, and does this by indiscriminate blanketing of every expenditure made in connection with an election, serving as a prior restraint upon expression not in fact forbidden as well as upon what is, cannot be squared with the First Amendment. APPENDIX. 104 'Mr. Pepper. * * * 105 'I wish to ask the Senator, if I may, this question: Would the newspaper called Labor, which is published by the Railway Labor Executives, be permitted to put out a special edition of the paper, for example, in support of President Truman, if he should be the Democratic candidate for the Presidency next year, and in opposition to the Senator from Ohio, if he should be the Republican nominee for the Presidency, stating that President Truman was a friend of labor and that the Senator from Ohio was not friendly to labor? Would that be called a political expenditure on the part of the labor organization? 106 'Mr. Taft. If it were supported b union funds contributed by union members as union dues it would be a violation of the law, yes. It is exactly as if a railroad itself, using its stockholders' funds, published such an advertisement in the newspaper supporting one candidate as against another. If the paper called Labor is operated independently, if it derives its money from its subscribers, then of course there would be no violation. The prohibition is against a labor organization using its funds either as a contribution to a political campaign or as a direct expenditure of funds on its own behalf.' (93 Cong.Rec. 6436.) 107 'Mr. Pepper. * * * Yet the Senator from Ohio says that the newspaper Labor, published by the 21 railway labor executives, would not be permitted to publish a statement saying that it supported President Truman and opposed Candidate Taft, or vice versa. I say that would be a deprivation of the freedom of the press. 108 'Mr. Taft. No; I said that union funds could not be used for that purpose. They could conduct a newspaper if they wanted to, just as a corporation can conduct a newspaper. But why should a labor organization be able to publish pamphlets or special newspapers against one candidate or in favor of another candidate, using funds which that organization collected from the union members?' (Id. 6436—6437.) 109 'Mr. Pepper. Mr. President, I call the attention of the Senator from Ohio to the following practice of the railway labor executives in the past: If a certain candidate was unfriendly to the interests of labor, they would publish a special edition of their paper and would put that special edition into circulation in the area where that candidate was running for office, and would place it in the hands of labor-union members and also in the hands of the public generally. 110 'Mr. Taft. That is exactly what they should not be allowed to do. 111 'Mr. Pepper. Very well; I want it definitely understood that the Senator from Ohio intends to outlaw that privilege on the part of labor. Now that I have that clear— 112 'Mr. Taft. It is perfectly clear. It is perfectly clear that union funds are not to be used to interfere in political campaigns and with political candidates, either in favor of one candidate or against another candidate. (Id. 6437.) 113 'Mr. Barkley. So if there is a labor organization which is publishing a newspaper—not as a political newspaper, but for the benefit of its members—and if the expenses of that publication and distribution are paid from the funds raised by means of the payment of dues, and if all members of the union understand that a certain portion of their dues goes to the publication of that newspaper, then in order for that newspaper to take any position with respect to any candidate, it would have to charge a subscription by the month or by the year, in order that it might express its views in that respect; is that so? 114 'Mr. Taft. I am inclined to think so, just as a corporation gets out regular house organs to its members, and if that corporation interferes in a political election through one of those house organs it violates the Corrupt Practices Act. (Id. 6437—6438.) 115 'Mr. Magnuson. In order to determine the meaning of that, let us assume a concrete example. The International Brotherhood of Teamsters have a newspaper, which they have published for many years. It has a circulation of probably 200,000. It is distributed to members. On the newsstand, no price appears on it. No advertisements are accepted. Under this prohibition, would they be prohibited in the future from mentioning in their editorial columns, for their regular circulation without adding anything additional, the support of a certain candidate or a certain political party? 116 'Mr. Taft. We discussed that. We discussed the question of whether or not that newspaper was supported in effect by contributions of corporations or labor organizations, or was paid for by the people who received it. If the latter, I do not think it was an expenditure of union funds or contribt ions, but if the union simply takes the union funds and publishes a newspaper and uses it as a political organ in an effort to elect or to defeat one man that is prohibited. (Id. 6439—6440.) 117 'Mr. Magnuson. * * * If the pending bill should become law it would mean that all labor organs which are now in existence would, from now on, be prohibited from participating in a campaign, favoring a candidate, mentioning his name, or endorsing him for public office? 118 'Mr. Taft. No; I do not think it means that. The union can issue a newspaper, and can charge the members for the newspaper, that is, the members who buy copies of the newspaper, and the union can put such matters in the newspaper if it wants to. The union can separate the payment of dues from the payment for a newspaper if its members are willing to do so, that is, if the members are willing to subscribe to that kind of a newspaper. I presume the members would be willing to do so. A union can publish such a newspaper, or unions can do as was done last year, organize something like the PAC, a political organization, and receive direct contributions, just so long as members of the union know what they are contributing to, and the dues which they pay into the union treasury are not used for such purpose.' (Id. 6440.) 1 § 304, Labor Management Relations Act, 1947, 61 Stat. 159, enacted June 23, 1947: "Sec. 313. It is unlawful for any national bank, or any corporation organized by authority of any law of Congress, to make a contribution or expenditure in connection with any election to any political office, or in connection with any primary election or political convention or caucus held to select candidates for any political office, or for any corporation whatever, or any labor organization to make a contribution or expenditure in connection with any election at which Presidential and Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, or for any candidate, political committee, or other person to accept or receive any contribution prohibited by this section. Every corporation or labor organization which makes any contribution or expenditure in violation of this section shall be fined not more than $5,000; and every officer or director ofa ny corporation, or officer of any labor organization, who consents to any contribution or expenditure by the corporation or labor organization, as the case may be, in violation of this section shall be fined not more than $1,000 or imprisoned for not more than one year, or both. For the purposes of this section 'labor organization' means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work." The additions of 1947 are italicized. 2 Thornhill v. Alabama, 310 U.S. 88, 60 S.Ct. 736, 84 L.Ed. 1093; West Virginia State Board of Education v. Barnette, 319 U.S. 624, 63 S.Ct. 1178, 87 L.Ed. 1628, 147 A.L.R. 674, and Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430, were cited. 3 '(3) That at all the times hereinafter mentioned, the said defendant CIO owned, composed, edited, and published a weekly periodical known as 'The CIO News', and the said defendant CIO paid all of the costs and made all of the expenditures necessary and incidental to the publication and distribution of said periodical, 'The CIO News', from the funds of the said defendant CIO, including the salaries of the editors and contributors and other writers of texts set forth in said periodical including also the cost of the printing of the said periodical and the cost of the distribution of the said periodical, and all such payments and expenditures, including those representing the cost and distribution of the issue of said 'The CIO News' under date of July 14, 1947, and designated as Volume 10, No. 28, were made by said defendant CIO at Washington, in the District of Columbia, and within the jurisdiction of this Court.' (6) '(b) That the defendant CIO also caused one thousand copies of the issue of the publication, 'The CIO News', dated July 14, 1947, and designated as the issue known as Volume 10, No. 28, to be specially moved and transported from Washington, District of Columbia, into the Third Congressional District of the State of Maryland, by mailing the said one thousand extra copies to the Regional CIO Director at Baltimore, Maryland, and caused the funds of the said defendant CIO to be expended in printing, packaging and transportation of said extra copies of the periodical, 'The CIO News', in connection with the aforesaid special election.' 4 The direction was in this form: 'I therefore have directed and requested the editor of the CIO News to publish this statement, including the following paragraphs, and to give to this issue of the CIO News proper circulation among the members of CIO unions in the City of Baltimore and, particularly, within the Congressional District in which this election is scheduled to take place.' 5 United States v. Kirby, 7 Wall. 482, 486, 487, 19 L.Ed. 278; Hawaii v. Mankichi, 190 U.S. 197, 211, 23 S.Ct. 787, 788, 47 L.Ed. 1016; Fort Smith & W.R. Co. v. Mills, 253 U.S. 206, 209, 40 S.Ct. 526, 527, 64 L.Ed. 862; United States v. Katz, 271 U.S. 354, 359, 46 S.Ct. 513, 515, 70 L.Ed. 986; United States v. Guaranty Trust Co., 280 U.S. 478, 485, 50 S.Ct. 212, 214, 74 L.Ed. 556; Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381, 391, note 4, 59 S.Ct. 516, 519, 83 L.Ed. 784; United States v. American Trucking Ass'n, 310 U.S. 534, 544, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345. 6 Burnet v. Harmel, 287 U.S. 103, 108, 53 S.Ct. 74, 76, 77 L.Ed. 199; Boston Sand & Gravel Co. v. United States, 278 U.S. 41, 49 S.Ct. 52, 73 L.Ed. 170. 7 Harrison v. Northern Trust Co., 317 U.S. 476, 479, 63 S.Ct. 361, 362, 87 L.Ed. 407. 8 See 40 Cong.Rec. 96; 41 Cong.Rec. 22. 9 See Hearings before the House Committee on the Election of the President, 59th Cong., 1st Sess. 76 (1906); 40 Cong.Rec. 96. In 1909 the Criminal Code of the United States, which codified, revised and amended the penal laws of the country, was passed. 35 Stat. 1088. The Act of 1907 was reenacted as § 83. 35 Stat. 1103. 10 36 Stat. 822, as amended by 37 Stat. 25. 11 43 Stat. 1074. 'Contribution' was defined to include 'a gift, subscription, loan, advance, or deposit, of money, or anything of value, and includes a contract, promise, or agreement, whether or not legally enforceable, to make a contribution.' 43 Stat. 1071, 2 U.S.C.A. § 241(d). 12 43 Stat. 1070. 13 57 Stat. 167. 'It is unlawful for any * * * labor organization to make a contribution in connection with any election at which Presidential and Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to Congress are to be voted for, or for any candidate, political committee, or other person to accept or receive any contribution prohibited by this section.' 14 57 Stat. 168. 'Except as to offenses committed prior to such date, the provisions of this Act and the amendments made by this Act shall cease to be effective at the end of six months following the termination of hostilities in the present war, as proclaimed by the President, or upon the date (prior to the date of such proclamation) of the passage of a concurrent resolution of the two Houses of Congress stating that such provisions and amendments shall cease to be effective.' 50 U.S.C.A.Appendix, § 1510. 15 See Hearings before a Subcommittee of the Committee on Labor on H.R. 804, and H.R. 1483, 78th Cong., 1st Sess. 2, 4; S.Rep.No.101, 79th Cong., 1st Sess. 24. 16 See Hearings on H.R. 804 and H.R. 1483, supra, n. 15, 117 18, 133; 89 Cong.Rec. 5334, 5792; 93 Cong.Rec. 6440. 17 See H.R.Rep.No.2093, 78th Cong., 2d Sess. 11; S.Rep.No.101, supra, n. 15, 57—59; H.R.Rep.No.2739, 79th Cong., 2d Sess. 39—40; S.Rep.No.1, Part 2, 80th Cong., 1st Sess. 37, 38—39. 18 See note 17, supra. 19 This point was repeatedly emphasized in the Senate debates. See 93 Cong.Rec. 6436—39. 20 United States v. Delaware & Hudson Co., 213 U.S. 366, 407, 408, 29 S.Ct. 527, 535, 536, 53 L.Ed. 836. 'It is elementary when the constitutionality of a statute is assailed, if the statute be reasonably susceptible of two interpretations, by one of which it would be unconstitutional and by the other valid, it is our plain duty to adopt that construction which will save the statute from constitutional infirmity. Knights Templars & Mason's Life Indemnity Co. v. Jarman, 187 U.S. 197, 205, 33 S.Ct. 108 (111), 47 L.Ed. 139, 145. And unless this rule be considered as meaning that our duty is to first decide that a statute is unconstitutional, and then proceed to hold that such ruling was unnecessary because the statute is susceptible of a meaning which causes it not to be repugnant to the Constitution, the rule plainly must mean that where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter. Harriman v. Interstate Commerce Comm., 211 U.S. 407, 29 S.Ct. 115, 53 L.Ed. 253.' Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 307, 44 S.Ct. 336, 337, 68 L.Ed. 696, 32 A.L.R. 786; Missouri Pac. R. Co. v. Boone, 270 U.S. 466, 471, 472, 46 S.Ct. 341, 343, 344, 70 L.Ed. 688; cf. Blodgett v. Holden, 275 U.S. 142, 147, 48 S.Ct. 105, 106, 72 L.Ed. 206. 21 Compare 'Free discussion of the problems of society is a cardinal principle of Americanism—a principle which all are zealous to preserve.' Pennekamp v. Florida, 328 U.S. 331, 346, 66 S.Ct. 1029, 1037, 90 L.Ed. 1295. 'The case confronts us again with the duty our system places on this Court to say where the individual's freedom ends and the State's power begins. Choice on that border, now as always delicate, is perhaps more so where the usual presumption supporting legislation is balanced by the preferred place given in our scheme to the great, the indispensable democratic freedoms secured by the First Amendment.' Thomas v. Collins, 323 U.S. 516, 529, 530, 65 S.Ct. 315, 322, 33 , 89 L.Ed. 430. 'For the First Amendment does not speak equivocally. It prohibits any law 'abridging the freedom of speech, or of the press.' It must be taken as a command of the broadest scope that explicit language, read in the context of a liberty-loving society, will allow.' Bridges v. California, 314 U.S. 252, 263, 62 S.Ct. 190, 194, 86 L.Ed. 192, 159 A.L.R. 1346. 22 93 Cong.Rec. 6436, 6437, 6439. 23 See 93 Cong.Rec. 6437—40. 1 See 1 Farrand, The Records of the Federal Convention of 1787 (1911) 21, 28, 94, 97 et seq., 105, 107, 109, 110, 111 et seq., 131, 138, 141, 144—45; 2 id. 71, 73 et seq., 294—95, 298 et seq. 2 1. 'The government concedes that rights guaranteed by the First Amendment are abridged by the prohibition against expenditures by labor organizations in connection with elections; but it says that Congress has power under Article I, Section 4, of the Constitution to abridge First Amendment rights if it considers such a course necessary in maintaining the purity and freedom of elections.' 'Thus the Court is confronted with the necessity of passing on the validity of Section 304 of the Act, insofar as it relates to expenditures by labor organizations in connection with federal elections.' 2. 'It is insisted by the government that Congress could abridge the freedoms guaranteed by the First Amendment (which the government concedes was done here) because of its constitutional control over the manner of holding elections, and its consequent power to prevent corruption therein, and to secure clean elections.' 3. 'In support of its argument that congressional control over elections may be exercised in abridgement of rights protected by the First Amendment, the government points to the case of United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556 (91 L.Ed. 754).' 1 Section 313 of the Corrupt Practices Act, as amended by § 304 of the Labor Management Relations Act of 1947, 61 Stat. 136, 2 U.S.C.A. § 251. 2 Rescue Army v. Municipal Court, 331 U.S. 549, 67 S.Ct. 1409, 91 L.Ed. 1666; Ashwander v. Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688, concurring opinion of Mr. Justice Brandeis in 297 U.S. at pages 346—348, 56 S.Ct. at pages 482—483, 80 L.Ed. 688; Federation of Labor v. McAdory, 325 U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725; United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754. 3 The statutory wording is: '* * * expenditure in connection with any election at which Presidential and Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices * * *.' 4 The indictment explicitly charges that 'The CIO News' was regularly (weekly) published by the C.I.O. and costs of publication and distribution, including the issue in question, were paid from the union's funds. There was no allegation concerning their source, whether from revenues not connected with or earmarked for receipt of the paper or from sources specifically so connected. The Court's opinion does not, nor could it fairly, assume that the allegations were limited to expenditure of funds derived from subscriptions, advertising revenues or returns from per copy sales. The opinion explicitly holds that source of the funds is immaterial under § 313 for coverage of the type of publication and circulation here involved. 5 By the opinion's phrase, 'in regular course to those accustomed to receive copies,' 334 U.S. 123, 68 S.Ct. 1358 (emphasis added), room seems to be left for the inference that insubstantial distribution outside the membership would not tend to bring the case within the section's terms. 6 See note 3. The section as presently effective is quoted in full at note 1 of the Court's opinion. 7 'Contribution' had been construed by legislative committees investigating campaign expenditures prior to 1947, see notes 9 and 10, though not always unanimously, not to cover expenditures made by labor unions in publishing their political views during campaigns or at other times. See H.R.Rep.No.2093, 78th Cong., 2d Sess. 10—11; Sen.Rep.No.101, 79th Cong., 1st Sess. 57—59, 83—84; H.R.Rep.No.2739, 79th Cong., 2d Sess. 39—40, 46; Sen.Rep.No.1, Part 2, 80th Cong., 1st Sess. 37, 38—39. It is not necessary to summarize the differing viewpoints expressed in the 1947 debates concerning the validity of this construction. Whether valid or not would make only the difference between extending the statute's scope by adding to its terms or by 'plugging a loophole,' albeit a large one, created by misconstruction. In either event a large addition to the section's coverage was made. See, e.g., 93 Cong.Rec. 6438—6440. The Federal Corrupt Practices Act of 1925, 43 Stat. 1070, amended the preexisting legislation forbidding a corporate 'money contribution' by changing that term t 'contribution' and defining this to include 'a gift, subscription, loan, advance, or deposit, of money, or anything of value, and includes a contract, promise, or agreement, whether or not legally enforceable to make a contribution * * *.' Since 'expenditure' was intended to broaden 'contribution' in the 1947 amendment of § 313, it would seem that its scope could hardly be less broad than was given by the 1925 Act's definition to 'contribution,' although the Government does not appear to urge that 'expenditure' incorporates that definition. 8 See 93 Cong.Rec. 6436—6441, 6446—6448, and excerpts quoted in the Court's opinion and the appendix to this one. Cf. also notes 11, 12, 13. 9 These were the objects of the prohibition against 'contributions' by labor unions, which first appeared on a temporary basis in 1943 in the War Labor Disputes Act, which by its terms was to expire six months following the termination of hostilities. Act of June 25, 1943, c. 144, § 9, 57 Stat. 167. See Hearings before a Subcommittee of the Committee on Labor on H.R. 804 and H.R. 1483, 78th Cong., 1st Sess. 2, 4, 117, 118, 133. Cf. 89 Cong.Rec. 5328, 5334, 5792. The Government's brief states that the legislative history of the 1943 Act shows that the principal basis of the extension to labor unions, like that of the same and earlier acts applying to corporations, 'was the securing of elections in accordance with the will of the people through removing disproportionate influences exerted by means of large aggregations of money.' Since the 1947 amendment to § 313 was designed to make permanent the prohibitions of the 1943 Act, H.R.Rep.No.245, 80th Cong., 1st Sess. 46; H.R.Rep.No.510, 80th Cong., 1st Sess. 67—68 (Conference report to accompany H.R. 3020), and to expand them by adding 'expenditures,' the objects of the 1943 Act necessarily were carried forward into the 1947 amendment. Ibid. See also 93 Cong.Rec. 3428. 10 Congressional committees investigating campaign expenditures in 1946 and 1947 had recommended that 'expenditures' be added to the prohibition of § 313. See H.R.Rep.No.2739, 79th Cong., 2d Sess. 39—40, 46; Sen.Rep.No.1, Part 2, 80th Cong., 1st Sess. 37, 38—39. The so-called Taft-Hartley Bill as introduced in the House contained the prohibition, H.R. 3020, 80th Cong., 1st Sess., § 304, while the Senate version did not. S. 1126, 80th Cong., 1st Sess. There was apparently little discussion in either body on the matter until the conference report incorporating the provision was made. H.R.Rep.No.510, 80th Cong., 1st Sess. Then lengthy discussion ensued in the Senate, from which excerpts are quoted in the Court's opinion and in the appendix to this one. See 93 Cong.Rec. 6436—6441, 6445—6448, 6522—6524, 6530. 11 Some of the more important instances included whether the section applies to forbid political comment or information 'in connection with' elections by corporately owned newspapers and periodicals, in regular course of distribution, 93 Cong.Rec. 6436, or in special editions, ibid.; by 'house organs,' id., 6440, or like publications put out by corporations engaging primarily in other business than publishing; by religious, ibid., and charitable corporations; by organizations like the Anti-Saloon League, ibid.; by radio commentators sponsored by commercial corporations, id. 6439, 6447; by trade associations, such as the National Association of Manufacturers, which receive funds from constituent corporations, id. 6438. These inquiries generally proceeded with analogous ones relating to comparable activities of unions and comparable responses, touching for example P.A.C. activities; labor publications, regular or special; sponsored broadcasts, etc. Illustrative responses are set forth in note 12. 12 E.g., the regular corporately owned press was considered not covered as to its ordinary circulation, because 'that is the operation of the newspaper itself,' 93 Cong.Rec. 6437. The same exemption from coverage, however, was thought not to extend to regularly published union or labor papers, since members' dues could not be so used without specific earmarking or designation by each for such use, even though from previous practice they might know such use would be made. Id. 6440. On the other hand, neither the regular press, corporately owned, nor union papers could publish special editions or distribute them with or without charge. Nor could house organs, union or corporate, comment politically, or religious organizations, if incorporated; neither could associations like the National Association of Manufacturers, which receive funds from corporations and by such expenditures would be making 'contributions' indirectly. Problems involving organizations like the Anti-Saloon League and sponsored radio broadcasts, whether by unions or corporations, as well as guest appearances of candidates and others supporting them on sponsored radio programs, raised matters of greater difficulty. See the various pertinent citations in note 11. Cf. notes 13 and 14. 13 The problems raised in connection with radio discussions presented particularly dubious situations, frequently admitted to call for further facts, to present questions of fact, and to require fine lines of distinction. See, e.g., 93 Cong.Rec. 6439, 6440. Difficulty arose and doubt was expressed also over what would constitute political comment, e.g., publishing an incumbent candidate's voting record, id. 6438, 6446, 6447, an instance in which the Senate sponsor at first disagreed with Senator Ball, but later apparently though somewhat equivocally agreed with him that publication of the record without comment further than 'merely a bare statement of actual facts and simply direct quotations of what the man had said in the course of certains peeches on certain subjects' would not be forbidden, id. 6447; corporate broadcasts not for or against a candidate, but for a party or relating to issues in the election, said to be 'again, a question of fact' and to depend on 'how close it is to the election.' Ibid. These instances are illustrative only, not comprehensive. Cf. note 29. 14 This rubric turned the answers to the inquiries and situations mentioned in notes 11, 12 and 13, as indeed to all others. If the funds used for the publication came to the corporate or union treasury without securing the conributor's express consent for that use, the organization could not so apply them; if so contributed, they could be thus employed. Except in the case of the regular corporate press which presumably were not covered as to ordinary circulation, cf. note 12 supra, expenditure of any corporate or union funds not derived from operation of the publication, e.g., from advertising revenues or returns from per copy sales, or funds received from individuals without individual and explicit authorization for the purpose of the publication was forbidden. 15 See the appendix to this opinion 68 S.Ct. 1374, post. 16 Since the statute in my judgment abridges those freedoms here, it is unnecessary to consider other groundings urged for its invalidation. 17 Thomas v. Collins, 323 U.S. 516, 531, 65 S.Ct. 315, 323, 89 L.Ed. 430; Board of Education v. Barnette, 319 U.S. 624, 639, 63 S.Ct. 1178, 1186, 87 L.Ed. 1628, 147 A.L.R. 674; Thornhill v. Alabama, 310 U.S. 88, 96, 60 S.Ct. 736, 741, 84 L.Ed. 1093; Schneider v. State, 308 U.S. 147, 161, 60 S.Ct. 146, 150, 84 L.Ed. 155. 18 Thomas v. Collins, 323 U.S. 516, 530, 65 S.Ct. 315, 322, 89 L.Ed. 430; Thornhill v. Alabama, 310 U.S. 88, 95, 60 S.Ct. 736, 740, 84 L.Ed. 1093; Schneider v. State, 308 U.S. 147, 161, 60 S.Ct. 146, 150, 84 L.Ed. 1093; cf. United States v. Carolene Products Co., 304 U.S. 144, 152, n. 4, 58 S.Ct. 778, 783, 82 L.Ed. 1234. 19 Thomas v. Collins, 323 U.S. 516, 530, 65 S.Ct. 315, 322, 89 L.Ed. 430; and cf. other cases cited in note 17. 20 'The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.' See also U.S.Const., Art. I, § 2, clause 1, § 8, clause 18. Cf. as to Congress' power over the electoral process, Ex parte Yarbrough, 110 U.S. 651, 4 S.Ct. 152, 28 L.Ed. 274; United States v. Classic, 313 U.S. 299, 61 S.Ct. 1031, 85 L.Ed. 1368. 21 As has been noted, the Senate debate went largely on the 'minority protection' basis of justification with only inferential or incidental reference to corrupting influencea nd occasional suggestions of 'undue influence.' See, however, the statements of Representative Hoffman, 93 Cong.Rec. 3428, and of Senator Taft, id. 6437. 22 The brief, however, includes among the reasons for the prohibition of § 313 'A distrust of the use of large contributions, not because these prove corruption, but because the large single contributions imply resulting obligations and, therefore, can breed corruption'; and goes on to state that 'there is no practical difference between a contribution and an expenditure so far as the effect of the use of money for campaign purposes is concerned.' 23 Apparently the Senate sponsor considered that revenues derived from the operation of union newspapers, such as advertising revenues, etc., are available for political publicity, although they are union funds in which politically dissentient members have interests proportionally with concurring ones and, it seems, do not give explicit consent to such use. The situation, like the case of the regular incorporated press, would seem to be exceptional in permitting the union (or corporation) to use its own funds for political publicity. 24 See note 12 supra. 25 It would even seem questionable whether union funds, not individually earmarked for the purpose, could be used for calling union meetings to discuss and determine official political policies or to hear candidates or others expressing their views on campaign issues. Cf. note 30 infra. 26 This difference is minimized, though noted, in the Government's comparison of § 313 with the British legislation and experience. Cf. Trade Union Act of 1913, 2 & 3 Geo. V, c. 30; Trade Disputes and Trade Unions Act of 1927, 17 & 18 Geo. V, c. 22, repealed by Trade Disputes and Trade Unions Act of 1946, 9 & 10 Geo. VI, c. 52. The legislation was not intended to prevent expenditures for union newspapers. See Rothschild, Government Regulation of Trade Unions in Great Britain: II, 38 Col.L.Rev. 1335, 1364. And see further regarding the British legislation's effect, DeMille v. American Federation of Radio Artists, 31 Cal.2d 137, 148, 187 P.2d 769, distinguishing Amalgamated Society of Railway Servants v. Osborne (1910) A.C. 87. 27 Cf.: 'It is perfectly clear that union funds are not to be used to interfere in political campaigns and with political candidates, either in favor of one candidate or against another candidate.' 93 Cong.Rec. 6437. 'Labor unions are supposed to keep out of politics in the same way that corporations are supposed to keep out of politics.' Id. 6440. 28 When does the connection begin? Obviously not with the date of the election, primary, convention or caucus. How long beforehand, with the announcement of candidacies or with earlier though not always public efforts to induce persons to run? When does the connection end? With the selection of candidates in the one case and the election of officers in the other or does it extend to activities relating to these events taking place later? 29 The publication of bare facts, e.g., voting records, of quotations from speeches and addresses, their reproduction in full? Cf. note 13. And does accuracy or inaccuracy of the quotation make the difference between criminality and legality? Could a president's speech in the course of a campaign for reelection be reproduced in a union newspaper published with unsegregated funds, whether designedly and clearly political or purporting not to be so? Where to draw the line between facts and comment, or comment and advocacy or opposition? 30 A summary from appellees' brief indicates the scope and variety of questions which would arise: 'This measure thus on its face would prevent a labor organization from holding a meeting for the purpose of advocating the election or defeat of a particular political candidate. It would preclude a labor organization from organizing a public gathering to advocate the election of a candidate pledged to the defeat of such a measure as Section 304. (§ 313, as amended.) 'A labor organization under this statute could not a place at the disposal of a candidate its own hall. It could not engage radio time to denounce a candidate who had identified himself with interests fundamentally opposed to those basic to the interests of the defendants. Nor could it pay the salary or expenses of an individual for the purpose of permitting him to participate in a political campaign. 'Handbills, placards or union newspapers advising the union membership of the voting records of public officials could not be published or distributed at election time to advocate either the election of labor's friends or the defeat of labor's enemies. Paid advertisements and radio publications for the same purposes would be likewise proscribed. 'No matter how dangerous the threat presented by a candidate to the fundamental interests of a labor organization, it is powerless under this law to speak and to inform the people of its views. It could not send to a single member a penny postcard dealing with such candidate. It could not even send a delegate or observer to a political convention. 'It could oppose bad laws but not 'in connection with any election'. It could endorse good lwas but at all times both its opposition and its endorsement would be undertaken at the peril of crossing the line at which such opposition or endorsement or advocacy could be regarded as being 'in connection with any election'. 'Moreover, a labor organization could not sponsor a public meeting in connection with an election for the purpose of hearing the views of candidates of various political parties with respect to issues of importance to its membership since such a meeting would inevitably require expenditures. 'The traditional campaigns on the part of labor organizations prior to federal elections to 'get out the vote' would, since they require expenditures, be proscribed by the statute. And the publication of voting guides and analyses of the voting records of candidates would likewise be condemned.' 31 Cf. the President's view, stated in his veto message as follows: 'Furthermore, this provision can be interpreted as going far beyond is apparent objectives, and as interfering with necessary business activities. It provides no exemption for corporations whose business is the publication of newspapers or the operation of radio stations. It makes no distinctions between expenditures made by such corporations for the purpose of influencing the results of an election, and other expenditures made by them in the normal course of their business 'in connection with' an election. Thus it would raise a host of troublesome questions concerning the legality of many practices ordinarily engaged in by newspapers and radio stations.' H.R.Doc.No.334, 80th Cong., 1st Sess. 9—10.
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335 U.S. 252 68 S.Ct. 1415 92 L.Ed. 1935 TAYLORv.STATE OF ALABAMA. No. 721. Argued April 30, May 3, 1948. Decided June 21, 1948. [Syllabus from pages 252-254 intentionally omitted] Messrs. Nesbitt Elmore, of Montgomery, Ala., and Thurgood Marshall, of New York City, for petitioner. Mr. Bernard F. Sykes, of Montgomery, Ala., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The question in this case is whether the State of Alabama deprived the petitioner of due process of law under the Fourteenth Amendment1 to the Constitution of the United States when the Supreme Court of that State denied him permission to file a petition for writ of error coram nobis in the Circuit Court of Mobile County, Alabama. We hold that it did not. We hold also that the Alabama procedure, whereby one of its trial courts, by writ of error coram nobis, may set aside its own judgment in a criminal case because of an error of fact not apparent on the common law record, is a procedure long recognized by the common law and constitutes due process of law under the Fourteenth Amendment. We hold further that the procedure of that State is in accordance with long-established common law practice and constitutes due process of law under the Fourteenth Amendment in requiring that the permission of the Supreme Court of Alabama be secured by a petitioner before filing such a petition for writ of error coram nobis, in a trial court of Alabama, if it appears that the trial court's judgment already has been affirmed by such Supreme Court. 2 October 25, 1946, the petitioner, Samuel Taylor, a Negro, residing in Prichard, Mobile County, Alabama, and then 19 years old, was indicted for rape. The act for which he was indicted was an attack made in Prichard, April 12, 1946, on a white girl then 14 years old. October 26, Henri M. Aldridge, of the Mobile County Bar, was appointed by the Circuit Court of that County to represent the petitioner. However, October 28, on counsel's own motion, this order was set aside and, throughout the trial, he represented the petitioner, evidently as counsel of the petitioner's choice or of that of his family. December 30, on motion of the Circuit Court, the same counsel was appointed to prepare and prosecute the petitioner's appeal to the Supreme Court of Alabama. He thus represented the petitioner at least from October 26, 1946, until the date of the judgment of the Supreme Court of Alabama, April 24, 1947, and it is clear that he rendered adequate and competent service.2 3 The trial took place in the Circuit Court of Mobile County, November 19, 1946. After a full hearing in which the petitioner did not take the stand, the trial judge submitted to the jury four alternative forms of verdicts: 'guilty of rape as charged in the indictment, and further find he shall suffer death by electrocution'; 'guilty of rape, as charged in the indictment, and further find he shall be imprisoned in the penitentiary for—' ('whatever you should determine, not less than ten years up to life'); 'guilty of carnal knowledge, as charged in the indictment, and further find he shall be imprisoned in the penitentiary for—years' ('whatever you should determine, not less than two nor more than ten'), and 'not guilty.' The jury returned its verdict in the first form and the petitioner was sentenced to be electrocuted January 9, 1947, at the Kilby Prison, at Montgomery, Alabama. No motion was made for a new trial but notice of appeal was entered and the petitioner's sentence was suspended pending the appeal. 4 On appeal the case was fully briefed and argued, and, April 24, 1947, the judgment was unanimously affirmed. Taylor v. State, 249 Ala. 130, 30 So.2d 256. From a subsequent brief of the State it appears that the petitioner did not apply for a rehearing, that he was later denied clemency by the Governor, and that he was granted a reprive from the execution of the death sentence until September 19, 1947. 5 September 18, 1947, the petitioner, represented by new counsel, instituted the present proceeding in the Supreme Court of the State at Montgomery. This proceeding is numbered First Division 308 and is entitled 'Ex Parte Taylor, In Re No. 279 Samuel Taylor Appellant v. State of Alabama, Appellee.' 249 Ala. 667, 32 So.2d 659. It was initiated by a petition to the Supreme Court of Alabama for an order granting the petitioner the right to file a petition in the Circuit Court of Mobile County, Alabama, for writ of error coram nobis. The petition in this new proceeding was sworn to by the petitioner and supported by the affidavits of three men who had been in the Prichard jail with him June 29—July 3, 1946. This petition and these affidavit executed in September, 1947, presented for the first time a charge that the petitioner's several confessions, his identification of the prosecutrix and the demonstration of locations which had been made by the petitioner as to his part in the crime, all on July 3, 1946, had been induced by physical violence administered to him or threats made to him in the Prichard jail prior to that date. Throughout the trial uncontradicted testimony had been given repeatedly that the petitioner had volunteered his confessions and that he had made his disclosures 'to get it all off his chest.' This attitude was reinforced by the petitioner's ready and complete disclosures of many details otherwise unavailable. In each instance these were consistent with the other evidence in the case and were demonstrative of the unfailing truthfulness of the statements made by the petitioner on July 3. United the filing of this new proceeding, the petitioner's statements had not been at any point self-contradictory or in conflict with other evidence. His present petition, on the other hand, is in direct conflict with the statements made by him to the Mayor of Prichard and others, July 3, and as to which the Mayor testified at the trial, November 19, 1946. The petitioner now alleges that when, apart from the trial, he 'was asked by his said attorney who represented him in the trial * * * if he was mistreated or beaten in any fashion by the law enforcement officers in connection with the giving of said confession he replied in the negative, being uneducated and ignorant as aforesaid, and fearful of further reprisals by said police officers.' I does not appear that he made any contrary disclosures to his counsel even during the trial of November 19, 1946, or up to the affirmance of the case on appeal, April 24, 1947, although the petitioner had long been out of the custody of the Prichard police and was aware of the diligence with which his counsel, without success, had sought throughout the trial to uncover possible evidence of violence or other coercion in connection with the petitioner's disclosures made on July 3. It is worthy of notice that, prior to the admission in evidence of each statement of the petitioner in the nature of a confession, his counsel diligently sought to inquire into its voluntariness, and never succeeded in bringing out evidence of its involuntary character. The trial judge in each instance expressly found the evidence to be admissible. The petitioner's failure to change his original statement to his counsel would of course be consistent with its truthfulness and with all the evidence on record before September 18, 1947. 6 After the filing of the present proceeding the sentence of execution of the petitioner was further suspended. September 25, 1947, the State of Alabama filed its motion to dismiss the new petition. In that motion it called the attention of the court to the testimony in the original proceeding recently reviewed by that court and contradictory to the new position taken by the petitioner. October 29, 1947, the issue was argued and the State filed an affidavit accompanied by eight photographs which had been taken of the petitioner at 5:37 p.m., July 3, 1946. Seven of these were taken of him in the nude immediately after he had made his several confessions on that day and immediately following the dates June 29 to July 2, inclusive, on which dates the new petition alleges that severe beatings had been administered to him.3 November 13, 1947, the Supreme Court of Alabama, by a vote of six to one, denied the petition. Ex parte Taylor, 249 Ala. 667, 32 So.2d 659. December 4 it denied a rehearing. March 3, 1948, petition for certiorari was filed here. Because of the important relation of this procedure to due process of law under the Fourteenth Amendment, especially in capital cases, we granted certiorari. 333 U.S. 866, 68 S.Ct. 787. 7 The first question is whether this Alabama procedure to secure a review of a judgment in a criminal case by writ of error coram nobis constitutes due process of law under the Fourteenth Amendment. It is clear that it does. This procedure to enable a trial court to correct its own judgment when found by it to have been based upon an error of fact not apparent on the common law record has long been recognized at common law.4 It survives in varying forms in state practice but it may be that in federal practice its purpose is otherwise served.5 This Court has held expressly that, in the form in which the procedure came before us from Florida, in 1942, it conformed to due process of law under the Fourteenth Amendment. Hysler v. Florida, 315 U.S. 411, 62 S.Ct. 688, 86 L.Ed. 932.6 The Supreme Court of Alabama, at least since its decision, in 1943, in Johnson v. Williams, 244 Ala. 391, 13 So.2d 683, has followed Florida precedents as to this procedure, and there is no controversy e re as to the conformity of the present procedure with that of those precedents.7 8 As distinguished from the traditional writ of error enabling a superior court to review an error of law committed by a trial court, the writ of error coram nobis brings the error of fact directly before the trial court. However, when the judgment of the trial court already has been affirmed by the judgment of a superior court, then the trial court is bound by the mandate of that superior court. Under those circumstances, it is appropriate to require a petitioner to secure, from that superior court, permission to file his petition for writ of error coram nobis in the trial court where he seeks an order setting aside the judgment already affirmed by the superior court. This additional step was included in the Florida procedure which was favorably considered by this Court in Hysler v. Florida, supra. 9 It is precisely this step that is before us in the prsent proceeding. It is the refusal of the Supreme Court of Alabama to grant this permission that is under review. On this point we hold that the Alabama procedure, following both the ancient precedents of the common law and the more recent precedents of Florida and of this Court, does not violate the due process of law required by the Fourteenth Amendment. 10 We come now to the merits of this particular case. It is charged that the denial by the Supreme Court of Alabama of the permission here sought from it amounted in itself to a denial to this petitioner of the due process of law to which he was entitled under all the circumstances of this case. The petitioner, however, had no mandatory right to the permission. The issue before us is not the issue which would have faced the trial court in the event that the Supreme Court of Alabama had granted permission to the petitioner to file his petition for writ of error coram nobis in that court. The proceeding here is not even a review, de novo, of the merits of the request made to the Supreme Court of Alabama. The issue before us is limited to a determination of whether, under all the circumstances, the action of the Supreme Court of Alabama in denying permission for the petitioner to file his petition not merely had committed error but had deprived the petitioner of life or liberty without due process of law. 11 In passing upon this request that court was not bound to accept at face value the allegations of the petition. The issue was not submitted to it as though on a demurrer. That court was called upon to decide not only whether this new petition, if true, presented a meritorious ground for setting aside its previous judgment, but that court, in its supervisory capacity over the enforcement of the law, was called upon to determine also the reasonableness of the allegations made in the petition and the probability or improbability of their truth. The standard by which the Supreme Court of Alabama seeks to guide its determination in such a case has been stated by it in Johnson v. Williams, 244 Ala. 391, 394, 13 So.2d 683, 686, as follows: 12 'We recognize in this State, as does the Supreme Court of Florida (Hysler v. State, 146 Fla. 593, 1 So.2d 628), that the common law writ of error coram nobis is available * * * and is the appropriate remedy to be followed. See 24 C.J.S., Criminal Law, § 1606. The rule in that State, which we think is just and proper, and is here adopted, calls for a petition to this Court, when the judgment of conviction has been here affirmed, for leave to petition the circuit court where the conviction was obtained for a writ of error coram nobis to review such judgment. Such application should make an adequate showing of the substantiality of the petitioner's claim to the satisfaction of this Court. A mere naked allegation that a constitutional right has been invaded will not suffice. The application should make a full disclosure of the specific facts relied upon, and not merely conclusions as to the nature and effect of such facts. The proof must enable this Court to 'ascertain whether under settled principles perti ning to such writ the facts alleged would afford at least prima facie just ground for an application to the lower court for a writ of error coram nobis.' And in the exercise of our discretion in matters of this character, this Court should look to the reasonableness of the allegations of the petition and to the existence of the probability of the truth thereof. The Supreme Court of the United States in Hysler v. State of Florida, 315 U.S. 411, 62 S.Ct. 688, 691, 86 L.Ed. 932, said that 'each State may decide for itself whether, after guilt has been determined by the ordinary processes of trial and affirmed on appeal, a later challenge to its essential justice must come in the first instance, or even in the last instance, before a bench of judges rather than before a jury,' and that the procedure outlined above, which we have adopted from the Florida Court, meets the requirements of the due process clause of the Constitution.' (Italics supplied.) 13 It remains to apply the test to this case. There is a presumption of validity attached to the factual basis for the original judgment which was rendered about 18 months ago after a jury trial. It has been affirmed unanimously by a Supreme Court of seven judges and, in this very proceeding, that court reached a conclusion, by a vote of six to one, that 'the averments of the (new) petition are unreasonable and that there is no probability of truth contained therein, and that the proposed attack upon the judgment is not meritorious.' Ex parte Taylor, supra, 249 Ala. at pages 670, 671, 32 So.2d at page 661. 14 In reviewing that conclusion, we emphasize the following considerations: 15 Like every capital case, it is one of serious moment. In the state courts and here, consideration must be given to each material issue of fact and law. Both opinions handed down by the Supreme Court of Alabama disclose an appreciation by its members of their constitutional obligations to the petitioner, the State and the nation. 16 Since the petitioner was sentenced, November 19, 1946, to pay the penalty which the law and the jury have prescribed for the crime of which he was then convicted, the execution of the sentence has been suspended repeatedly in order that the fullest consideration might be given by appropriate authorities to every substantial argument presented on his behalf. The Supreme Court of Alabama has stated its appreciation of its responsibilities in this case as follows: 17 'We are fully mindful of petitioner's rights under the due process clause of the Federal Constitution and the responsibility resting upon this court in cases of this character. We not only are mindful of responsibility so far as this defendant is concerned, but also feel like responsibility to society in the enforcement of the criminal laws of our state.' Ex parte Taylor, supra, 249 Ala. at page 669, 32 So.2d at page 660. 18 If the new petition and its supporting affidavits stood alone or had to be accepted as true, the issue would be materially different from what it is. The Supreme Court of Alabama, however, read this petition and these affidavits, as we must read them, in close connection with the entire record already made in the case. They must be tested in that context for their reasonableness, the probability of their truth, the effectiveness of the attack they make on the original judgment and their relationship to the general enforcement of law with justice to all. 19 The new petition and the affidavits have inherent elements of strength and weakness bearing upon their credibility to which the Supreme Court of Alabama was entitled to give consideration. In contrast to the situation presented in many other cases where a petition for writ of error coram nobis has been relied upon, this petition contains no charge that there was any false testimony presented at the trial (except for its reference to testimony by Sergeant Wilkes which reference the record shows is plainly erroneous). The petitioner bases his claims upon evidence nt presented at the original trial. This consists of evidence of coercion alleged to have been applied to the petitioner by police officers at times not covered by the testimony given at the original trial. All of this addition evidence, if true, must have been known to the petitioner at the time of his trial but it is claimed that he concealed it even from his own counsel. It is newly disclosed evidence, rather than newly discovered evidence, and its credibility in the eyes of the Supreme Court of Alabama may well have been affected by that fact. The new petition does not deny the guilt of the petitioner or deny any of the acts upon which his conviction was based. It claims merely that the coercion applied to the petitioner was such that it would be a sufficient basis for the exclusion, from a new trial, of the evidence of certain confessions and subsequent conduct of the petitioner that was used against him at the original trial. 20 The petition contains no charges that the state's attorney made use of any false testimony or that he knew of any of the coercion relied upon in the new petition. 21 More serious than this lack of compelling force to the petitioner's attack are the following circumstances which were appropriate for consideration by the Supreme Court of Alabama in passing upon the probable truth or falsity of those allegations: 22 1. The only affidavits presented are those of the petitioner himself and of three persons, each of whom was an associate of the petitioner, arrested and detained with him by the Prichard police, June 29—July 3, 1946, under a charge of some crime not connected with the rape. One of these affiants is serving a ten-year sentence for robbery in the Kilby Prison. With the exception of one instance on June 29, none of the three associates claims to have seen the alleged beatings of the petitioner, although each claims to have heard the beatings being administered. The charges as to the alleged beatings are made in such extreme terms that marks of such beatings, if they actually occurred, probably would have been evident on July 3, whereas the testimony at the trial as to the physical condition of the petitioner on that day is to the contrary and the appearance of the petitioner in the photographs, taken on July 3, was found by the Supreme Court of Alabama to lend no support to these statements in the affidavits. 23 2. The petition charges Sergeant C. D. Wilkes of the Prichard police force with perjuring himself 'by falsely testifying that Petitioner was not subjected to any mistreatment in connection with making said confession.' Sergeant Wilkes, however, gave no testimony on that subject. At the trial he testified only as to his being on duty when the petitioner was arrested on June 29, as to the identification made of the petitioner by the prosecutrix, as to the fact that he talked with the petitioner at 9 p.m. on July 2, and as to the manner in which the petitioner had volunteered to make his confession at 3 a.m. on July 3, Nothing was said by Sergeant Wilkes on direct or cross-examination or was even asked of him on cross-examination as to any mistreatment of the petitioner or as to any subject as to which there appears to be any conflict of fact. The record of the trial demonstrates on its face that the charge of perjury is without foundation. 24 3. In the trial record there is no evidence, either on direct or cross-examination of any witness, of any physical or mental coercion, or of any inducement or promise bearing upon the volunteered, detailed and repeated confessions by the petitioner of his conduct, the identification of his victim or his designation, by sketch and on the premises, of the localities of material occurrences. Although the alert and diligent counsel for the petitioner endeavored at the trial to test on each occasion the voluntariness of every statement in the nature of a confession that was made by the petitioner, he did not succeed in convincing the court that any of them should be excluded § having been involuntarily made. His efforts resulted in nothing more than establishing that many witnesses had little or no knowledge as to the presence or absence of coercion during extended periods prior to the petitioner's confessions, although they testified to the voluntariness of the confessions at the time they were made and for varying periods prior thereto. The Supreme Court of Alabama said: 'The question of the voluntary character of the confession was duly considered and treated in the opinion on former appeal. Nor did the record contain the slightest indication that the defendant, a Negro twenty years of age, was ignorant and in any manner subnomal.' Ex parte Taylor, supra, 249 Ala. at page 669, 32 So.2d at page 660. 25 4. No witness testified at the trial to having seen any evidence of physical violence on the body of the petitioner. G. M. Porter, the member of the Prichard police who was on duty much of the time at the jail and who brought the petitioner from his cell in answer to petitioner's request on July 3 for an opportunity to make his initial confession, expressly testified on cross-examination that at that time there were no signs of the petitioner having been mistreated. The photographs taken that afternoon are described in the opinion of the Supreme Court of Alabama as disclosing 'no indications on the body of any physical violence as set forth in the petition.' Ex parte Taylor, supra, 249 Ala. at page 669, 32 So.2d at page 660. 26 5. Still more striking are the statements made by the petitioner himself on July 3. These were made under circumstances so disarming and self-confirmatory as to suggest the reasonableness of their credibility by the jury and later by the Supreme Court on its review of the record. When read in full, the statements of the petitioner throughout July 3 are so free in manner, detailed in content and affirmative in their nature that they carry obvious earmarks of being the truth. The record shows that at 3 a.m. on July 3 the petitioner called from his cell that he wished to tell 'all of it' and 'get it all off his chest.' Shortly thereafter, he told his story before the Mayor of Prichard and others. He repeated it to still others who came in later. He volunteered further details while riding in a car to the scene of the crime. His statements in the car were then than there written down by an assistant county solicitor, were signed by the petitioner and were supplemented by a sketch which the petitioner drew himself. These signed statements and this sketch were introduced in evidence on cross-examination of the assistant county solicitor who had been called as a witness on behalf of the petitioner. Later that day, the petitioner made a further detailed statement in question and answer form. He personally identified the victim of his crime in the presence of several witnesses and she identified him. In his testimony given in the presence of the Mayor, the petitioner stated unequivocally that he had not been beaten or coerced. Excerpts from this testimony are set forth in the margin as retold by the Mayor at the trial.8 27 6. The petition alleges that the petitioner falsely told his own attorney that he had not been beaten and that he so told his attorney because of fear of further reprisals. This attorney was the one who had been appointed by the court to defend the petitioner and later privately retained for the petitioner. Still later he was appointed by the court to handle the case on appeal. There is nothing other than this petition to suggest that the petitioner at any time misled his attorney, or lacked confidence in him, or had reason to lack confidence in him. Both the record and the attorney's conduct of the trial and appeal are thoroughly consistent with the petitioner's having told his attorney that he had not been beaten and there is nothing, other than the new petition, to show that such statement was false. The trial took place on November 19, 1946, and in that connection petitioner was detained in the Mobile County jail rather than with the Prichard police. After his conviction the petitioner was sent to Kilby Prison in Montgomery, over 200 miles away. The Supreme Court of Alabama concluded: 28 'The trial was conducted with much care. There is nothing in the record on former appeal to indicate the slightest appeal to prejudice, nor was a single untoward incident recorded. We think it is asking entirely too much of the court to believe that this defendant, in the secrecy of consultation with his own able counsel, would say to counsel in substance that there was nothing upon which to base an objection to his confessions, solely because he was under fear generated by treatment which he claims was accorded him on July 3, nearly four months previous.' Ex parte Taylor, supra, 249 Ala. at page 670, 32 So.2d at page 661. 29 The petitioner's trial attorney has submitted no affidavit and has not appeared in the present proceeding. 30 For these reasons, we conclude not only that the Alabama procedure is in accordance with due process of law under the Fourteenth Amendment, but that the denial by the Supreme Court of Alabama of the permission thus sought by the petitioner to file a petition for writ of error coram nobis in the Circuit Court of Mobile County, Alabama, was not, under all the circumstances, such an arbitrary action as in itself to amount to a deprivation of due process of law. 31 The Supreme Cor t of Alabama was acting within its constitutional authority when, in its supervisory capacity over the procedure in the criminal trials of that State, it denied to petitioner the right to file this petition for writ of error coram nobis and stated that 'Upon due consideration we conclude that the averments of the petition are unreasonable and that there is no probability of truth contained therein, and that the proposed attack upon the judgment is not meritorious.' Ex parte Taylor, supra, 249 Ala. at pages 670, 671, 32 So.2d at page 661. 32 Accordingly, the judgment of the Supreme Court of Alabama is affirmed. 33 Affirmed. 34 Mr. Justice BLACK took no part in the consideration or decision of this case. 35 Mr. Justice FRANKFURTER, concuring. 36 The dissenting opinion is written as though this Court were a court of criminal appeals for revision of convictions in the State courts. It is written as though we were asked to consider independently, and as a revisory appellate tribunal which had power to do so, whether a conviction in the courts of Alabama was based upon a coerced confession. One would hardly gather from the dissenting opinion that a trial was had in Alabama under the best safeguards to which a defendant in our courts is entitled; that he was defended by counsel concededly able who exerted all his professional skill on behalf of his client; that the trial judge guided the proceedings with competence and scrupulosity; that then followed a careful review of the trial on appeal, resulting in an affirmance of the judgment of conviction by the highest court of Alabama. 37 The Due Process Clause of the Fourteenth Amendment does require still further protection. A state must furnish corrective process to enable a convicted person, even after such proceedings as I have outlined, to establish that in fact a sentence was procured under circumstances which offend 'the fundamental conceptions of justice which lie at the base of our civil and political institutions.' Mooney v. Holohan, 294 U.S. 103, 110, 55 S.Ct. 340, 342, 79 L.Ed. 791, 98 A.L.R. 406. Such reinsurance that no one is punished in violation of basic notions of justice does not of course require determination of such a claim by another jury. 'Each State may decided for itself whether, after guilt has been determined by the ordinary processes or trial and affirmed on appeal, a later challenge to its essential justice must come in the first instance, or even in the last instance, before a bench of judges rather than before a jury.' Hysler v. Florida, 315 U.S. 411, 417, 62 S.Ct. 688, 691, 86 L.Ed. 932. 38 Alabama, it cannot be denied, provides for such corrective process. If Alabama chose to leave the determination of the reasonableness of such a claim as is here made finally and on the merits to the Supreme Court of Alabama, of course we could not say that Alabama was disregardful of the requirements of due process. Not, in view of the circumstances of this case, could we in all fairness say that the Supreme Court of Alabama could not have reasonably rejected that claim—made as belatedly as it was and having regard to the human probabilities of the situation. If the Supreme Court of Alabama could, as a matter of due process, have rejected on the merits the claim that the very foundation of the original proceedings, resulting in the judgment of conviction, was undermined because of an infraction of the United States Constitution, it would disregard reason for this Court to hold that a conscientious State court could not have concluded, as the Supreme Court of Alabama has concluded, that, on the totality of the circumstances, the probabilities were so strong against the truth of the allegations on which the claim was based that it did not require a hearing of witnesses to reject it. In reaching such a conclusion the Supreme Court of Alabama was entitled to consider the circumstances of the original trial, the manner of its conduct by the trial judge, the professional ability with which the defed ant was represented, the behavior of the accused throughout the proceedings, and, in the light of all these circumstances, the weight to be attached to the affidavits on which his present petition is based. 39 For me, the essence of the decision of the Alabama Supreme Court is contained in the following sentence: 'We think it is asking entirely too much of the court to believe that this defendant, in the secrecy of consultation with his own able counsel, would say to counsel in substance that there was nothing upon which to base an objection to his confessions, solely because he was under fear generated by treatment which he claims was accorded him on July 3, nearly four months previous.' 249 Ala. 667, 670, 32 So.2d 659, 661. Since I cannot deem the reasoning by which this conclusion was reached as unsustainable in reason, I am not entitled to reject it, and I therefore agree with this Court's opinion. 40 But this merely carries me to sustaining the judgment of the Alabama Supreme Court. There is not now before us any right that the petitioner may have under the Judicial Code to bring an independent habeas corpus proceeding in the District Court of the United States.1 41 Mr. Justice MURPHY, dissenting. 42 One of the fixed principles of due process, as guaranteed by the Fourteenth Amendment, is that no conviction in a state court is valid which is based in whole or in part upon an involuntary confession. Lee v. Mississippi, 332 U.S. 742, 745, 68 S.Ct. 300, 301. Wherever a confession is shown to be the product of mental or physical coercion rather than reasoned and voluntary choice, the conviction is void. And it is void even though the confession is in fact true and even though there is adequate evidence otherwise to sustain the conviction. 43 This principle reflects the common abhorrence of compelling any man, innocent or guilty, to give testimony against himself in a criminal proceeding. It is a principle which was written into the Constitution because of the belief that to torture and coerce an individual into confessing a crime, even though that individual be guilty, is to endanger the rights and liberties of all persons accused of crime. History has shown that once tyrannical methods of law enforcement are permitted as to one man such methods are invariably used as to others. Brutality knows no distinction between the innocent and the guilty. And those who suffer most from these inquisitorial processes are the friendless, the ignorant, the poor and the despised. Chambers v. Florida, 309 U.S. 227, 237, 238, 60 S.Ct. 472, 477, 478, 84 L.Ed. 716. To guard against this evil, therefore, the Constitution requires that a conviction be set aside whenever it appears that a confession introduced at the trial is involuntary in nature. 44 The problem in this case is whether the petitioner, having been found guilty of rape and sentenced to death, is now entitled to a hearing on his allegation that the confession introduced at the trial was obtained by coercive methods. The Supreme Court of Alabama refused to allow a hearing on the theory that the allegation was unreasonable. In affirming that refusal, however, this Court relies upon considerations which are either irrelevant, inconclusive or contrary to the constitutional principle just discussed: (1) The Court emphasizes that the petition does not deny the guilt of petitioner or deny any of the acts upon which his conviction was based. But whether petitioner be innocent or guilty has no bearing whatever on the reasonableness of the allegation that the confession was coerced. Even if we assume that petitioner is guilty beyond all doubt, the due process clause still invalidates his conviction if it was obtained through use of a coerced confession. The thrust of that clause is directed toward the voluntariness of the confession, not toward the innocence of the accused. 45 (2) Significance is given to the fact that the statements made by petitioner and introduced at the trial as his confession 'are so free in manner, detailed in content and affirmative in their nature that they carry obvious earmarks of being the truth.' Here again the Court misconceives the nature and purpose of the constitutional principle in issue. Coerced confessions are outlawed by the due process clause regardless of the truth or falsity of their content. It is just as uncivilized to brutalize an accused person into telling the truth as it is to force him to fabricate a confession. The torture and coercion are what the Constitution condemns. Hence all allegation that a confession is involuntary is not rendered unreasonable because of the apparent truthfulness of that confession. 46 (3) The Court refers to the absence of any evidence at the original trial of any physical or mental coercion or of any inducement or promise bearing upon the confession made by petitioner. But because he allegedly was still suffering from the coercive effects of the beatings, petitioner made no effort at the trial to prove that he had been subject to undue pressure prior to 3 a.m., July 3, 1946, which is the crucial period. Most of the witnesses at the trial admitted ignorance as to the events occurring before that time. Thus the proof at the trial is at least consistent with the allegation now made and is not such as to render the allegation unreasonable. 47 (4) Objection is made that the only affidavits supporting the allegation are those of petitioner himself and of three persons associated with him. I fail to see, however, how such an objection indicates the unreasonableness of the allegation. The affidavits are those of four Negroes arrested on the street at the same time and detained on a robbery charge. Their common arrest and detention do not necessarily render untrustworthy any affidavits on the part of petitioner's three companions. A statement by a friend or associate can be just as probative for present purposes as a statement by an enemy or a disinterested person. It is not our function now to weigh the effect which the relationships of the four affiants may have on the verity of their statements. Sufficient it is that the statements are reasonable and pertinent on their face. Moreover, the jail sentence now being served by one of the companions does not, standing alone, destroy the force of his affidavit unless we are to indulge in the unrealistic assumption that nothing said by a prison inmate is to be given credence. Overlooked in this respect is the fact that two of the companions are now free individuals who presumably lack what the Court feels is the taint of imprisonment. I can only conclude, therefore, that if there is anything wrong with these affidavits is does not appear in the background of the affiants. 48 (5) The Court observes that, except for one instance, none of the three associates claims to have seen the alleged beatings of the petitioner; all they did was a hear the brutality being inflicted. But I had never supposed that an allegation of coercion was any less reasonable because the alleged torture did not take place before the very eyes of disinterested witnesses. A momen' § reflection will demonstrate that coercion is most likely to occur in secret and to be witnessed, if at all, through the ears of other inmates. Whether there is any truth to the claimed overhearing, of course, is a matter for the trier of facts and does not affect the reasonableness of the claim itself. 49 (6) The alleged beatings are said to be so extreme in nature as to be evident on July 3, when photographs of the petitioner were taken. Suffice it to say that photographs can be most deceiving, especially photographs of a person like petitioner. The Supreme Court of Alabama realized this fact and placed no particular reliance upon the photographs; the dissenting judge, however, was conviced that the pictures did show numerous marks on petitioner's body. Under these circumstances, we should refrain from judgment the reasonableness of the allegation by what we think appears in deceptive photographs. 50 (7) The statement that Sergeant Wilkes perjured himself at the trial apparently has no foundation, as the Court points out. But this factor has no particular relevance to the reasonableness of the claim of coercion. Such an error should not prejudice petitioner's entire allegation. 51 (8) It is said that there is nothing other than the petition to show that petitioner concealed the alleged coercion from his attorney at the trial. This fact may be conceded, but it hardly warrants treating the claim as unreasonable. The coercion conceivably could have been so effective as to shut petitioner's lips all through the trial and to silence him even as to his own attorney. We should not close the door to proof of that possibility. 52 Thus I find inadequate the considerations relied upon by this Court to affirm the judgment below. Petitioner has made an allegation of the most serious nature, one that reflects gravely upon the law enforcement processes of Alabama. He claims that for four nights preceding the confession he was 'brutally beaten, kicked and bruised in an effort to obtain said confession' and put in 'great fear for his future safety.' Cf. Chambers v. Florida, supra. Three other persons are willing to testify that they heard blows struck and heard petitioner 'scream and holler many times.' A perusal of the record reveals an absence of any factor that would render this allegation completely sleeveless. Doubts may reasonably exist as to the merits of the allegation. But they are doubts which should be resolved at a full hearing. That is all that petitioner now asks. And I believe that a denial of his request to have the opportunity to prove his allegation is a denial of due process of a most flagrant nature. 53 We are dealing here with a matter of life and death, a matter of constitutional importance. If it were our function to speculate upon the effect petitioner's confession had on the jury's verdict, it would seem clear that the confession was of crucial importance. There was little else to sustain the verdict, the prosecutrix's identification of petitioner being somewhat weakened by the fact that she had previously made a positive and mistaken identification of another Negro. And the confession undoubtedly affected the jury's choice from among four alternative forms of the guilty verdict of the one that imposed the death sentence. Cf. Andres v. United States, 333 U.S. 740, 68 S.Ct. 880. If the confession was in fact coerced, therefore, the conviction itself was thoroughly impregnated with the coercion. But the degree of such impregnation is irrelevant under the due process clause. As we have seen, it is enough if a coerced confession was actually introduced at the trial. The conviction then becomes void under well established rules. Where there is a reasonable possibility that a conviction is void for this reason, I think that an opportunity should be afforded a condemned man to demonstrate his case. Petitioner's execution is no answer to the allegation which he has raised. 54 Fortunately, this Court has not yet made a final and conclusive answer o petitioner's claim. All that has been decided here is that the Supreme Court of Alabama did not err in declining to permit him to file a petition for writ of error coram nobis in the Alabama courts. Nothing has been held which prejudices petitioner's right to proceed by way of habeas corpus in a federal district court, now that he has exhausted his state remedies. He may yet obtain the hearing which Alabama has denied him. 55 Mr. Justice DOUGLAS and Mr. Justice RUTLEDGE join this dissent. 1 '* * * nor shall any State deprive any person of life, liberty, or property, without due process of law; * * *.' U.S.Const. Amend. XIV, § 1. 2 The Supreme Court of Alabama, in the appellate proceeding, said: 'Counsel appointed by the court for the defense has very diligently presented the questions raised in the record, both by oral argument and a full and complete brief.' Taylor v. State, 249 Ala. 130, 133, 30 So.2d 256, 258. In the present proce ding that court said: 'Upon the trial of this cause the petition admits that the defendant was represented by able counsel.' Ex parte Taylor, 249 Ala. 667, 669, and see page 670, 32 So.2d 659, 660, 661. 3 The State in its brief here says that 'it is not unusual for photographs to be taken of defendants in charges of this nature. It is sometimes anticipated by law enforcement officers that a voluntary confession will later be repudiated. Photographs have been taken and introduced in evidence before. Johnson v. State, 242 Ala. 278, 282, 5 So.2d 632, 635.' At the original trial no repudiation of the confessions had been made and no testimony had been introduced supporting any charge of coercion of the petitioner by physical violence or otherwise. The photographs were introduced in the case only after affidavits charging coercive physical violence had been filed in the present proceeding. 4 'If * * * there was error in fact in the proceedings, not error in law, a writ of error coram nobis or coram vobis might issue to the trial court to enable it to correct the error. * * * If the cause were in the K. B. (King's Bench), the writ would be coram nobis, before us, as the record remaining in the court where the king is constructively; if it were in the common pleas, the writ would be coram vobis, before you, since the record remains then before the justices of that court.' Cooley's Blackstone's Commentaries (4th ed., Andrews, 1889), Book III, p. *406 n. 2. See also, opinion by Mr. Justice Clifford, on circuit, in United States v. Plumer, 27 Fed.Cas. pages 561, 573, No. 16,056. 5 See e.g., Hysler v. State, 146 Fla. 593, 1 So.2d 628, affirmed, 315 U.S. 411, 62 S.Ct. 688, 86 L.Ed. 932; McCall v. State, 136 Fla. 349, 186 So. 802; Chambers v. State, 117 Fla. 642, 158 So. 153; Lamb v. State, 91 Fla. 396, 107 So. 535; and see as to the federal practice, Federal Rules of Criminal Procedure, rules 32, 33, 35 and 36, 18 U.S.C.A. following section 687; Reid v. United States, 5 Cir., 149 F.2d 334; Young v. United States, 5 Cir., 138 F.2d 838; United States v. Gardzielewski, 7 Cir., 135 F.2d 271; Robinson v. Johnston, 9 Cir., 118 F.2d 998; Strang v. United States, 5 Cir., 53 F.2d 820; United States v. Plumer, 27 Fed.Cas. pages 561, 571—574, No. 16,056. See also, United States v. Smith, 331 U.S. 469, 475, 476, n. 4, 67 S.Ct. 1330, 1333, 1334, 91 L.Ed. 1610; United States v. Mayer, 235 U.S. 55, 35 S.Ct. 16, 59 L.Ed. 129. Cf. United States v. Norstrand Corporation, 2 Cir., 168 F.2d 481; Moore and Rogers, Federal Relief from Civil Judgments, 55 Yale L.J. 623, 669—674 (1945—1946). 6 'Such a state procedure of course meets the requirements of the Due Process Clause. Vindication of Constitutional rights under the Due Process Clause does not demand uniformity of procedure by the forty-eight States. Each State is free to devise its own way of securing essential justice in these situations. The Due Process Clause did not stereotype the means for ascertaining the truth of a claim that that which duly appears as the administration of intrinsic justice was such merely in form, that in fact it was a perversion of justice by the law officers of the State. Each State may decide for itself whether, after guilt has been determined by the ordinary processes of trial and affirmed on appeal, a later challenge to its essential justice must come in the first instance, or even in the last instance, before a bench of judges rather than before a jury. 'Florida then had ample machinery for correcting the Constitutional wrong of which Hysler complained. But it remains to consider whether in refusing him relief the Supreme Court of Florida denied a proper appeal to its corrective process for protecting a right guaranteed by the Fourteenth Amendment.' Hysler v. Florida, 315 U.S. 411, 416, 417, 62 S.Ct. 688, 691, 86 L.Ed. 932. See, also, Bute v. Illinois, 333 U.S. 640, 650—654, 68 S.Ct. 763, 768—771, as to the scope which states enjoy in providing their own procedures within the meaning of due process of law under the Fourteenth Amendment. 7 See also, Ex parte Lee, 248 Ala. 246, 27 So.2d 147, certiorari denied, sub nom. Lee v. Alabama, 329 U.S. 808, 67 S.Ct. 621, 91 L.Ed. 690; Ex parte Burns, 247 Ala. 98, 22 So.2d 517; Smith v. State, 245 Ala. 161, 16 So.2d 315; Redus v. Williams, 244 Ala. 459, 13 So.2d 561, certiorari denied, 320 U.S. 775, 64 S.Ct. 85, 88 L.Ed. 464; Brown v. State, 32 Ala.App. 500, 27 So.2d 226. While, for reasons set forth in the respective opinions, the petition for writ of error coram nobis, or for permission to file such a petition has been denied in each of the foregoing cases in the Supreme Court of Alabama, nevertheless, the Court of Appeals of Alabama, in the last case cited, in 1946, granted leave for a petitioner to present his petition for writ of error coram nobis to the Circuit Court of Russell County. 8 Glen V. Dismukes, Mayor of Prichard, on cross-examination by counsel for the petitioner, testified as to the appearance and conduct of the petitioner immediately preceding his initial confession at about 3 a.m. July 3, as follows: 'Q. And you do not know whether, or not, they actually inflicted any violence on him before you got there? A. He didn't appeared (appear) to be frightened in any way. 'Q. But you don't know. He didn't appear to be frightened? A. No. 'Q. Did he seem to be wholly at ease? A. Perfectly at ease. 'Q. I See. You came in there at three o'clock in the morning, and found this negro boy and two policemen, and he assemed to be perfectly at ease? A. Yes, sir. 'Q. Didn't seem to be upset at all? A. Not at all. 'Q. Didn't appear to be nervous? A. No. 'Q. Perfectly friendly? A. Rather pleasant. 'Q. Rather pleasant, well, and you don't know whethe, or not, after you talked to him that they made any promises or threats, do you, Mr. Dismukes? A. No, sir.' Later that day the Mayor visited the scene of the crime with the petitioner and others and, after their return to the office of the Chief of Police, the petitioner made replies to questions asked of him by the State Solicitor. These questions and answers were recalled by the Mayor in his oral testimony and were thus introduced at the trial. Some of this testimony of the Mayor in response to direct examination by the State Solicitor was as follows: 'Q. Now, Mr. Dismukes, on that time and place there in the office to which we referred, do you recall me asking him (the petitioner), 'When were you arrested on this charge, Samuel?', and him answering, 'I was arrested Saturday night around midnight.' Do you recall that? A. Yes, sir. 'Q. Then do you recall me asking, 'And you have been in jail since that time?' and he answering, 'Yes, sir.' A. Yes, sir. 'Q. Do you recall me saying, 'Now, since you have been in jail, Samuel, have you been properly treated?' Do you recall him answering, 'Yes, sir.' A. Yes, sir. 'Q. Do you recall me asking him, 'Have any of the officers mistreated you, or threatened to beat you, or offered you any reward, to get you to talk?' And his answer being, 'No, sir.' A. That is right. 'Q. Do you recall me asking him, 'Have any of them beat you or kicked you?' And he answering, 'No, sir.' A. That's right. 'Q. Do you recall me asking him, 'Now, a few minutes ago when Dr. Grubbs took pictures of you naked, were there any marks on your body that were put there by the police?' And him answering, 'No, sir.' A. Yes sir.' 1 See also § 2254 of the legislation revising the Judicial Code, H.R. 3214, 80th Cong., 2d Sess., as passed by Congress on June 16, 1948: 'State custody: remedies in State courts. 'An application for a writ of habeas corpus in behalf of a person in custody pursuant to the judgment of a State court shall not be granted unless it appears that the applicant has exhausted the remedies available in the courts of the State, or that there is either an absence of available State corrective process or the existence of circumstances rendering such process ineffective to protect the rights of the prisoner. 'An applicant shall not be deemed to have exhausted the remedies available in the courts of the State, within the meaning of this section, if he has the right under the law of the State to raise, by any available procedure, the question presented.' (Congressional Record, June 16, 1948, p. 8676.)
34
335 U.S. 80 68 S.Ct. 1475 92 L.Ed. 1832 MEMPHIS NATURAL GAS CO.v.STONE. No. 94. Argued Dec. 8, 1947. Decided June 21, 1948. Mr. Edward P. Russell, of Memphis, Tenn., for petitioner. Mr. J. H. Sumrall, of Jackson, Miss., for respondent. Mr. Justice REED announced the judgment of the Court anda n opinion in which Mr. Justice DOUGLAS and Mr. Justice MURPHY join. 1 The Memphis Natural Gas Company is a Delaware corporation which owns and operates a pipe line for the transportation of natural gas. The line runs from the Monroe Gas Field in the State of Louisiana through the states of Arkansas and Mississippi to Memphis and other points in the State of Tennessee. Approximately 135 miles of the pipe line lie within Mississippi; at two points within that state there are compressing stations. It is stipulated that the Gas Company has never engaged in any intrastate commerce in Mississippi; that it has only one customer within the state, the Mississippi Power and Light Company, to which it sells gas from its interstate line at wholesale from several delivery points; that the Gas Company has never qualified under the laws of Mississippi to do intrastate business within that state; that it has no agent for the service of process and that it has no office within the state; and that its only employees and representatives in Mississippi are those necessary to maintain the pipe line and its auxiliary appurtenances. 2 The Gas Company has paid all ad valorem taxes assessed against its property in Mississippi pursuant to the state law. In addition to the ad valorem taxes, Mississippi imposes a 'franchise or excise tax' upon all corporations 'doing business' within the state.1 For the purpose of the Act, 'doing business' is defined '(to) mean and (to) include each and every act, power or privilege exercised or enjoyed in this State, as an incident to, or by virtue of the powers and privileges acquired by the nature of such organization.'2 The tax is 'equal to $1.50 for each $1,000.00 or fraction thereof of the value of capital used, invested or employed' within the state. 3 The Gas Company filed a peition for review by the State Tax Commission of Mississippi of the franchise tax assessed against it for the years 1942, 1943 and 1944 by the State Tax Commissioner. In this petition the Gas Company argued that the imposition of the tax by the state was an act prhibited by the Commerce Clause of the Federal Constitution. Art. 1, § 8, cl. 3. From an order of the Tax Commission approving the action of the Commissionr , the Gas Company appealed to the Circuit Court of Hinds County, Mississippi. That court reversed the Tax Commission, but was itself reversed by the Supreme Court of Mississippi. The Supreme Court said that Mississippi had made 'no attempt to tax interstate commerce as such, but the levy is an exaction which the State requires as a recompense for its protection of lawful activities carried on in this State by the corporation, foreign or domestic, activities which are incidental to the powers and privileges possessed by it by the nature of its organization—here the local activities in maintaining, keeping in repair, and otherwise in manning the facilities of the system throughout the 135 miles of its line in this State.' 201 Miss. 670, 29 So.2d 268, 270. It argued that the state tax did not bear directly upon interstate commerce and that any burden imposed upon that commerce was remote and unsubstantial. It concluded that the local tax was not unconstitutional and ordered that the taxes in question, plus penalties, be paid by the Gas Company. A petition for certiorari, under § 237(b), Judicial Code, 28 U.S.C.A. § 344(b), was filed in this Court by the Gas Company on May 17, 1947. It presented the question as to whether the judgment violated the Commerce Clause by requiring a foreign undomesticated corporation, engaged in interstate commerce, to pay the tax. That petition was granted June 16, 1947. 331 U.S. 802, 67 S.Ct. 1736, 91 L.Ed. 1825. 4 The suggestion is made that by the stipulation of facts in the trial court, Mississippi concedes the truth of an allegation of the challenged petition before the State Tax Commission reading as follows: 'To carry on interstate commerce is not a franchise or a privilege granted by the state; it is a right which every citizen of the United States is entitled to exercise under the constitution and laws of the United States; and the accession and possession of mere corporate facilities, as a matter of convenience in carrying on their business, cannot have the effect of depriving it of such right, unless congress should see fit to interpose some contrary regulation. Your Petitioner obtains no protection from the State of Mississippi and acquires no powers or privileges in its interstate activity other than the protection afforded your Petitioner by virtue of the payment of an ad valorem tax on the property used by the Company wholly in interstate commerce.' 5 It is said that because of this concession Mississippi cannot exact a tax from petitioner as the state 'affords nothing to this petitioner for which it could ask recompense by way of a tax.' The pertinent part of the stipulation reads: 'That all of the facts stated in said petition are true and no proof of the same shall be required in this cause.' No contention as to the concession is presented to us by the petition for certiorari, assignment of errors or brief. Petitioner's contention is that the tax levied against it is invalid under the Commerce Clause. Petitioner's failure to raise the question alone would justify a refusal here to consider the contention. See Connecticut R. Co. v. Palmer, 305 U.S. 493, 496, 59 S.Ct. 316, 319, 83 L.Ed. 309; Kessler v. Strecker, 307 U.S. 22, 34, 59 S.Ct. 694, 700, 83 L.Ed. 1082. The answer to the suggestion, however, seems to us clear. The argument is that the Supreme Court of Mississippi must be reversed because the tax before us 'is a tax on the privilege of engaging in the doing of interstate business within the State, and such a tax is * * * invalid under the Commerce Clause.' This conclusion seems to be reached by the following analysis. The stipulation between the Company and the State Tax Commission is read as if the phrase 'in its interstate activity' modified only the words 'powers' and 'privileges' and not the word 'protection.' If that is a proper construction of this stipulation, then the parties have agreed that the Company has obtained by the tax 'no protection from the State * * * other than the protection afforded * * * by virtue of the payment of an ad valorem tax * * *.' The dissent then concludes that the imposition of the ad valorem taxes 'exhausted' the state's taxing power and, consequently, that the tax 'is a tax on the privilege of engaging in interstate business' and, as such, 'invalid under the Commerce Clause.' 6 The state Supreme Court construed the tax as 'an exaction * * * as a recompense for * * * protection of * * * the local activities in maintaining, keeping in repair, and otherwise in manning the facilities of the system throughout the 135 miles of its lines in this State.' As we are bound by the construction of the state statute by the state court, it is idle to suggest that the tax is on 'the privilege of engaging in interstate business.' Nor can this result be changed by the suggestion tha the tax cannot be on any local incidents 'because they have already been fully taxed.' The local incidents, spoken of by the Supreme Court of Mississippi, were not the taxable events selected for the imposition of the ad valorem tax. These local incidents were the basis for the franchise or excise tax now in controversy. No reason is perceived why Mississippi cannot exact this different tax for the same protection. It is as though the ad valorem rate had been increased. The power to levy such a new tax is not and could not be questioned except as an interference with commerce. The legal question remains as to whether a state can exact a tax on those activities under the Commerce Clause. 7 The facts of this case present again the perennial problem of the validity of a state tax for the privilege of carrying on, within a state, certain activities admittedly necessary to maintain or operate the interstate business of the taxpayer. This transportation by pipe line with deliveries within the state at wholesale only is interstate business. Panhandle Eastern Pipe Line Co. v. Comm'n, 332 U.S. 507, 513, 68 S.Ct. 190, 193, and cases cited. Notwithstanding the power granted to Congress by the Commerce Clause to regulate the taxation of interstate commerce, if it so desires,3 that body generally has left the determination to the courts of what state taxes on or affecting commerce were permissible and what impermissible under the Commerce Clause. The states have sought by taxation to collect from the instrumentalities of commerce compensation for the protection and advantages rendered to commerce by state governments. The federal courts have sought over the years to determine the scope of a state's power to tax in the light of the competing interests of interstate commerce, and of the states, with their power to impose reasonable taxes upon incidents connected with that commerce. See Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 441, 59 S.Ct. 325, 328, 83 L.Ed. 272. We continue at that task, characterized long ago as an area of 'nice distinctions.' Galveston, Harrisburg & S.A.R. Co. v. Texas, 210 U.S. 217, 225, 28 S.Ct. 638, 639, 52 L.Ed. 1031. 8 There is no question here of Due Process. The Gas Company's property is in the taxing state where the taxable incidents occurred. McLeod v. Dilworth Co., 322 U.S. 327, 329, 64 S.Ct. 1023, 1025, 88 L.Ed. 1304. See Nippert v. City of Richmond, 327 U.S. 416, 423, 66 S.Ct. 586, 589, 90 L.Ed. 760, 162 A.L.R. 844. Nor is the measure used to calculate the amount of the tax challenged. That measure is $1.50 on each thousand dollars of capital employed within Mississippi. Southern Gas Corp. v. Alabama, 301 U.S. 148, 156, 57 S.Ct. 696, 699, 81 L.Ed. 970, Third. The attack on the Mississippi statute is that it violates the Commerce Clause by putting a tax on the commerce itself. 9 The local incidents covered by the definition of doing business hereinbefore set out, § 9312, Mississippi Code, supra, were said by the Supreme Court in this case to be 'the local activities in maintaining, keeping in repair, and ote rwise in manning the facilities of the system' in Mississippi. 201 Miss. 670, 29 So.2d 268.4 The cases just cited in the note show that, from the viewpoint of the Commerce Clause, where the corporations carry on a local activity sufficiently separate from the interstate commerce state taxes may be validly laid, even though the exaction from the business of the taxpayer is precisely the same as though the tax had been levied upon the interstate business itself.5 But the choice of a local incident for the tax, without more, is not enough. There are always convenient local incidents in every interstate operation. Nippert v. City of Richmond, supra, 327 U.S. at 423, 66 S.Ct. 589, 90 L.Ed. 760. The incident selected should be one that does not lend itself to repeated exactions in other states. Otherwise intrastate commerce may be preferred over interstate commerce.6 Again, where there is a state exaction for some intrastate privilege that discriminates against interstate commerce, it is invalid even though it is sufficiently disconnected from the commerce to be taxable otherwise.7 10 The Mississippi tax under consideration is not discriminatory. It is levied, in addition to ad valorem taxes, on corporations created under Mississippi laws, those admitted to do business in Mississippi and those operating in the state without any authority from the state. See note 1, supra. Petitioner operated local compressor stations. We have heretofore held that the generation of electric energy for the operation of such stations was subject to state taxation withou violation of the Commerce Clause. Coverdale v. Arkansas-Louisiana Pipe Line Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043. A glance at the activities, named above, listed by the Supreme Court of Mississippi, shows that there is no possibility of multiple taxation through the same exactions by other states. The amount of the tax is reasonable.8 It is properly apportioned to the investment in Mississippi.9 11 However, a state tax upon a corporation doing only an interstate business may be invalid under our decisions because levied (1) upon the privilege of doing interstate business within the state,10 or (2) upon some local event so much a part of interstate business as to be in effect a tax upon the interstate business itself.11 Petitioner asserts that the Mississippi statute so offends. 12 First. This Court has drawn the distinction in the field of pipe line taxation between state statutes on the privilege of doing business where only interstate business was done and those upon appropriate local incidents. In Ozark Pipe Line Corp. v. Monier, 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439, the Ozark Pipe Line Corporation operated an oil pipe line from Oklahoma, through Missouri to a point in Illinois. Oil was neither received nor delivered in Missouri. This was interstate transportation. Interstate Natural Ga Co. v. Power Comm'n, 331 U.S. 682, 689, 67 S.Ct. 1482, 1486, 91 L.Ed. 1742, and cases cited at note 12. It had its principal office in Missouri. It had a license from Missouri authorizing it to engage "exclusively in the business of transporting crude petroleum by pipe line." 266 U.S. Page 561, 45 S.Ct. 184, 185, 69 L.Ed. 439. The state tax was an apportioned franchise tax.12 It was construed by this Court as a tax 'upon the privilege or right to do business,' 266 U.S. Page 562, 45 S.Ct. 185, 69 L.Ed. 439. Virginia v. Imperial Coal Co., 293 U.S. 15, 20, 55 S.Ct. 12, 14, 79 L.Ed. 171. As such a tax upon a corporation doing only an interstate business, it was held invalid under the Commerce Clause.13 13 In State Tax Commission v. Interstate Natural Gas Co., 284 U.S. 41, 52 S.Ct. 62, 76 L.Ed. 156, a pipe line ran from Louisiana through Mississippi and back to Louisiana. Two local Mississippi distributors took gas in that state from the respondent. Mississippi sought to tax the respondent under a privilege tax law that required the pipe line company to get a license to exercise the privilege desired, that is, to operate an interstate pipe line.14 This Court held that the entire business of the respondent was interstate despite a claimed local activity by the reduction of pressure to deliver gas to the Mississippi distributors. It followed that the state license for the privilege of engaging in the business of operating a pipe line was an invalid burden under the Commerce Clause.15 14 On the other hand, in Interstate Natural Gas Co. v. Stone, 308 U.S. 522, 60 S.Ct. 292, 84 L.Ed. 442, we affirmed per curiam a judgment of the Fifth Circuit in Stone v. Interstate Natural Gas Co., 103 F.2d 544, on the authority of Southern Gas Corporation v. Alabama, supra, 301 U.S. at 153, 156, 157, 57 S.Ct. 699, 700, 81 L.Ed. 970. The tax in question in the 308 U.S. case was exacted by the same Mississippi statute employed here. This differs from the Mississippi statute in the Interstate case in 284 U.S. The Interstate case in 308 U.S. differed from this present case, § far as is material, only in the fact that the foreign corporation filed a copy of its charter as a prerequisite to doing business in Mississippi and appointed an agent for the service of process. The page references in the Stone citation of the Southern Gas case show that this Court considered the Mississippi tax in the Stone case as one not on business but "on the privilege of exercising corporate functions within the State and its employment of its capital in (Mississippi)." Southern Gas Corp. v. Alabama, supra, 301 U.S. 153, 57 S.Ct. 698, 81 L.Ed. 970. In the Southern Gas case, 301 U.S. page 155, 57 S.Ct. 699, 81 L.Ed. 970, the company did intrastate business but in the Stone case, no intrastate business was done. Thus the local event of qualifying for intrastate business which occurred in both Sourthern Gas and Stone, brought a different result from that in the Ozark case and in Interstate, 284 U.S., where the privilege or right to do interstate business was protected. Mississippi, through its Supreme Court, had declared that there is no attempt to tax the privilege of doing an interstate business or to secure anything from the corporation by thi statute except compensation for the protection of the enumerated local activities of 'maintaining, keeping in repair and otherwise in manning the facilities.' 201 Miss. 670, 29 So.2d 268. Under § 9314, quoted in note, 1, in the light of that statute's definition of 'doing business' set out 68 S.Ct. 1475 supra, this is a reasonable meaning to give the taxing statute. We must accept the state court's interpretation.16 We therefore conclude that the Mississippi statute here involved is not upon the privilege of doing an interstate business. 15 Second. We come now to the second question. That is whether the challenged excise for carrying on within the state the aforementioned activities of maintenance, repair and manning by a corporation engaged solely in interstate commerce may be taxed. The answer on this point depends upon whether these activities are so much a part of the interstate business as to be under the protection of the Commerce Clause as this Court has construed it.17 In this case the local activities are those involved in the maintenance of the pipe line. This tax is not an unapportioned tax on gross receipts from the commerce itself. It is measured by a proportion of the capital employed within the state. It cannot be duplicated in other states. Compare Western Live Stock v. Bureau, 303 U.S. 250, 255, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944. In Ozark Pipe Line v. Monier, supra, this Court, 266 U.S. at page 565, 45 S.Ct. 186, 69 L.Ed. 439, spoke of such activities as set out below.18 If it was intended to say that such in-the-state activities as there described could not be taxed, we disagree with that conclusion. We are inclined to the view that the fact that the tax there under consideration was considered a tax 'upon the privilege or right to do business,' led the Court to point out that as the local activities were essential to that business, they were not taxable activities. The pipe line itself and all appurtenances are essential, yet an ad valorem tax can be laid.19 16 In taxation, we do not have the problems raised by many decisions on state regulations alleged to impede the free flow of commerce when not nationally uniform. Southern Pacific Co. v. Arizona, 325 U.S. 761, 65 S.Ct. 1515, 89 L.Ed. 115. Regulations may be imposed by the state on commerce. Panhandle Eastern Pipe Line Co. v. Public Service Comm'n, supra; Bob-Lo Excursion Co. v. Michigan, 333 U.S. 28, 68 S.Ct. 358. When state taxation of activities or property within a state is involved, different considerations control. It is no longer a question of actual interruption of the operation of commerce. Kelly v. Washington, 302 U.S. 1, 14, 58 S.Ct. 87, 82 L.Ed. 3. Rather a prohibited tax exaction is one beyond the power of the state because the taxable event is outside its boundaries, McLeod v. Dilworth Co., supra, or for a privilege the state cannot grant. See note 10, supra. Is it bad because a tax on the commerce itself? We have sustained a fee for the privilege of using state courts, exacted by the state from a business licensed by the United States to handle customs charges. Union Brokerage Co. v. Jensen, 322 U.S. 202, 64 S.Ct. 967, 88 L.Ed. 1227.20 Likewise a special privilege tax upon an interstate automobile transportation company for the use of the state roads has been approved. Aero Mayflower Transit Co. v. Board of Railroad Comm'rs, 332 U.S. 495, 68 S.Ct. 167. 17 The Mississippi excise has no more effect upon the commerce than any of the instances just recited. The events giving rise to this tax were no more essential to the interstate commerce than those just mentioned or ad valorem taxes. We think that the state is within its constitutional rights in exacting compensation under this statute for the protection it affords the activities within its borders. Of course, the interstate commerce could not be conducted without these local activities. But that fact is not conclusive. These r e events apart from the flow of commerce. This is tax on activities for which the state, not the United States, gives protection and the state is entitled to compensation when its tax cannot be said to be an unreasonable burden or a toll on the interstate business. 18 Affirmed. 19 Mr. Justice BLACK, concurs in the judgment. 20 Mr. Justice RUTLEDGE, concurring. 21 In accordance with views which I have heretofore expressed,1 it is enough for me to sustain the tax imposed in this case that it is one clearly within the state's power to lay insofar as any limitation of due process or 'jurisdiction to tax' in that sense is concerned;2 it is nondiscriminatory, that is, places no greater burden upon interstate commerce than the state places upon competing intrastate commerce of like character;3 is duly apportioned, that is, does not undertake to tax any interstate activities carried on outside the state's borders;4 and cannot be repeated by any other state.5 22 In this view the tax is not different in any substantial respect, for purposes of the commerce clause's prohibitive application, from the apportioned tax upon grss receipts from interstate transportation levied by New York and sustained by the decision recently rendered in Central Greyhound Lines v. Mealey, 334 U.S. 653, 68 S.Ct. 1260.6 That tax is nonetheless one upon the commerce, although it is apportioned. The apportionment, however, guards it from the vice of taxing commerce done in other states and thus also from multiplication by them.7 In my view the same consequence follows here, in practical effect, both for the bearing of the tax and for saving its validity. 23 It may be that for the pr poses of this case there is little more than a verbal difference in so regarding the tax and in looking at it as one not 'upon' the commerce, although affecting it, but as being laid upon 'incidents of the commerce' or 'taxable events' taking place in Mississippi which are regarded as being 'sufficiently separate from' the commerce, whether by reason of the pportionment of otherwise, to sustain the tax. To the extent that no greater difference is presently involved, I accept the Court's conclusions and its reasoning. 24 But the difference conceivably may be of large, indeed of controlling, importance for other cases. And, so far as this may be true, I am unable to revert to rationalizations which make merely verbal formulae without reflection of differences in substantive effects controlling in these matters. 25 The New York legs of the journey involved in the Central Greyhound case, supra, are interstate commerce, as much as those in New Jersey and Pennsylvania. They do not lose that character merely because an apportioned tax may be levied upon the gross receipts from them. The incidence of that tax is flatly on the commerce, though only on the local portion of it. So here I do not think that the local activities for the protection of which the Mississippi tax purports in terms to be laid become separate from the interstate business which petitioner conducts in Mississippi, either by reason of the apportionment or otherwise. But they are incidents of carrying on that business taking place in Mississippi and only there, for which Mississippi affords protection received from no other state or the United States. Nor can any other state give that protection. For that portion of the business and the protection given it, I think the state is entitled to levy such a tax as has been placed here. Nothing in the commerce clause or its great purposes forbids such an exaction. Nor is the state limited to a single exaction for different or indeed like protections afforded, so long as each is safeguarded against prohibited effects upon commerce, as are those laid by Mississippi, and their aggregate cannot be shown to contravene the clause's purpose. 26 Accordingly, I concur in the Court's judgment. 27 Mr. Justice FRANKFURTER, with whom The CHIEF JUSTICE, Mr. Justice JACKSON, and Mr. Justice BURTON concur, dissenting. 28 This litigation began before the State Tax Commission of Mississippi by a petition of the Memphis Natural Gas Company for a revision of the franchise tax assessed against that Company under the Franchise Tax Law of Mississippi. On judicial review of this administrative denial, the parties stipulated that 'all of the facts stated in said petition are true and no proof of the same shall be required in this cause.'1 The decision therefore must be based on the undisputed allegations of the petition. 29 Petitioner, a Delaware corporation, owns and operates a pipeline for the transportation of natural gas running from the gas fields in Louisiana through Arkansas and Mississippi into Tennessee. Petitioner has conducted no intranstate business within Mississippi, nor is it qualified to do so. The Company paid Mississippi an income tax 'upon that part of its net income fairly attributable to activities in Mississippi.' It also pays ad valorem taxes to the six counties through which the Mississippi portion of its interstate pipeline—some 135 miles—runs. The o unties are: Washington, Bolivar, Sunflower, Coahoma, Tunica, and Desoto. It also pays ad valorem property taxes to the cities of Greenville (Washington), Indianola (Sunflower), and Clarksdale (Coahoma). In addition to these income and local ad valorem property taxes, not here questioned, the State Tax Commission assessed the franchise tax in controversy. This was done under an enactment of 1940, which imposed on all foreign corporations 'doing business within this state'2 a 'franchise or excise tax equal to $1.50 of each $1,000.00 or fraction thereof of capital used, invested or employed within this State * * *.' Ch. 115 of the 1940 General Laws of Mississippi § 2; Miss.Code, § 9314(1942). The record is barren of any indication that 'the taxing power exerted by the state bears fiscal relation to protection, opportunities and benefits given by the state,' Wisconsin v. J.C. Penny Co., 311 U.S. 435, 444, 61 S.Ct 246, 249, 85 L.Ed. 267, 130 A.L.R. 1229, other than those for which the State, through its subordinate taxing authorities, has already made exaction, as contrasted with those which are given not by the State but by the United States and for which the State may not make exaction. Crutcher v. Kentucky, 141 U.S. 47, 11 S.Ct. 851, 35 L.Ed. 649. The record not only makes no such affirmative showing; it denies the foundation for suggesting that the State has given something for which it can exact a return. For it was stipulated between the Company and the State Tax Commission that 'Your Petitioner obtains no protection from the State of Mississippi and acquires no powers or privileges in its interstate activity other than the protection afforded your Petitioner by virtue of the payment of an ad valorem tax on the property used by the Company wholly in interstate commerce.'3 30 Even assuming therefore that, while Mississippi cannot impose a tax for the privilege of doing an exclusively interstate business within the State, it can cast an ad valorem property tax on the Mississippi portion of the corpus of its interstate property in a form having all the earmarks of a franchise tax, the assessment here challenged on the record before us cannot stand. And for a very simple reason. 31 There would hardly be disagreement, I take it, that Alabama could not constitutionally impose an ad valorem tax on these 135 miles of pipeline in Mississippi. This is so not because the pipeline does not traverse Alabama—concededly the assailed tax cannot be sustained merely because the pipeline travels through Mississippi—but because Alabama affords nothing to this petitioner for which it could ask recompense by way of a tax. We cannot know, unless we are instructed, how governmental powers are distributed in Mississippi as between its State and local governments. And the petitioner has no proof of its allegations that the nine county and city taxing authorities to which the petitioner pays approximately $85,000 a year in ad valorem taxes supply all the benefits which it enjoys from the State and that the State in seeking to enforce the franchise tax aa inst the petitioner is asking something (approximately $3,500 a year) for nothing. But 'no proof of the same shall be required in this cause,' according to the stipulation between the parties, to which the State Tax Commission has set its name. See H. Hackfeld & Co. v. United States, 197 U.S. 442, 446, 25 S.Ct. 456, 457, 49 L.Ed. 826. In holding that Mississippi is 'exacting compensation under this statute for the protection it affords the activities within its borders' to this petitioner the Court is flying in the face of the record. On the basis of that record Mississippi can no more exact this tax against this pipeline than could Alabama. For we are all agreed that where the only 'local incident' is the fact of interstate commerce—that the interstate pipeline goes through Mississippi—the tax is necessarily a tax upon the privilege of doing interstate business. The Commerce Clause put an end to the power of the States to charge for that privilege. 32 But it is suggested that we are barred from reaching this conclusion, though the record compels it, because it deals with an issue not before us. Let us see. The petition for certiorari presented this question: 'Admittedly petitioner is engaged in Mississippi solely in interstate commerce. It pays to Mississippi ad valorem and income taxes and thus contributes materially to the cost of local government. An undomesticated foreign corporation has the right to engage in Mississippi in interstate commerce without paying for the privilege as the privilege flows from the Commerce Clause of the Federal Constitution and may not be directly burdened by the imposition of a local 'franchise or excise tax." 33 By this statement the petitioner clearly asserted that insofar as Mississippi has power to tax this interstate business for the protection accorded the 'local incidents' of that business, the taxes levied by the State through its local taxing authorities exhausted the power. To tax beyond that is bald tax on the privilege of doing interstate commerce. If we were precluded from deciding a case otherwise than by the precise course of argument presented by counsel, many of our opinions would have to be deleted from the United States Reports. 34 The Court however attempts to deal with the contention. As I understand the Court's opinion, it argues that even if it be true that this tax does not recompense the State for the local protection accorded the petitioner's activities, this is wholly immaterial as the Supreme Court of Mississippi has given the tax a contrary interpretation. The opinion offers the extraordinary suggestion that although the State Tax Commission on behalf of the State conceded that the exaction as a matter of fact afforded no protection, the State Supreme Court may disregard such a concession of fact, having all the force of proof, and hold as a matter of law that protection beyond that for which taxes were already imposed was enjoyed by the interstate business. 35 In the first place the Supreme Court of Mississippi purported to do no such thing. On the contrary, its opinion concluded as follows: 'Does the franchise tax here demanded amount to enough to have any substantial effect to block or impede the free flow of commerce, or is it at all out of reasonable proportion to the services and protection which must be furnished by the State in and about the stated local activities? The franchise tax demanded is approximately $3,400 per annum, whereas the ad valorem taxes are approximately $82,000 a year, whence the obvious answer to this last question must be in the negative.' Miss., 29 So.2d 268, 271. 36 Of course, a State tax on interstate commerce does not become a valid one merely because 'it's only a little one.' And even in thise days, an unconstitutional exaction by a State of $3,400 is not de minimis. 37 But even if the State court's opinion were susceptible of the construction accorded it by this Court, its ipse dixit in applying the Commerce Clause would not be i nding on this Court. Of course the construction of a statute is for the State court. But the construction of the statute which the Court now attributes to the State Supreme Court whereby the tax is imposed not for any 'local incidents'—because these have already been fully taxed—makes clear beyond peradventure that it is a tax on the privilege of engaging in the doing of interstate business within the State, and such a tax is, of course, invalid under the Commerce Clause. 38 It is a novel abdication of this Court's function that we are bound by a State court's views of the constitutional significance of a State tax on interstate business, but are not bound by an unambiguous stipulation by the State that no protection was afforded by the State to the taxable local incidents of the interstate business beyond that for which the State, through its local agencies, has already levied the tax. 39 A State may of course increase the rate of a properly apportioned ad valorem tax of an interstate business. Compare Wallace v. Hines, 253 U.S. 66, 40 S.Ct. 435, 64 L.Ed. 782. But it can do so only by increasing the rate. The mere fact that the same number of dollars could have been exacted by the State in a constitutional way cannot legalize every tax, 'as though the ad valorem rate had been increased.' Because a State could obtain twice the amount of revenue that it gets from an interstate business by increasing the ad valorem rate does not constitutionally justify a tax which, by virtue of a stipulation having the force of truth is not referable to any protection which the State accords. 40 These are not abstract objections against disregarding the tax which the State has in fact levied and treating it as though it levied some other tax. Practical considerations preclude such a patent endeavor to circumvent the restrictions that the Commerce Clause places upon the taxing powers of the States. A State legislature may be ready to levy a tax for the privilege of doing interstate business within the State—as legislatures have again and again attempted to do—and not be prepared to increase outright the ad valorem rate. 41 The suggestion that an otherwise unconstitutional tax may be treated 'as though the ad valorem rate had been increased' is an easy way of sustaining almost every tax that would otherwise fall under the ban of the Commerce Clause by transmuting it into an assumed increase in the rate of an ad valorem tax. The suggestion has the merit of inventiveness. In the competition for revenue among the States, it is an inventiveness that subjects the hitherto great boon of free trade across State lines to the bane of multitudinous local tariffs. 42 The judgment should be reversed. 1 Miss.Code § 9313 (1942): 'There is hereby imposed * * * a franchise or excise tax upon every corporation * * * now existing in this state, or hereafter organized, created or established, under and by virtue of the laws of the State of Mississippi, equal to $1.50 for each $1,000.00 or fraction thereof, of the value of the capital used, invested or employed in the exercise of any power, privilege or right enjoyed by such organization within this state, except as hereinafter provided. It being the purpose of this section to require the payment to the state of Mississippi, this tax for the right granted by the laws of this state to exist as such organization, any enjoy, under ther protection of the laws of this state, the powers, rights, privileges and immunities derived from the state by the form of such existence.' § 9314: 'For the year 1940 and annually thereafter, there shall be and is hereby imposed, levied and assessed upon every corporation, association or joint stock company, as hereinbefore defined, organized and existing under and by virtue of the laws of some other state, territory or country, or organized and existing without any specific statutory authority, now, or hereafter doing business within this state, as hereinbefore defined, a franchise or excise tax equal to $1.50 of each $1,000.00 or fraction thereof of the value of capital used, invested or employed within this state, except as hereinafter provided. It being the purpose of this section to require the payment of a tax by all organizations not organized under the laws of this state, measured by the amount of capital or its equivalent, for which such organization receives the benefit and protection of the government and laws of the state.' 2 Miss.Code § 9312 (1942). 3 Prudential Ins Co. v. Benjamin, 328 U.S. 408, 429, 66 S.Ct. 1142, 1154, 90 L.Ed. 1342, 164 A.L.R. 476. 4 Such local incidents form a sound basis for taxation by a state of foreign corporations doing interstate business. For example, we have upheld state taxes on sales after completion of the interstate state transit, McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876; on production of electricity for interstate commerce, Utah Power & L. Co. v. Pfost, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038, compare Fisher's Blend Station, Inc., v. Tax Comm'n, 297 U.S. 650, 655, 56 S.Ct. 608, 610, 80 L.Ed. 956; a privilege tax on the operation of machines for the production of electricity to drive gas in interstate commerce, Coverdale v. Arkansas-Louisiana Pipe Line Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043; a use tax on rails shipped interstate for immediate incorporation into an interstate transportation system, Southern Pacific Co. v. Gallagher, 306 U.S. 167, 59 S.Ct. 389, 83 L.Ed. 586. We have upheld a franchise tax on a foreign corporation authorized to do business and making sales in a state other than its actual or business domicile, Ford v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304; a privilege tax on a foreign corporation doing business in the state upon a proportion of property in the taxing state that was computed by using interstate commerce as an element, Hump Hairpin Co. v. Emmerson, 258 U.S. 290, 42 S.Ct. 305, 66 L.Ed. 622; Western Cartridge Co. v. Emmerson, 281 U.S. 511, 50 S.Ct. 383, 74 L.Ed. 1004; an excise on intrastate manufacturing, added to an ad valorem tax and measured by sales, including out of state, American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084, and see Powell, 60 Harv.L.Rev. 508 and 727, Freeman v. Hewit, 329 U.S. 249, 255, 67 S.Ct. 274, 278, 91 L.Ed. 265; a license for storing goods at rest in the state under a transit privilege, Independent Warehouses, Inc. v. Scheele, 331 U.S. 70, 67 S.Ct. 1062, 91 L.Ed. 1346. 5 See Western Live Stock v. Bureau, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. 6 See Western Live Stock v. Bureau, 303 U.S. 250, 255, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. 7 See Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275; Nippert v. City of Richmond, supra, 327 U.S. at 431, 432, 66 S.Ct. 593, 594, 88 L.Ed. 1304. Cf. Aero Mayflower Transit Co. v. Board of Railroad Comm'rs, 332 U.S. 495, 501, 502, 68 S.Ct. 167, 170. 8 See Hump Hairpin Co. v. Emmerson, 258 U.S. 290, 295, 42 S.Ct. 305, 307, 66 L.Ed. 622, and Western Cartridge Co. v. Emmerson, 281 U.S. 511, 514, 50 S.Ct. 383, 385, 74 L.Ed. 1004. 9 See Southern Gas Corp. v. Alabama, 301 U.S. 148, 156, 57 S.Ct. 696, 699, 81 L.Ed. 970, Third, and cases cited; International Harvester Co. v. Evatt, 329 U.S. 416, 422, 423, 67 S.Ct. 444, 447, 91 L.Ed. 390; Aero Mayflower Transit Co. v. Board of Railroad Com'rs, 332 U.S. 495, 501, 502, 68 S.Ct. 167. 10 This Court has held many times that a state has no power to refuse or tax the privilege of doing interstate business. A foreign corporation, seeking or requiring no privilege from a state such as the power of eminent domain, the right to use public ways or beds of streams, and without federal charter or other federal statutory privilege, cannot be denied the right to enter a state, remain there and operate a purely interstate business without a state franchise. Crutcher v. Kentucky, 141 U.S. 47, 56, 11 S.Ct. 851, 853, 35 L.Ed. 649; International Textbook Co. v. Pigg, 217 U.S. 91, 107(3), 30 S.Ct. 481, 484, 54 L.Ed. 678, 27 L.R.A.,N.S., 493, 18 Ann.Cas. 1103; Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239. See also California v. Pacific R. Co., 127 U.S. 1, 8 S.Ct. 1073, 32 L.Ed. 150; Luxton v. North River Bridge Co., 153 U.S. 525, 14 S.Ct. 891, 38 L.Ed. 808; Colorado v. United States, 271 U.S. 153, 164, 46 S.Ct. 452, 454, 70 L.Ed. 878; State ex rel. Board of Railroad Com'rs v. Stanolind Pipe Line Co., 216 Iowa 436, 445, 249 N.W. 366. 11 Freeman v. Hewit, 329 U.S. 249, 67 S.Ct. 274, 277, 91 L.Ed. 265, 'because it taxes the very process of interstate commerce' 329 U.S. page 253, 67 S.Ct. 277, 91 L.Ed. 265, it is 'a direct imposition on that very freedom of commercial flow which for more than a hundred and fifty years has been the ward of the Commerce Clause' 329 U.S. page 256, 67 S.Ct. 278, 91 L.Ed. 265: Joseph v. Carter Clause' 329 U.S. page 256, 67 S.Ct. 815, 91 L.Ed. 993, 'Stevedoring, we conclude, is essentially a part of the commerce itself and therefore a tax * * * upon the privilege of conducting the business of stevedoring for interstate and foreign commerce, measured by those gross receipts, is invalid' 330 U.S. page 433, 67 S.Ct. 821, 91 L.Ed. 993; this follows 'a line of precedents outlawing taxes on the commerce itself' 330 U.S. page 433, 67 S.Ct. 821, 91 L.Ed. 993; Galveston, Harrisburg & S.A.R. Co. v. Texas, supra, 210 U.S. at 224, 28 S.Ct. 638, 52 L.Ed. 1031. See Adams Mfg. Co. v. Storen, 304 U.S. 307, 312, n. 11, 58 S.Ct. 913, 916, 82 L.Ed. 1365, 117 A.L.R. 429; see comments on American Mfg. Co. v. St. Louis, n. 4, supra. 12 Mo.Rev.Stat. § 9836 (1919), Mo.R.S.A. § 5113: '* * * Every corporation, not organized under the laws of this state, and engaged in business in this state, shall pay an annual franchise tax to the state of Missouri equal to one-tenth of one per cent. of the par value of its capital stock and surplus employed in business in this state * * *.' 13 The opinion evoked a dissent by Justice Brandeis which pointed out that: 'The tax assailed is not laid upon the occupation * * *'; nor 'upon the privilege of doing business.' 266 U.S. pages 567, 568, 45 S.Ct. 187, 69 L.Ed. 439. The Justice concluded that 'a tax is not a direct burden merely becauses it is laid upon an indispensable instrumentality of such commerce,' but that the contrary is true 'where it is upon property moving in interstate commerce.' 266 U.S. Page 569, 45 S.Ct. 189, 69 L.Ed. 439. Compare Ozark with Atlantic Lumber Co. v. Comm'r, 298 U.S. 553, 56 S.Ct. 887, 80 L.Ed. 1328. The Ozark case has had a long history in this Court. Since 288 U.S., it has not been cited in a manner pertinent to our present issue, except to be distinguished, sometimes narrowly. In Helson v. Kentucky, 279 U.S. 245, 249, 49 S.Ct. 279, 280, 73 L.Ed. 683, and State Tax Commission v. Interstate Natural Gas Co., 284 U.S. 41, 43, 52 S.Ct. 62, 76 L.Ed. 156, it was cited with approval for the proposition that a state cannot lay a tax on the occupation or the business of carrying on interstate commerce. In Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U.S. 218, 53 S.Ct. 373, 77 L.Ed. 710, Ozark was relied upon to hold unconstitutional a state tax upon a corporation which was qualified to do intrastate business within the state but which in fact did only an interstate business. Cardozo, J., joined by Brandeis, J., and Stone, J., dissented on the ground that the tax could be supported as a tax laid upon the privilege to do intrastate business. Ozark was next before the Court in Virginia v. Imperial Coal Co., supra, a case involving a tax on tangible and intangible property situated and used within the state to carry on an exclusively interstate business. In that case it was distinguished on the ground that an ad valorem property tax, and not a privilege tax, was before the Court. In Atlantic Lumber Co. v. Comm'r, 298 U.S. 553, 56 S.Ct. 887, 80 L.Ed. 1328, involving an excise tax on corporations doing business within Massachusetts, Ozark was again distinguished, this time on the ground that the Lumber Co. was engaged in local activities within the state and, therefore, that the burden imposed upon its interstate commerce was remote and incidental. Again, in Southern Gas Corp. v. Alabama, 301 U.S. 148, 57 S.Ct. 696, 81 L.Ed. 970, Ozark was found to be inapposite because of factual differences. Southern Gas ruled upon the constitutionality of a tax assessed on the basis of the same tax that was before this Court in Anglo-Chilean Nitrate Sales Corp. v. Alabama, supra. The state tax was held constitutional by the Southern Gas case as a tax exacted for the privilege of doing an intrastate business by a company in fact engaging in intrastate business in Alabama. 14 Miss.Gen.Laws (1930), ch. 88, § 3: 'Every person desiring to engage in any business, or exercise any privilege hereinafter specified, shall first, before commencing same, apply for, pay for, and procure from the proper officer a privilege license authorizing him to engage in the business, or exercise the privilege specified therein; and the amount of tax shown in the following schedules is hereby imposed for the privilege of engaging and/or continuing in the businesses set out therein.' Id., § 163: 'Upon each person engaging and/or continuing in this state in the business of operating a pipe line or transporting in or through this state oil, or natural, or artificial gas, through pipes, and/or conduits, a tax, as follows: (On each mile a varying tax that depended upon the diameter of the pipe).' 15 The same rationale has led this Court at times to declare invalid similar taxes on foreign corporations, admitted to do business in a state and doing only an interstate business through activities within the state. The leading decisions supporting this view (Cheney Brothers Co. v. Massachusetts, 246 U.S. 147, 38 S.Ct. 295, 62 L.Ed. 632, and Alpha Portland Cement Co. v. Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69 L.Ed. 916, 44 A.L.R. 1219) have been strictly limited. Atlantic Lumber Co. v. Commissioner, 298 U.S. 553, 56 S.Ct. 887, 80 L.Ed. 1328; cf. Southern Gas Corporation v. Alabama, supra, 301 U.S. at page 156, 57 S.Ct. 699, 81 L.Ed. 970, and dissent in Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U.S. 218, 229, at 237, 53 S.Ct. 373, 376, 379, 77 L.Ed. 710. In the Cheney case an excise tax for the privilege of doing business in Massachusetts of an unapportioned percentage of its authorized capital stock (Mass.Acts, 1909, c. 490, Part III, § 56) was invalidated as being wholly on interstate commerce although it maintained 'in Boston a selling office with one office salesman and four other salesmen who travel through New England. The salesmen solicit and take orders, subject to approval by the home office in Connecticut, and it ships directly to the purchasers. No stock of goods is kept in the Boston office, but only samples used in soliciting and taking orders. Copies and records of orders are retained, but no bookkeeping is done, and the office makes no collections. The salesmen and the office rent are paid directly from Connecticut and the other expenses of the office are paid from a small deposit kept in Boston for the purpose. No other business is done in the state.' 246 U.S. Page 153, 38 S.Ct. 296, 62 L.Ed. 632. In the Alpha Portland case where, on the assumption that the taxpayer had obtained a right to do business in the state, under similar circumstances an unapportioned excise on the privilege to do business in Massachusetts was invalidated because a burden on commerce. 16 St. Louis S.W.R. Co. v. Arkansas, 235 U.S. 350, 362, 35 S.Ct. 99, 102, 59 L.Ed. 265; Southern Gas Corp. v. Alabama, supra, 301 U.S. at 153, 57 S.Ct. 698, 81 L.Ed. 970, First; Skiriotes v. Florida, 313 U.S. 69, 79, 61 S.Ct. 924, 930, 85 L.Ed. 1193; Caldarola v. Eckert, 332 U.S. 155, 158, 67 S.Ct. 1569, 1570, 91 L.Ed. 1968. 17 See note 11, supra. 18 This Court said, 266 U.S. at 565, 45 S.Ct. 186, 69 L.Ed. 439: 'The business actually carried on by appellant was exclusively in interstate commerce. The maintenance of an office, the purchase of supplies, employment of labor, maintenance and operation of telephone and telegraph lines and automobiles, and appellant's other acts within the state, were all exclusively in furtherance of its interstate business, and the property itself, however extensive o of whatever character, was likewise devoted only to that end. They were the means and instrumentalities by which that business was done and in no proper sense constituted, or contributed to, the doing of a local business.' See also Heyman v. Hays, 236 U.S. 178, 185, 35 S.Ct. 403, 404, 59 L.Ed. 527. 19 Cleveland C.C. & St. L.R. Co. v. Backus, 154 U.S. 439, 445, 14 S.Ct. 1122, 1124, 38 L.Ed. 1041: 'The rule of property taxation is that the value of the property is the basis of taxation. It does not mean a tax upon the earnings which the property makes, nor for the privilege of using the property, but rests solely upon the value. But the value of property results from the use to which it is put, and varies with the profitableness of that use, present and prospective, actual and anticipated. There is no pecuniary value outside of that which results from such use. The amount and profitable character of such use determines the value, and, if property is taxed at its actual cash value, it is taxed upon something which is created by the uses to which it is put.' See also Northwest Airlines v. Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283, 153 A.L.R. 245; Adams Express Co. v. Ohio, 165 U.S. 194, 17 S.Ct. 305, 41 L.Ed. 683; Western Union Tel. Co. v. Massachusetts, 125 U.S. 530, 8 S.Ct. 961, 31 L.Ed. 790. 20 In the Union Brokerage case we dealt not with an annual tax on franchises or licenses but with a state's single exaction from a foreign corporation for the right to use the courts of the state. The company was a customhouse broker engaged wholly in thus earning fees by "charges upon the commerce itself," 322 U.S. page 209, 64 S.Ct. 972, 88 L.Ed. 1227. There were incidental activities in the state in furtherance of this main purpose, 322 U.S. page 208, 64 S.Ct. 971, 88 L.Ed. 1227: 'Union's business is localized in Minnesota, it buys materials and services from people in that State, it enters into business relationships, as this case, a suit against its former president, illustrates, wholly outside of the arrangements it makes with importers or exporters.' 1 See McLeod v. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304; General Trading Co. v. Tax Comm'n, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309; International Harvester Co. v. Dept. of Treasury, 322 U.S. 340, separate opinion, id. 349, 64 S.Ct. 1019, 1023, 88 L.Ed. 1313; Freeman v. Hewit, 329 U.S. 249, concurring opinion at 259, 67 S.Ct. 274, 280, 91 L.Ed. 265. 2 See 322 U.S. at 352, 353, 64 S.Ct. 1032, 88 L.Ed. 1309; Nippert v. Richmond, 327 U.S. 416, 423, 424, 66 S.Ct. 586, 589, 590, 90 L.Ed. 760, 162 A.L.R. 844. 3 See Miss.Code § 9313 (1942), imposing a comparable tax, of identical amount, upon companies organized under Mississippi laws. Intrastate business done in the state obviously would be subject to one tax or the other, depending on whether the company doing it were organized under the state's laws or those of another state. 4 The statute, Miss.Code §§ 9313 and 9314 (1942), expressly measures and limits the tax by an amount 'equal to $1.50 of each $1,000.00 or fraction thereof of the value of capital used, invested or employed within this state * * *.' (Emphasis added.) 5 Cf. note 4. Apportionment in itself prevents taxation of extrastate 'events' or portions of the business done, unless the apportionment is itself constitutionally invalid as not reflecting a sufficient approximation to what the state may be entitled, on the facts, to tax. Cf. Stone, C.J., dissenting in Northwest Airlines v. Minnesota, 322 U.S. 292, 315, 316, 64 S.Ct. 950, 961, 962, 88 L.Ed. 1283, 153 A.L.R. 245, and authorities cited. 6 It is, of course, for New York to say whether its tax will be applied upon the apportioned basis permitted by the Court's opinion. There would seem to be little doubt that such an application will be made, in view of the state's alternative argument here for sustaining the tax to that extent in the event its unapportioned application should be found invalid. 7 See Freeman v. Hewit, 329 U.S. 249, 266, 67 S.Ct. 274, 283, 91 L.Ed. 265 (concurring opinion) and authorities cited. That the apportionment in the one case is made in relation to mileage and in the other to the value of capital 'used, invested or employed within this state' is of no significance, since the states have considerable latitude in the selection of fair methods of making apportionment. Cf. note 5. 1 The second paragraph of the stipulation, in full, is as follows: 'That all of the facts stated in said petition are true and no proof of the same shall be required in this cause. The Stipulation that the facts are true shall be limited to the facts stated in the petition and the defendants shall not, by virtue of this Stipulation, be considered or held to have agreed with any of the legal propositions and arguments made by the Memphis Natural Gas Company in said petition as the parties recognize that these legal questions and arguments are for determination by the Court.' 2 The statute defined 'doing business' to 'mean and include each and every act, power or privilege exercised or enjoyed in this State, as an incident to, or by virtue of the powers and privileges acquired by the nature of such organization, whether the form of existence be corporate, associate, joint stock company or common law trust.' Miss.Code, § 9312(1942). 3 Particularly in the light of the substantial taxes paid by the petitioner for such protection to the nine county and city taxing authorities, where nothing else appears in the record except the exaction, this uncontroverted allegation must control over the presumptive inference that might otherwise be drawn in favor of the validity of the State's exaction. This Court, as the special guardian of the Commerce Clause, ought not to indulge in casuistic assumptions that the allegations left uncontroverted by the State do not correspond to the realities of the Mississippi situation.
78
335 U.S. 77 68 S.Ct. 1413 92 L.Ed. 1830 UNITED STATESv.HOFFMAN. No. 97. Argued Oct. 23, 1947. Decided June 21, 1948. Rehearing Denied Oct. 11, 1948. Appeal from the District Court of the United States for the District of Columbia. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for appellant. Mr. Bernard Margolius, of Washington, D.C., for appellee. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 On Feb. 27, 1946, the Price Administrator filed a petition, in the District Court for the District of Columbia, to institute criminal contempt proceedings against appellee. The petition charged appellee with having made numerous sales of used cars at over-ceiling prices in violation of an injunction previously issued by the District Court. A rule to show cause was issued, but was dismissed on motion of the appellee, on the ground that he was entitled to immunity under § 202(g) of the Emergency Price Control Act, 50 U.S.C.A.Appendix, § 922(g), from prosecution for the transactions upon which the petition was founded. D.C., 68 F.Supp. 53. 2 The Government brought this appeal, under the provisions of the Criminal Appeals Act,1 to review the decision of the District Court. The main issue is the same as that presented in the companion case, Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 1375, but two additional minor questions are raised: 3 1. Appellee urges that the appeal was not properly taken by the United States because the Government was not a party to the proceedings in the District Court. The record shows, however, that the litigation was instituted in that court by a petition of the OPA District Enforcement Attorney on behalf of the Price Administrator. When the rule to show cause was issued, the court appointed the United States Attorney and the OPA District Enforcement Attorney as 'attorneys to prosecute the criminal charges contained in the petition filed herein on behalf of the Court and of the United States.' See Rule 42(b) of the Rules of Criminal Procedure, 18 U.S.C.A. following section 687, 327 U.S. 865, 866. Thus the United States was, in any relevant sense, a party to the proceedings, and the appeal was properly brought under the Criminal Appeals Act. See United States v. Goldman, 1928, 277 U.S. 229, 235, 48 S.Ct. 486, 487, 72 L.Ed. 862; Ex parte Grossman, 1925, 267 U.S. 87, 115 et seq., 45 S.Ct. 332, 335, 69 L.Ed. 527, 38 A.L.R. 131. 4 2. The Government mentions a further consideration, not involved in the Shapiro case. The record does not state that the appellee was sworn and produced the records under oath, a condition precedent to the attainment of immunity under a 1906 Amendment, 49 U.S.C. § 48, 49 U.S.C.A. § 48, to the Compulsory Testimony Act of 1893, 49 U.S.C.A. § 46. It is unnecessary to consider this contention both because it does not appear to have been duly raised in the court below, and because the grounds considered and the views set forth in our opinion in the Shapiro case suffice to dispose of this appeal. 5 The decision of the District Court is reversed and the case remanded for further proceedings. 6 Reversed. 7 Mr. Justice FRANKFURTER dissents for the reasons stated in his dissenting opinion in Shapiro v. United States, supra. Mr. Justice JACKSON and Mr. Justice MURPHY dissent for the reasons stated in Mr. Justice JACKSON'S dissenting opinion in Shapiro v. United States, supra. Mr. Justice RUTLEDGE dissents for the reasons stated in his dissenting opinion in Shapiro v. United States, supra. 1 34 Stat. 1246, as amended by 56 Stat. 271, 18 U.S.C.Supp. V, § 682, 18 U.S.C.A. § 682, and by § 238 of the Judicial Code as amended, 28 U.S.C. § 345, 28 U.S.C.A. § 345.
01
335 U.S. 160 68 S.Ct. 1429 92 L.Ed. 1881 LUDECKEv.WATKINS, District Director of Immigration. No. 723. Argued May 3, 4, 1948. Decided June 21, 1948. Rehearing Denied Oct. 11, 1948. See 69 S.Ct. 14. Mr. Kurt G. W. Ludecke pro se. Mr. Stanley M. Silverberg, for Washington, D.C., for respondent. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 The Fifth Congress committed to the President these powers: 2 'Whenever there is a declared war between the United States and any foreign nation or government, or any invasion or predatory incursion is perpetrarted, attempted, or threatened against the territory of the United States by any foreign nation or government, and the President makes public proclamation of the event, all natives, citizens, denizens, or subjects of the hostile nation or government, being of the age of fourteen years and upward, who shall be within the United States and not actually naturalized, shall be liable to be apprehended, restrained, secured, and removed as alien enemies. The President is authorized, in any such event, by his proclamation thereof, or other public act, to direct the conduct to be observed, on the part of the United States, toward the aliens who become so liable; the manner and degree of the restraint to which they shall be subject and in what cases, and upon what security their residence shall be permitted, and to provide for the removal of those who, not being permitted to reside within the United States, refuse or neglect to depart therefrom; and to establish any other regulations which are found necessary in the premises and for the public safety.' (Act of July 6, 1798, 1 Stat. 577, R.S. § 4067, as amended, 40 Stat. 531, 50 U.S.C. § 21, 50 U.S.C.A. § 21.) 3 This Alien Enemy Act has remained the law of the land, virtually unchanged since 1798.1 Throughout these one hundred and fifty years executive interpretation and decisions of lower courts have found in the Act an authority for the President which is now questioned, and the further claim is made that if what the President did comes within the Act, the Congress could not give him such power.2 Obviously these are issues which properly brought the case here. 333 U.S. 865, 68 S.Ct. 785. 4 Petitioner, a German alien enemy,3 was arrested on December 8, 1941, and, after proceedings before an Alien Enemy Hearing Board on January 16, 1942, was interned by order of the Attorney General, deted February 9, 1942.4 Under authority of the Act of 1798, the President, on July 14, 1945, directed the removal from the United States of all alien enemies 'who shall be deemed by the Attorney General to be dangerous to the public pease and safety of the United States.' Proclamation 2655, 10 Fed.Reg. 8947. Accordingly, the Attorney General, on January 18, 1946, ordered petitioner's removal.5 Denial of a writ of habeas corpus for release from detention under this order was affirmed by the court below. 2 Cir., 163 F.2d 143. 5 As Congress explicitly recognized in the recent Administrative Procedure Act, some statutes 'preclude judicial review.' Act of June 11, 1946, § 10, 60 Stat. 237, 243, 5 U.S.C.A. § 1009. Barring questions of interpretation and constitutionality, the Alien Enemy Act of 1798 is such a statute. Its terms, purpose, and construction leave no doubt. The language employed by the Fifth Congress could hardly be made clearer, or be rendered doubtful, by the incomplete and not always dependable accounts we have of debates in the early years of Congress.6 That such was the scope of the Act is established by controlling contemporaneous construction. 'The act concerning alien enemies, which confers on the president very great discretionary powers respecting their persons,' Marshall, C.J., in Brown v. United States, 8 Cranch 110, 126, 3 L.Ed. 504, 'appears to me to be as unlimited as the legislature could make it.' Washington, J., in Lockington v. Smith, 15 Fed.Cas. 758, 761, at page 760, No. 8,448. The very nature of the President's power to order the removal of all enemy aliens rejects the notion that courts may pass judgment upon the exercise of his discretion.7 This view was expressed by Mr. Justice Iredell shortly after the Act was passed, Case of Fries, 9 Fed.Cas. page 826, No. 5,126, and every judge before whom the question has since come has held that the statute barred judicial review.8 We would so read the Act if it came before us without the impressive gloss of history. 6 The power with which Congress vested the President had to be executed by him through others. He provided for the removal of such enemy aliens as were 'deemed by the Attorney General' to be dangerous.9 But such a finding, at the President's behest, was likewise not to be subjected to the scrutiny of courts. For one thing, removal was contingent not upon a finding that in fact an alien was 'dangerous.' The President was careful to call for the removal of aliens 'deemed by the Attorney General to be dangerous.' But the short answer is that the Attorney General was the President's voice and conscience. A war power of the President not subject to judicial review is not transmuted into a judicially reviewable action because the President chooses to have that power exercised within narrower limits than Congress authorized. 7 And so we reach the claim that while the President had summary power under the Act, it did not survive cessation of actual hostilities.10 This claim in effect nullifies the power to deport alien enemies, for such deportations are hardly practicable during the pendency of what is colloquially known as the shooting war.11 Nor does law lag behind common sense. War does not cease with a cease-fire order, and power to be exercised by the President such as that conferred by the Act of 1798 is a process which begins when war is declared but is not exhausted when the shooting stops.12 See United States v. Anderson, 9 Wall. 56 70, 19 L.Ed. 615; The Protector, 12 Wall. 700, 20 L.Ed. 463; McElrath v. United States, 102 U.S. 426, 438, 26 L.Ed. 189; Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 167, 40 S.Ct. 106, 112, 64 L.Ed. 194. 'The state of war' may be terminated by treaty or legislation or Presidential proclamation. Whatever the modes, its termination is a political act.13 Id. Whether and when it would be open to this Court to find that a war though merely formally kept alive had in fact ended, is a question too fraught with gravity even to be adequately formulated when not compelled. Only a few months ago the Court rejected the contention that the state of war in relation to which the President has exercised the authority now challenged was terminated. Woods v. Cloyd W. Miller Co., 333 U.S. 138, 68 S.Ct. 421. Nothing that has happened since calls for a qualification of that view.14 It is still true, as was said in the opinion in that case which eyed the war power most jealously, 'We have armies abroad exercising our war power and have made no peace terms with our allies not to mention our enemies.' Woods v. Cloyd W. Miller Co., supra, 333 U.S. at page 147, 68 S.Ct. at page 425 (concurring opinion). The situation today is strikingly similar to that of 1919, where this Court observed: 'In view of facts of public knowledge, some of which have been referred to, that the treaty of peace has not yet been concluded, that the railways are still under national control by virtue of the war powers, that other war activities have not been brought to a close, and that it cannot even be said that the man power of the nation has been restored to a peace footing, we are unable to conclude that the act has ceased to be valid.' Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. at page 163, 40 S.Ct. at page 111, 64 L.Ed. 194. 8 The political branch of the Government has not brought the war with Germany to and end. On the contrary, it has proclaimed that 'a state of war still exists.' Presidential Proclamation 2714, 34 U.S.C.A. § 366, 12 Fed.Reg. 1; see Woods v. Cloyd W. Miller Co., supra, 333 U.S. at page 140, 68 S.Ct. at page 422; Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 116, 67 S.Ct. 1129, 1132, 91 L.Ed. 1375. The Court would be assuming the functions of the political agencies of the Government to yield to the suggestion that the unconditional surrender of Germany and the disintegration of the Nazi Reich have left Germany without a government capable of negotiating a treaty of peace. It is not for us to question a belief by the President that enemy aliens who were justifiably deemed fit subjects for internment during active hostilities do not lose their potency for mischief during the period of confusion and conflict which is characteristic of a state of war even when the guns are silent but the peace of Peace has not come.15 These are matters of political judgment for which judges have neither technical competence nor official responsibility. 9 This brings us to the final question. Is the statute valid as we have construed it? The same considerations of reason, authority, and history, that led us to reject reading the statutory language 'declared war'16 to mean 'actual hostilities,' support the validity of the statute. The war power is the war power. If the war, as we have held, has not in fact ended, so as to justify local rent control, a fortiori, it validly supports the power given to the President by the Act of 1798 in relation to alien enemies. Nor does it require protracted argument to find no defect in the Act because resort to the courts may be had only to challenge the construction and validity of the statute and to question the existence of the 'declared war,' as has been done in this case.17 The Act is almost as old as the Constitution, and it would savor of doctrinaire audacity now to find the statute offensive to some emanation of the Bill of Rights.18 The fact that hearings are utilized by the Executive to secure an informed basis for the exercise of summary power does not argue the right of courts to retry such hearings, nor bespeak denial of due process to withhold such power from the courts. 10 Such great war powers may be abused, no doubt, but that is a bad reason for having judges supervise their exercise, whatever the legal formulas within which such supervision would nominally be confined. In relation to the distribution of constitutional powers among the three branches of the Government, the optimistic Eighteenth Century language of Mr. Justice Iredell, speaking of this very Act, is still pertinent: 11 'All systems of government suppose they are to be administered by men of common sense and common honesty. In our country, as all ultimately depends on the voice of the people, they have it in their power, and it is to be presumed they generally will choose men of this description; but if they will not, the case, to be sure, is without remedy. If they choose fools, they will have foolish laws. If they choose knaves, they will have knavish ones. But this can never be the case until they are generally fools or knaves themselves, which, thank God, is not likely ever to become the character of the American people.' (Case of Fries, supra, 9 Fed.Cas. at page 836, No. 5,126.) Accordingly, we hold that full responsibility for the just exercise of this great power may validly be left where the Congress has constitutionally placed it—on the President of the United States. The Founders in their wisdom made him not only the Commander-in-Chief but also the guiding organ in the conduct of our foreign affairs. He who was entrusted with such vast powers in relation to the outside world was also entrusted by Congress, almost throughout the whole life of the nation, with the disposition of alien enemies during a state of war. Such a page of history is worth more than a volume of rhetoric.19 12 Judgment affirmed and stay order entered February 2, 1948, vacated. 13 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE join, dissenting. 14 The petition for habeas corpus in this case alleged that petitioner, a legally admitted resident of the United States, was about to be deported from this country to Germany as a 'dangerous' alien enemy, without having been afforded notice and a fair hearing to determine whether he was 'dangerous.' The Court now holds, as the Government argued that because of a presidential proclamation, petitioner can be deported by the Attorney General's order without any judicial inquiry whatever into the truth of his allegations.1 The Court goes further and holds, as I understand its opinion, that the Attorney General can deport him whether he is dangerous or not. The effect of this holding is that any unnaturalized person, good or bad, loyal or disloyal to this country, if he was a citizen of Germany before coming here, can be summarily seized, interned and deported from the United States by the Attorney General, and that no court of the United States has any power whatever to review, modify, vacate, reverse, or in any manner affect the Attorney General's deportation order. Mr. Justice DOUGLAS has given reasons in his dissenting opinion why he believes that deportation of aliens, without notice and hearing, whether in peace or war, would be a denial of due process of law. I agree with Mr. Justice DOUGLAS for many of the reasons he gives that deportation of petitioner without a fair hearing as determined by judicial review is a denial of due process of law.2 But I do not reach the question of power to deport aliens of countries with which we are at war while we are at war, because I think the idea that we are still at war with Germany in the sense contemplated by the statute controlling here is a pure fiction. Furthermore, I think there is no act of Congress which lends the slightest basis to the claim that after hostilities with a foreign country have ended the President or the Attorney General, one or both, can deport aliens without a fair hearing reviewable in the courts. On the contrary, when this very question came before Congress after World War I in the interval between the Armistice and the conclusion of formal peace with Germany, Congress unequivocally required that enemy aliens be given a fair hearing before they could be deported. 15 The Court relies on the Alien Enemy Act of 1798. 1 Stat. 577, 50 U.S.C. §§ 21—24, 50 U.S.C.A. §§ 21—24. That Act did grant extraordinarily broad powers to the President to restrain and 'to provide for the removal' of aliens who owe allegiance to a foreign government, but such action is authorized only 'whenever there is a declared war between the United States' and such foreign government, or in the event that foreign government attempts or threatens the United States with 'any invasion or predatory incursion.' The powers given to the President by this statute, I may assume for my purposes, are sufficiently broad to have authorized the President acting through the Attorney General to deport alien Germans from this country while the 'declared' second World War was actually going on, or while there was real danger of invasion from Germany. But this 1798 statute, unlike statutes passed in later years, did not expressly prescribe the events which would for statutory purposes mark the termination of the 'declared' war or threatened invasions. See Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 165, note 1, 40 S.Ct. 106, 111, 64 L.Ed. 194. In such cases we are called on to interpret a statute as best we can so as to carry out the purpose of Congress in connection with the particular right the statute was intended to protect, United States v. Anderson, 9 Wall. 56, 69, 70, 19 L.Ed. 615; The Protector, 12 Wall. 700, 702, 20 L.Ed. 463, or the particular evil the statute was intended to guard against. McElrath v. United States, 102 U.S. 426, 437, 438, 26 L.Ed. 189. See Judicial Determination of the End of the War, 47 Col.L.Rev. 255. 16 The 1798 Act was passed at a time when there was widespread hostility to France on the part of certain groups in the United States. It was asserted by many that France had infiltrated this country with spies preaching 'subversive' ideas and activities. Mr. Otis, the chief congressional spokesman for the measure, expressed his fears of '* * * a band of spies * * * spread through the country from one end of it to the other who in case of the introduction of an enemy into our country' might join the enemy 'in their attack upon us, and in their plunder of our property * * *.' Annals of Congress, 5th Cong., 2d Sess. 1791. Congressional discussions of this particular measure appear at pp. 1573—1582, 1785—1796, and 2034—2035, Annals of Congress, 5th Cong., 2d Sess.,3 and show beyond any reasonable doubt that the Alien Enemy Act of 1798 was intended to grant its extraordinary powers only to prevent alien enemies residing in the United States from extending aid and comfort to an enemy country while dangers from actual fighting hostilities were imminently threatened. Indeed, Mr. Otis, who was most persistent in his expressions of anti-French sentiments and in his aggressive sponsorship of this and its companion Alien and Sedition Acts, is recorded as saying '* * * that in a time of tranquility, he should not desire to put a power like this into the hands of the Executive; but, in a tim of war, the citizens of France ought to be considered and treated and watched in a very different manner from citizens of our own country.' Annals of Congress, 5th Cong., 2d Sess. 1791. And just before the bill was ordered to be read for its third time, Mr. Gallatin pointed out that the Alien Act had already made it possible for the President to remove all aliens, whether friends or enemies; he interpreted the measure here under consideration, aimed only at alien enemies, as providing 'in what manner they may be laid under certain restraints by way of security.' For this reason he supported this bill. Annals of Congress, 5th Cong., 2d Sess. 2035. 17 German aliens could not now, if they would, aid the German Government in war hostilities against the United States. For as declared by the United States Department of State, June 5, 1945, the German armed forces on land and sea had been completely subjugated and had unconditionally surrendered. 'There is no central Government or authority in Germany capable of accepting responsibility for the maintenance of order, the administration of the country and compliance with the requirements of the victorious Powers.' And the State Department went on to declare that the United States, Russia, Great Britain, and France had assumed 'supreme authority with respect to Germany, including all the powers possessed by the German Government, the High Command, and any state, municipal, or local government or authority.' 12 State Dept.Bull. 1051. And on March 17, 1948, the President of the United States told the Congress that 'Almost three years have passed since the end * * *' of the war with Germany. See Court opinion, note 15. 18 Of course it is nothing but a fiction to say that we are now at war with Germany.4 Whatever else that fiction might support, I refuse to agree that it affords a basis for today's holding that our laws authorize the peacetime banishment of any person on the judicially unreviewable conclusion of a single individual. The 1798 Act did not grant its extraordinary and dangerous powers to be used during the period of fictional wars. As previously pointed out, even Mr. Otis, with all of his fervent support of anti-French legislation, repudiated the suggestion that the Act would vest the President with such dangerous powers in peacetime. Consequently, the Court today gives the 1798 Act a far broader meaning than it was given by one of the most vociferous champions of the 1798 series of anti-alien and anti-sedition laws. 19 Furthermore, the holding today represents an entirely new interpretation of the 1798 Act. For nearly 150 years after the 1798 Act there never came to this Court any case in which the Government asked that the Act be interpreted so as to allow the President or any other person to deport alien enemies without allowing them access to the courts. In fact, less than two months after the end of the actual fighting in the first Word War, Attorney General Gregory informed the Congress that, although there was power to continue the internment of alien enemies after the cessation of actual hostilities and until the ratification of a peace treaty, still there was no statute under which they could then be deported.5 For this reason the Attorney General requested Congress to enact new legislation to authorize deportation of enemy aliens at that time. The bill thereafter introduced was endorsed by both the Attorney General and the Secretary of Labor in a joint letter in which they asked that it be given 'immediate consideration' in view of the 'gravity of this situation.' Hearings before the House Committee on Immigration and Naturalization on H.R. 6750, 66th Cong., 1st Sess. 42—43. Several months later Attorney General Palmer submitted substantially the same statements to the House and Senate Committees on Immigration. H.R.Rep. 143, 66th Cong., 1st Sess. 2; S.Rep. 283, 66th Cong., 1st Sess. 2. See also Report of the Attorney General, 1919, 25—28. 20 A bill to carry out the recommendations of the Wilson administration was later passed, 41 Stat. 593 (1920), 8 U.S.C.A. § 157, but not until it had been amended on the floor of the House of Representatives to require that all alien enemies be given a fair hearing before their deportation. 58 Cong.Rec. 3366. That a fair hearing was the command of Congress is not only shown by the language of the Act but by the text of the congressional hearings, by the committee reports and by congressional debates on the bill. In fact, the House was assured by the ranking member of the Committee reporting the bill that in hearings to deport alien enemies under the bill 'a man is entitled to have counsel present, entitled to subpoena witnesses and summon them before him and have a full hearing, at which the stenographer's minutes must be taken.' 58 Cong.Rec. 3373. See also 3367 and 3372. Congress therefore after the fighting war was over authorized the deportation of interned alien enemies only if they were 'given a full hearing, as in all cases of deportation under existing laws.' H.R.No. 143, 66th Cong., 1st Sess. 2. 21 This petitioner is in precisely the same status as were the interned alien enemies of the first World War for whom Congress specifically required a fair hearing with court review as a prerequisite to their deportation. Yet the Court today sanctions a procedure whereby petitioner is to be deporte without any determination of his charge that he has been denied a fair hearing. The Court can reach such a result only by rejecting the interpretation of the 1798 Act given by two Attorney Generals, upon which Congress acted in 1920. It is held that Congress and the two Attorney Generals of the Wilson administration were wrong in believing that the 1798 Act did not authorize deportation of interned enemy aliens after hostilities and before a peace treaty. And in making its novel interpretation of the 1798 Act the Court today denies this petitioner and others the kind of fair hearing that due process of law was intended to guarantee. See The Japanese Immigrant Case (Kaoru Yamataya v. Fisher), 189 U.S. 86, 100, 101, 23 S.Ct. 611, 614, 47 L.Ed. 721, read and explained on the floor of the House of Representatives at 58 Cong.Rec. 3373, read into the House Committee hearings, supra at 19—20, and quoted in part in note 2 of Mr. Justice DOUGLAS' dissenting opinion. 22 The Court's opinion seems to fear that Germans if now left in the United States might somehow 'have a potency for mischief' even after the complete subjugation and surrender of Germany, at least so long as the 'peace of Peace has not come.' This 'potency for mischief' can of course have no possible relation to apprehension of any invasion by or war with Germany. The apprehension must therefore be based on fear that Germans now residing in the United States might emit ideas dangerous to the 'peace of Peace.' But the First Amendment represents this nation's belief that the spread of political ideas must not be suppressed. And the avowed purpose of the Alien Enemy Act was not to stifle the spread of ideas after hostilities had ended.6 Others in the series of Alien and Sedition Acts did provide for prison punishment of people who had or at least who dared to express political ideas.7 I cannot now agree to an interpretation of the Alien Enemy Act which gives a new life to the long repudiated anti-free speech and anti-free press philosophy of the 1798 Alien and Sedition Acts. I would not disinter that philosophy which the people have long hoped Thomas Jefferson had permanently buried when he pardoned the last person convicted for violation of the Alien and Sedition Acts. 23 Finally, I wish to call attention to what was said by Circuit Judge Augustus Hand in this case speaking for himself and Circuit Judges Learned Hand and Swan, before whom petitioner argued his own cause. Believing the deportation order before them was not subject to judicial review, they saw no reason for discussing the '* * * nature or weight of the evidence before the Repatriation Hearing Board, or the finding of the Attorney General * * *.' But they added: 'However, on the face of the record it is hard to see why the relator should now be compelled to go back. Of course there may be much not disclosed to justify the step; and it is of doubtful propriety for a court ever to express an opinion on a subject over which it has no power. Therefore we shall, and should, say no more than to suggest that justice may perhaps be better satisfied if a reconsideration be given him in the light of the changed conditions, since the order of removal was made eighteen months ago.' 2 Cir., 163 F.2d at page 144. 24 It is not amiss, I think, to suggest my belief that because of today's opinion individual liberty will be less secure tomorrow than it was yesterday. Certainly the security of aliens is lessened, particularly if their ideas happen to be out of harmony with those of the governmental authorities of a period. And there is removed a segment of judicial power to protect individual liberty from arbitrary action, at least until today's judgment is corrected by Congress8 or by this Court. 25 Mr. Justice DOUGLAS, with whom Mr. Justice MURPHY and Mr. Justice RUTLEDGE, concur, dissenting. 26 I do not agree that the sole question open on habeas corpus is whether the petitioner is in fact an alien enemy.1 That delimitation of the historic writ is a wholly arbitrary one. I see no reason for a more narrow range of judicial inquiry here than in habeas corpus arising out of any other deportation proceeding. 27 It is undisputed that in peacetime an alien is protected by the due process clause of the Ff th Amendment. Wong Wing v. United States, 163 U.S. 228, 16 S.Ct. 977, 41 L.Ed. 140. Federal courts will then determine through habeas corpus whether or not a deportation order is based upon procedures affording due process of law. United States ex rel. Vajtauer v. Commissioner, 273 U.S. 103, 106, 47 S.Ct. 302, 303, 71 L.Ed. 560. In deportation proceedings due process requires reasonable notice (Tisi v. Tod, 264 U.S. 131, 134, 44 S.Ct. 260, 261, 68 L.Ed. 590), a fair hearing (Bridges v. Wixon, 326 U.S. 135, 156, 65 S.Ct. 1443, 1453, 89 L.Ed. 2103; Chin Yow v. United States, 208 U.S. 8, 12, 28 S.Ct. 201, 202, 52 L.Ed. 369; Low Wah Suey v. Backus, 225 U.S. 460, 32 S.Ct. 734, 56 L.Ed. 1165), and an order supported by some evidence. Vajtauer v. Commissioner, supra, 273 U.S. page 106, 47 S.Ct. at page 303, 71 L.Ed. 560; Zakonaite v. Wolf, 226 U.S. 272, 274, 33 S.Ct. 31, 32, 57 L.Ed. 218. And see Kwock Jan Fat v. White, 253 U.S. 454, 40 S.Ct. 566, 64 L.Ed. 1010. 28 The rule of those cases is not restricted to instances where Congress itself has provided for a hearing. The Japanese Immigrant Case (Kaoru Yamataya v. Fisher), 189 U.S. 86, 23 S.Ct. 611, 47 L.Ed. 721, decided in 1903, so held. The Court in that case held that due process required that deportation be had only after notice and hearing even though there, as here, the statute prescribed no such procedure but entrusted the matter wholly to an executive officer.2 Consistently with that principle we held in Bridges v. Wixon, supra, that a violation of the rules governing the hearing could be reached on habeas corpus, even though the rules were prescribed not by Congress but by the administrative agency in charge of the deportation proceeding. We stated, 326 U.S. page 154, 65 S.Ct. page 1452, 89 L.Ed. 2103, 29 'We are dealing here with procedural requirements prescribed for the protection of the alien. Though deportation is not technically a criminal proceeding, it visits a great hardship on the individual and deprives him of the right to stay and live and work in this land of freedom. That deportation is a penalty—at times a most serious one—cannot be doubted. Meticulous care must be exercised lest the procedure by which he is deprived of that liberty not meet the essential standards of fairness.' 30 The same principles are applicable here. The President has classified alien enemies by regulations of general applicability and has authorized deportation only of those deemed dangerous because they have adhered to an enemy government, or the principles thereof. Petitioner was in fact given a hearing in 1945 before the Repatriation Hearing Board in addition to one in 1942 before the Alien Enemy Hearing Board. The order for his deportation recites that 'upon consideration of the evidence presented' before those Boards, the Attorney General, in the words of the Proclamation, dees petitioner 'to be dangerous to the public peace and safety of the United States because he has adhered to a government with which the United States is at war or to the principle thereof.' Those findings and conclusions and the procedure by which they were reached must conform with the requirements of due process. And habeas corpus is the time-honored procedure to put them to the test. 31 The inquiry in this type of case need be no greater an intrusion in the affairs of the Executive branch of government than inquiries by habeas corpus in times of peace into a determination that the alien is considered to be an 'undesirable resident of the United States.' See Mahler v. Eby, 264 U.S. 32, 44 S.Ct. 283, 68 L.Ed. 549. Both involve only a determination that procedural due process is satisfied, that there be a fair hearing, and that the order be based upon some evidence. 32 The needs of the hour may well require summary apprehension and detention of alien enemies. A nation at war need not be detained by time-consuming procedures while the enemy bores from within. But with an alien enemy behind bars, that danger has passed. If he is to be deported only after a hearing, our constitutional requirements are that the hearing be a fair one. It is foreign to our thought to defend a mock hearing on the ground that in any event it was a mere gratuity. Hearings that are arbitrary and unfair are no hearings at all under our system of government. Against them habeas corpus provides in this case the only protection. 33 The notion that the discretion of any officer of government can override due process is foreign to our system. Due process does not perish when war comes. It is well established that the war power does not remove constitutional limitations safeguarding essential liberties. Home Building & Loan Ass'n v. Blaisdell, 290 U.S. 398, 426, 54 S.Ct. 231, 235, 78 L.Ed. 413, 88 A.L.R. 1481. 1 There have been a few minor changes in wording. We have duly considered these in light of an argument in the brief of the amici curiae and deem them without significance. 2 We are advised that there are 530 alien enemies, ordered to depart from the United States, whose disposition awaits the outcome of this case. 3 The district court found that: 'The petitioner was born in Berlin, Germany, on February 5, 1890. He was out f Germany for most of the period of 1923 to March 1933. He returned to Germany in March 1933 and became a member of the Nazi party. Later he had some disagreements with other members and as a result he was sent to a German concentration camp, from which he escaped March 1, 1934, after being confined for over eight months. Sometime thereafter he came to this country and published a book, 'I Knew Hitler' ('The Story of a Nazi Who Escaped The Blood Purge'—'In memory of Captain Ernst Roehm and Gregor Strasser and many other Nazis who were betrayed, murdered, and traduced in their graves'), in 1937. His petition for naturalization as an American citizen was denied December 18, 1939.' The petitioner's attitude was thus expressed in his brief before the district court: 'Fundamentally, it matters not where I live, for I can strive to live the right life and be of service where ever I am. Besides, it may well be a better thing to do the best I can while I can in the midst of a defeated people suffering in body and soul, than to be a futile and frustrated something in the midst of a triumphant people breathing the foul air of self-complacency, hypocrity, and self-deceit.' 4 No question has been raised as to the validity of these administrative actions taken pursuant to Presidential Proclamation 2526, dated December 8, 1941, 6 Fed.Reg. 6323, issued under the authority of the Alien Enemy Act. 5 The order recited that the petitioner was deemed dangerous on the basis of the evidence adduced at hearings before the Alien Enemy Hearing Board on January 16, 1942, and the Repatriation Hearing Board on December 17, 1945. The district court which examined these proceedings found that petitioner had notice and a fair hearing and that the evidence was substantial. See also note 8, infra. 6 See, however, United States ex rel. Kessler v. Watkins, 2 Cir., 163 F.2d 140; Citizens Protective League v. Clark, 81 U.S.App.D.C. 116, 155 F.2d 290. 7 'Such a construction would, in my opinion, be at variance with the spirit as well as with the letter of the law, the great object of which was to provide for the public safety, by imposing such restraints upon alien enemies, as the chief executive magistrate of the United States might think necessary, and of which his particular situation enabled him best to judge. * * * I do not feel myself authorised to impose limits to the authority of the executive magistrate which congress, in the exercise of its constitutional powers, has not seen fit toi mpose. Nothing in short, can be more clear to my mind, from an attentive consideration of the act in all its parts, than that congress intended to make the judiciary auxiliary to the executive, in effecting the great objects of the law; and that each department was intended to act independently of the other, except that the former was to make the ordinances of the latter, the rule of its decisions.' Lockington v. Smith, supra, 15 Fed.Cas. at page 761, No. 8,448. 8 Citizen's Protective League v. Clark, 81 U.S.App.D.C. 116, 155 F.2d 290; United States ex rel. Schlueter v. Watkins, 2 Cir., 158 F.2d 853; United States ex rel. Hack v. Clark, 7 Cir., 159 F.2d 552; United States ex rel. Kessler v. Watkins, 2 Cir., 163 F.2d 140; United States ex rel. Von Ascheberg v. Watkins, 2 Cir., 163 F.2d 1021; Minotto v. Bradley, D.C., 252 F. 600; see Lockington's Case, Brightly, N.P., Pa., 269, 280; Lockington v. Smith, 15 F.Cas. page 758, No. 8,448; Ex parte Graber, D.C., 247 F. 882; De Lacey v. United States, 9 Cir., 249 F. 625, L.R.A.1918E, 1011; Ex parte Fronklin, D.C., 253 F. 984; Grahl v. United States, 7 Cir., 261 F. 487; cf. Banning v. Penrose, D.C., 255 F. 159; Ex parte Risse, D.C., 257 F. 102; Ex parte Gilroy, D.C., 257 F. 110; United States ex rel. De Cicco v. Longo, D.C., 46 F.Supp. 170; United States ex rel. Schwarzkopf v. Uhl, 2 Cir., 137 F.2d 898; United States ex rel. D'Esquiva v. Uhl, 2 Cir., 137 F.2d 903; United States ex rel. Knauer v. Jordan, 7 Cir., 158 F.2d 337. The one exception is the initial view taken by the district court in this case. It rejected the 'contention that the only question that the Court may consider in this habeas corpus proceeding is the petitioner's alien enemy status, although there are cases which give support to that view,' but held the petitioner had had a fair hearing before the Repatriation Board and that there was substantial evidence to support the Attorney General's determination that petitioner was 'dangerous.' On rehearing, the court noted that the Schlueter case, supra, foreclosed the issue. 9 If the President had not added this express qualification, but had conformed his proclamation to the statutory language, presumably the Attorney General would not have acted arbitrarily but would have utilized some such implied standard as 'dangerous' in his exercise of the delegated power. 10 'The cessation of hostilities does not necessarily end the war power. It was stated in Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 161, 40 S.Ct. 106, 110, 64 L.Ed. 194, that the war power includes the power 'to remedy the evils which have arisen from its rise and progress' and continues during that emergency. Stewart v. Kahn, 11 Wall. 493, 507, 20 L.Ed. 176. Whatever may be the reach of that power, it is plainly adequate to deal with problems of law enforcement which arise during the period of hostilities but do not cease with them. No more is involved here.' Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 116, 67 S.Ct. 1129, 1132, 91 L.Ed. 1375. 11 The claim is said to be supported by the legislative history of the Act. We do not believe that the paraphrased expressions of a few members of the Fifth Congress could properly sanction at this late date a judicial reading of the statutory phrase 'declared war' to mean 'state of actual hostilities.' See p. 3, supra. Nothing needs to be added to the consideration which this point received from the court below in the Kessler case. Circuit Judge Augustus Hand, in this case speaking for himself and Circuit Judges L. Hand and Swan, said: 'Appellants' counsel argues that the Congressional debates preceding the enactment of the Alien Law of 1798 by Gallatin, Otis and others, show that Congress intended that 'war' as used in the Alien Enemy Act should be war in fact. We cannot agree that the discussions had such an effect. Gallatin argued that Section 9 of Art. I of the Constitution allowing to the states the free 'Migration or Importation' of aliens until 1808 might stand in the way of the Act as proposed if it was not limited to a 'state of actual hostilities.' It however was not so limited in the text of the act and it is hard to see how the failure to limit it in words indicated a disposition on the part of Congress to limit it by implication. Otis objected to limiting the exercise of the power to a state of declared war because he thought that the President should have power to deal with enemy aliens in the case of hostilities short of war and in cases where a war was not declared. That Otis wished to add 'hostilities' to the words 'declared war,' and failed in his attempt, does o t show that Congress meant that when war was declared active hostilities must exist in order to justify the exercise of the power. The questions raised which were dealt with in the act as finally passed were not how long the power should last when properly invoked, but the conditions upon which it might be invoked. Those conditions were fully met in the present case and no question is raised by appellants' counsel as to the propriety of the President's Proclamation of War. There is no indication in the debates or in the terms of the statute that the exercise of the power, when properly invoked, should cease until peace was made, and peace has not been made in the present case. If the construction of the statute contended for by appellants' counsel were adopted, the Executive would be powerless to carry out internment or deportation which was not exercised during active war and might be obliged to leave the country unprotected from aliens dangerous either because of secrets which they possessed or because of potential inimical activities. It seems quite necessary to suppose that the President could not carry out prior to the official termination of the declared state of war, deportations which the Executive regarded as necessary for the safety of the country but which could not be carried out during active warfare because of the danger to the aliens themselves or the interference with the effective conduct of military operations.' United States ex rel. Kessler v. Watkins, 2 Cir., 163 F.2d at pages 142, 143. 12 It is suggested that a joint letter to the Chairman of a congressional committee by Attorney General Gregory and the Secretary of Labor in the Wilson administration reflects a contrary interpretation of this Act. But, as the Kessler opinion pointed out: 'The letter of Attorney General Gregory referred to by appellants' counsel does not affect our conclusions. When he said that there was no law to exclude aliens he was, in our opinion, plainly referring to conditions after the ratification of the peace treaty, and not to prior conditions.' 163 F.2d 143. The text of the letter (dated Feb. 5, 1919) supports that observation: 'There is no law now on the statute books under which these persons can be excluded from the country, nor under which they can be detained in custody after the ratification of the peace treaty. Unless the bill introduced by you, or one similar in character is passed it will become necessary on the ratification of peace to set free all of these highly dangerous persons.' Hearings before the House Committee on Immigration and Naturalization on H.R. 6750, 66th Cong., 1st Sess., 42—43. And Attorney General Palmer made substantially the same statements to the Senate and House Committees on Immigration. See S.Rep. No. 283, 66th Cong., 1st Sess., 2; H.R.Rep. No. 143, 66th Cong., 1st Sess., 2. But even if contradictory views were expressed by Attorney General Gregory, they plainly reflect political exigencies which from time to time guide the desire of an administration to secure what in effect is confirming legislation. The confusion of views is strikingly manifested by Attorney General Gregory's recognition that the Act survived the cessation of actual hostilities so as to give authority to apprehend, restrain, and secure enemy aliens. See, generally, World War I cases cited note 8, supra. In any event, even if one view expressed by Attorney General Gregory, as against another expressed by him, could be claimed to indicate a deviation from an otherwise uniformly accepted construction of the Act before us, it would hardly touch the true meaning of the statute. United States ex rel. Hirshberg v. Malanaphy, 168 F.2d 503, opinion denying petition for rehearing, United States Circuit Court of Appeals for the Second Circuit, June 2, 1948. As against the conflicting views of one Attorney General we have not only the view but the actions of the present Attorney General and of the President and their ratification by the present Congress. See note 19, infra. 13 Of course, there are statutes which have r ovisions fixing the date of the expiration of the war powers they confer upon the Executive. See, e.g., Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 167, note 1, 40 S.Ct. 106, 112, 64 L.Ed. 194 (collection of statutes providing that the authority terminates upon ratification of treaty of peace or by Presidential proclamation). Congress can, of course, provide either by a day certain or a defined event for the expiration of a statute. But when the life of a statute is defined by the existence of a war, Congress leaves the determination of when a war is concluded to the usual political agencies of the Government. 14 Cf., e.g., the President's address to Congress on March 17, 1948, recommending the enactment of the European recovery program, universal military training, and the temporary reenactment of selective service legislation. H.Doc.No.569, 80th Cong., 2d Sess. On May 10, 1948, by Executive Order 9957, 13 Fed.Reg. 2503, the President exercised his authority 'in time of war, * * * through the Secretary of War, to take possession and assume control of any system or systems of transportation * * *.' Act of August 29, 1916, 39 Stat. 619, 645, 10 U.S.C. § 1361, 10 U.S.C.A. § 1361. 15 'Rapid changes are taking place in Europe which affect our foreign policy and our national security. * * * Almost 3 years have passed since the end of the greatest of all wars, but peace and stability have not returned to the world.' H.Doc.No.569, supra, at p. 1. 16 We should point out that it is conceded that a 'state of war' was 'formally declared' against Germany. Act of December 11, 1941, 55 Stat. 796, 50 U.S.C.A.Appendi, note preceding section 1. 17 The additional question as to whether the person restrained is in fact an alien enemy fourteen years of age or older may also be reviewed by the courts. See cases cited note 8, supra. This question is not raised in this case. 18 The Fifth Congress was also responsible for 'An Act concerning Aliens,' approved June 25, 1798, 1 Stat. 570, and 'An Act in addition to the act, entitled 'An act for the punishment of certain crimes against the United States," approved July 14, 1798, 1 Stat. 596, as well as the instant 'An Act respecting Alien Enemies,' approved July 6, 1798. It is significant that while the former statutes—the Alien and Sedition Acts—were vigorously and contemporaneously attacked as unconstitutional, there was never any issue raised as to the validity of the Alien Enemy Act. James Madison, in his report on the Virginia Resolutions, carefully and caustically differentiated between friendly and enemy alien legislation, as follows: 'The next observation to be made is, that much confusion and fallacy have been thrown into the question by blending the two cases of aliens, members of a hostile nation, and aliens, members of friendly nations. * * * With respect to alien enemies, no doubt has been intimated as to the Federal authority over them; the Constitution having expressly delegated to Congress the power to declare war against any nation, and, of course, to treat it and all its members as enemies.' 6 Writings of James Madison (Hunt, Editor) 360, 361. Similarly, Thomas Jefferson, the author of the Kentucky Resolutions of 1798 and 1799, was careful to point out that the Alien Act under attack was the one 'which assumes power over alien friends.' 8 Writings of Thomas Jefferson (Ford, Editor) 466. There was never any questioning of the Alien Enemy Act of 1798 by either Jefferson or Madison nor did either ever suggest its repeal. 19 It is suggested that Congress ought to do something about correcting today's decision. But the present Congress has apparently anticipated the decision. It has recognized that the President's powers under the Alien Enemy Act of 1798 were not terminated by the cessation of actual hostilities by appropriating funds '* * * for all necessary expenses, incident to the maintenance, care, detention, surveillance, parole, and transportation ofa lien enemies and their wives and dependent children, including transportation and other expenses in the return of such persons to place of bona fide residence or to such other place as may be authorized by the Attorney General * * *.' Pub.L. 166, 80th Cong., 1st Sess., approved July 9, 1947, 61 Stat. 279, 292. 'And the appropriation by Congress of funds for the use of such agencies stands as confirmation and ratification of the action of the Chief Executive. Brooks v. Dewar, 313 U.S. 354, 361, 61 S.Ct. 979, 982, 85 L.Ed. 1399.' Fleming v. Mohawk Wrecking & Lumber Co., 331 U.S. 111, 116, 67 S.Ct. 1129, 1132, 91 L.Ed. 1375; see also Isbrandtsen-Moller Co. v. United States, 300 U.S. 139, 57 S.Ct. 407, 81 L.Ed. 562. 1 The Court specifically holds that this petitioner is not entitled to have this Court or any other court determine whether petitioner has had a fair hearing. The merits of the Attorney General's action are therefore not subject to challenge by the petitioner. Nevertheless the court in note 3 quotes out of context a short paragraph from a written protest made by petitioner against the Attorney General's procedure. The only possible purpose of this quotation is to indicate that, anyhow, the petitioner ought to be deported because of his views stated in this paragraph of his protest against the Attorney General's procedure. This is a strange kind of due process. The protest pointed out that Hitler had kept petitioner in a concentration camp for eight months for disloyalty to the Nazis and that this Government had then kept him imprisn ed for four years on the charge that he was a Nazi. Immediately before the paragraph cited in the Court's opinion, petitioner's protest contained the following statement: 'Far be it from me, however, to thrust my goodwill upon anybody and insist to stay on a community whose public servants of ill will seek to remove me by pitiful procedures and illegal means. Therefore, I propose that I leave voluntarily as a free man, not as a dangerous alien deportee, at the earliest opportunity provided I shall be allowed sixty days to settle my affairs before sailing date.' Is it due judicial process to refuse to review the whole record to determine whether there was a fair hearing and yet attempt to bolster the Attorney General's deportation order by reference to two sentences in a long record? 2 Compare Ex parte Mitsuye Endo, 323 U.S. 283, 65 S.Ct. 208, 89 L.Ed. 243; Korematsu v. United States, 323 U.S. 214, 65 S.Ct. 193, 89 L.Ed. 194. 3 In addition to the above discussions of the Alien Enemy Act, frequent references to the Act were made in the congressional debates on the Alien Act, 1 Stat. 570, and the Sedition Act, 1 Stat. 596, both of which were passed within two weeks of the adoption of the Alien Enemy Act. These references appear in many places in the Annals of Congress, 5th Cong., 2d Sess. See e.g., 1973—2028. 4 The Court cites Woods v. Cloyd W. Miller Co., 333 U.S. 138, 68 S.Ct. 421, as having held that the war with Germany has not yet terminated. I find no such holding in the opinion and no language that even suggests such a holding. We there dealt with the constitutional war powers of Congress, whether all those powers are necessarily nonexistent when there are no actual hostilities. Decision of that question has hardly even a remote relevancy to the meaning of the 1798 Alien Enemy Act. The Court today also seeks to support its judgment by a quotation from a concurring opinion in the Woods case, supra. But the concurring opinion cited was that of a single member of the Court. 5 In a letter addressed to the Chairman of the House Committee on Immigration and Naturalization dated January 9, 1919, Attorney General Gregory explained that a number of German subjects who had 'been interned pursuant to section 4067 of the Revised Statutes' (section 1 of the Alien Enemy Act of 1798), were still held in custody. He then stated: 'The authority given by the President to regulate the conduct of enemy aliens during the existence of the war, in my opinion, could not properly be used at this time to bring about the deportation of these aliens. There is now, therefore, no law under which these persons can be expelled from the country nor, if once out of it, prevented from returning to this country. I have, therefore, caused to be prepared the inclosed draft of a proposed bill, the provisions of which are self-explanatory.' (Italics added.) H.Rep.No.1000, 65th Cong., 3d Sess. 1—2. This position of the Attorney General that there then was no power under existing law to deport enemy aliens was reiterated by representatives of the Attorney General in hearings before the House Committee on Immigration and Naturalization on the bill enacted into law. Hearings on H.R. 6750, 66th Cong., 1st Sess. 3—21. In conformity with this interpretation of the 1798 Alien Enemy Act the Wilson administration did not attempt to deport interned alien enemies under the 1798 Act after the Armistice and before Congress by statute expressly authorized such deportations as requested by the two Attorney Generals. Report of the Attorney General 1919, 25—28. 6 As a justification for its interpretation of the 1798 Act the Court appears to adopt the reasons advanced by the Second Circuit Court of Appeals in United States ex rel. Kessler v. Watkins, 2 Cir., 163 F.2d 140, 143, decided in 1947. That Court emphasized the difficulty of deportation of alien enemies during the time of actual hostility 'because of the danger to the aliens themselves or the interference with the effective conduct of military operations.' This reasoning would of course be persuasive if the object of the 1798 statute had been punishment of the alien enemies, but the whole legislative history shows that such was not the purpose of the Act. Hence the Act cannot be construed to authorize the deportation of an enemy alien after the war is over as punishment. Furthermore, the purpose of deportation, so far as it was authorized (if authorized) under the 1798 Act, was not to protect the United States from ideas of aliens after a war or threatened invasion but to protect the United States against sabotage, etc., during a war or threatened invasion. Nevertheless, the Circuit Court of Appeals thought that without its interpretation 'the Executive would be powerless to carry out internment or deportation which was not exercised during active war and might be obliged to leave the country unprotected from aliens dangerous either because of secrets which they possessed or because of potential inimical activities.' But after a war is over the only 'inimical activities' would relate to peacetime governmental matters—not the type of conduct which concerned those who passed the Alien Enemy Act. Moreover, it is difficult to see why it would endanger this country to keep aliens here 'because of secrets which they possess.' Ad of course the executive is not powerless to send dangerous aliens out of this country, even if the 1798 Act does not authorize their deportation, for there are other statutes which give broad powers to deport aliens. There is this disadvantage to the Government, however, in connection with the other deportation statutes—they require a hearing and the executive would not have arbitrary power to send them away with or without reasons. 7 See Bowers, Jefferson and Hamilton, 1925, c. XVI, 'Hysterics,' and c. XVII, 'The Reign of Terror'; 1 Morison, Life of Otis, c. VIII, 'A System of Terror.' 8 It is suggested in the Court's opinion that Congress by appropriating funds in 1947 to 'return' alien enemies to their 'bona fide residence or to such other place as may be authorized by the Attorney General' has already approved the Attorney General's interpretation of the 1798 Act as authorizing the present deportation of alien enemies without affording them a fair hearing. But no such strained inference can be drawn. Congress did not there or elsewhere express a purpose to deny these aliens a fair hearing after the war was over. Until it does so, I am unwilling to attribute to the Congress any such attempted violation of the constitutional requirement for due process of law. 1 See United States ex rel. Schlueter v. Watkins, D.C., 67 F.Supp. 556, affirmed 2 Cir., 158 F.2d 853; United States v. Longo, D.C., 46 F.Supp. 170; United States v. Uhl, D.C., 46 F.Supp. 688, reversed on other grounds, 2 Cir., 137 F.2d 858; Ex parte Gilroy, D.C., 257 F. 110; Banning v. Penrose, D.C., 255 F. 159; Ex parte Fronklin, D.C., 253 F. 984; Minotto v. Bradley, D.C., 252 F. 600. Cf. Citizens Protective League v. Clark, 81 U.S.App.D.C. 116, 155 F.2d 290; DeLacey v. United States, 9 Cir., 249 F. 625, L.R.A.1918E, 1011. In the Schlueter case it was held that the Constitution and the statute do not require a hearing and thus an alien enemy cannot complain of the character of the hearing he did receive. 67 F.Supp. at page 565. 2 The Court said, 189 U.S. page 101, 23 S.Ct. page 614, 47 L.Ed. 721: '* * * no person shall be deprived of his liberty without opportunity, at some time, to be heard, before such officers, in respect of the matters upon which that liberty depends,—not necessarily an opportunity upon a regular, set occasion, and according to the forms of judicial procedure, but one that will secure the prompt, vigorous action contemplated by Congress, and at the same time be appropriate to the nature of the case upon which such officers are required to act. Therefore, it is not competent for the Secretary of the Treasury or any executive officer, at any time within the year limited by the statute, arbitrarily to cause an alien who has entered the country, and has become subject in all respects to its jurisdiction, and a part of its population, although alleged to be illegally here, to be taken into custody and deported without giving him all opportunity to be heard upon the questions involving his right to be and remain in the United States. No such arbitrary power can exist where the principles involved in due process of law are recognized.'
12
335 U.S. 1 68 S.Ct. 1375 92 L.Ed. 1787 SHAPIROv.UNITED STATES. No. 49. Argued Oct. 23, 1947. Decided June 21, 1948. Rehearing Denied Oct. 11, 1948. [Syllabus from pages 1-3 intentionally omitted] Mr. Bernard Tomson, of New York City, for Petitioner. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 Petitioner was tried on charges of having made tie-in sales in violation of regulations under the Emergency Price Control Act.1 A plea in bar, claiming immunity from prosecution based on § 202(g)2 of the Act, was overruled by the trial judge; judgment of conviction followed and was affirmed on appeal, 2 Cir., 159 F.2d 890. A contrary conclusion was reached by the district judge in United States v. Hoffman, 335 U.S. 77, 68 S.Ct. 1413. Because this conflict involves an important question of statutory construction, these cases were brought here and heard together. Additional minor considerations involved in the Hoffman case are dealt with in a separate opinion. 2 The petitioner, a wholesaler of fruit and produce, on September 29, 1944, was served with a subpoena duces tecum and ad testificandum issued, by the Price Administrator, under authority of the Emergency Price Control Act. The subpoena directed petitioner to appear before disignated enforcement attorneys of the Office of Price Administration and to produce 'all duplicate sales invoices, sales books, ledgers, inventory records, contracts ad records relating to the sale of all commodities from September 1st, 1944, to September 28, 1944.' In compliance with the subpoena, petitioner appeared and, after being sworn, was requested to turn over the subpoenaed records. Petitoner's counsel inquired whether petitioner was being granted immunity 'as to any and all matters for information obtained as a result of the investigation and examination of these records.' The presiding official stated that the 'witness is entitld to whatever immunity which flows as a matter of law from the production of these books and records which are required to be kept pursuant to M.P.R.'s 271 and 426.'3 Petitioner thereupon produced the records, but claimed constitutional privilege. 3 The plea in bar alleged that the name of the purchaser in the transactions involved in the information appeared in the subpoenaed sales invoices and other similar documents. And it was alleged that the Office of Price Administration had used the name and other unspecified leads obtained from these documents to search out evidence of the violations, which had occurred in the preceding year. 4 The Circuit Court of Appeals ruled that the records which petitioner was compelled to produce were records required to be kept by a valid regulation under the Price Control Act; that thereby they became public documents, as to which no constitutional privilege against self-incrimination attaches; that accordingly the immunity of § 202(g) did not extend to the production of these records and the plea in bar was properly overruled by the trial court. 2 Cir., 159 F.2d 890. 5 It should be observed at the outset that the decision in the instant case turns on the construction of a compulsory testimony-immunity provision which incorporates by reference the Compulsory Testimony Act of 1893. This provision, in conjunction with broad record-keeping requirements, has been included not merely in a temporary wartime measure but also, in substantially the same terms, in virtually all of the major regulatory enactments of the Federal Government.4 6 It is contended that a broader construction of the scope of the immunity provision than that approved by the Circuit Court of Appeals would be more consistent with the congressional aim, in conferring investigatory powers upon the Administrator, to secure prompt disclosure of books and records of the private enterprises subjected to OPA regulations. In support of this contention, it is urged that the language and legislative history of the Act indicate nothing more than that § 202 was included for the purpose of 'obtaining information' and that nothing in that history throws any light upon the scope of the immunity afforded by subsection(g). We cannot agree with these contentions. For, thr language of the statute and its legislative history, viewed against the background of settled judicial construction of the immunity provision, indicate that Congress required records to be kept as a means of enforcing the statute and did not intend to frustrate the use of those records for enforcement action by granting an immunity bonus to individuals compelled to disclose their required records to the Administrator. 7 The very language of § 202(a) discloses that the record-keeping and inspection requirements were designed not merely to 'obtain information' for assistance in prescribing regulations or orders under the statute, but also to aid 'in the administration and enforcement of this Act and regulations, orders, and price schedules thereunder.'5 8 The legislative history of § 202 casts even stronger light on the meaning of the words used in that section. On July 30, 1941, the President of the United States, in a message to Congress, requested price-control legislation conferring effective authority to curb evasion and bootlegging.6 Two days later the Price Control Bill was introduced in the House by Representative Steagall, and referred to the Committee on Banking and Currency. 9 As introduced, and as reported out of the Committee on November 7, 1941, the bill included broad investigatory, record-keeping, licensing, and other enforcement powers to be exercised by the Administrator.7 While it was before the House, Representative Wolcott on November 28, 1941, offered as a substitute for § 201 a series of amendments, one of which authorized the Administrator 'to subpoena documents and witnesses for the purpose of obtaining information in respect to the establishment of price ceilings, and a review of price ceilings.'8 This amendment was adopted. Thereupon Representative Wolcott moved to strike out as 'redundant' the much broader and far more rigorous provisions in the bill (§ 202), which authorized the Administrator to 'require the making and keeping of records and other documents and making of reports,' and to 'obtain or require the furnishing of such information under oath or affirmation or otherwise, as he deems necessary or proper to assist him in prescribing any regulation or order under this act, and in the administration and enforcement of the act, and regulations and orders thereunder.'9 This amendment too was accepted by the House.10 10 It is significant to note that the Senate Committee on Banking and Currency began its consideration of the bill on December 9, 1941, the day after Congress declared the existence of a state of war between this country and the Imperial Government of Japan. Appearing before the Senate Committee in this wartime setting, the proponents of the original measure requested and secured the restoration of the enforcement powers which the House had stricken.11 They asserted that a major aspect of the investigatory powers contained in the bill as originally drafted was to enable the Administrator to ferret out violations and enforce the law against the violators.12 And it was pointed out that in striking down the authority originally given the Administrator in the committee bill to require the maintenance of records, the House had substantially stripped him of his investigatory and enforcement powers, 'because no investigatory power can be effective without the right to insist upon the maintenance of records. By the simple device of failing to keep records of pertinent transactions, or by destroying or falsifying such records, a person may violate the Act with impunity and little fear of detection. Especially is this true in the case of price-control legislation, which operates on many diverse industries and commodities, each industry having its own trade practices and methods of operation. 11 'The House bill also deprives the Administrator of the power to require reports and to make inspections and to copy documents. By this deprivation the Administrator's supervision over the operation of the act is rendered most difficult. He has no expeditious way of checking on compliance. He is left without ready power to discover violations. 12 'It should not be forgotten that the statute to be administered is an emergency statute. To put teeth into the Price Control Act, it is imperative that the Administrator's investigatory powers be strong, clear, and well adapted to the objective * * *.'13 13 Emphasis was placed on the restoration of licensing provisions, which the House had deleted from the Price Control Bill as originally drafted. The General Counsel for the OPA contended that licensing was the backbone of enforcement of price schedules and regulations.14 The World War I prototype of the Price Control Act, the Lever Act, had contained authority for the President to license the distribution of any necessaries whenever deemed essential 'in order to carry into effect any of the purposes of this Act * * *.'15 It was pointed out that 'The general licensing regulations prescribed under the Lever Act, applicable to all licensees, required the making of reports (rule 1), the permitting of inspection (rule 2), and the keeping of records (rule 3).'16 And it was noted that licensing had been employed in connection with the fuel provisions of the Act 'as a method of obtaining information, of insuring universal compliance, and of enforcing refunds of overcharges and the payment of penalty charges to war charities.'17 By licensing middlemen, 'Violations were readily discovered by examination of the records which each licensee was required to submit.'18 14 With this background,19 Congress restored licensing powers to the Administrator in the Price Control Bill as enacted, § 205, 50 U.S.C.A.App. § 925(f), 50 U.S.C.A.Appendix, § 925(f) and provided for the suspension by court action of the license of any person found to have violated any of the provisions of the license or price schedules or other requirements. Nonretail fruit dealers, including petitioner in the present case, were licensed under § 9a of Maximum Price Regulation No. 426, 8 F.R. 16411 (1943). 15 It is difficult to believe that Congress, whose attention was invited by the proponents of the Price Control Act to the vital importance of the licensing, recordkeeping and inspection provisions in aiding effetive enforcement of the Lever Act, could possibly have intended § 202(g) to proffer a 'gratuity to crime' by granting immunity to custodians of non-privileged records. Nor is it easy to conceive that Congress could have intended private privilege to attach to records whose keeping it authorized the Administrator to require on the express supposition that it was thereby inserting 'teeth' into the Price Control Act since the Administrator, by the use of such records, could readily discover violations, check on compliance, and prevent violations from being committed 'with impunity.' 16 In conformance with these views, the bill as passed by Congress empowered the Administrator to require the making and keeping of records by all persons subject to the statute, and to compel, by legal process, oral testimony of witnesses and the production of documents deemed necessary in the administration and enforcement of the statute and regulations. It also included the immunity proviso, subsection (g) of § 202, as to which no special attention seems to have been paid in the debates, although it was undoubtedly included, as it had been in other statutes, as a 'usual administrative provision,'20 intended to fulfill the purpose customarily fulfilled by such a provision. 17 The inescapable implications of the legislative history related above concerning the other subsections of § 202 would appear to be that Congress did not intend the scope of the statutory immunity to be so broad as to confer a bonus for the production of information otherwise obtainable. 18 Moreover, there is a presumption that Congress, in reenacting the immunity provision of the 1893 Act, was aware of the settled judicial construction of the statutory immunity. In adopting the language used in the earlier act, Congress 'must be considered to have adopted also the construction given by this Court to such language, and made it a part of the enactment.'21 That judicial construction is made up of the doctrines enunciated by this Court in spelling out the non-privileged status of records validly required by law to be kept, in Wilson v. United States, 1911, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771, Ann.Cas.1912D, 558, and the inapplicability of immunity provisions to non-privileged documents, in Heike v. United States, 1914, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.1914C, 128. 19 In the former case, Wilson, the president of a corporation, was required by subpoena to produce the corporate books in his custody before a grand jury. He appeared before the grand jury but refused to deliver up the records on the ground that their contents would tend to incriminate him, and claimed privilege under the Fifth Amendment. On review in this Court of the judgment committing him for contempt, Wilson based his defense in part on the theory that he would have been protected in his constitutional privilege against self-incrimination had he been sworn as a witness, and that the government's failure to permit him to be sworn could not deprive him of such protection.22 This argument was disposed of by the Court simply on the ground that a corporate officer has no such constitutional privilege as to corporate records in his possession, even though they contain entries made by himself which disclose his crim. Mr. Justice Hughes, announcing the opinion of the Court, based the decision on the reasoning (which this Court recently cited with approval, in Davis v. United States, 1946, 328 U.S. 582, 589, 590, 66 S.Ct. 1256, 1259, 90 L.Ed. 1453), that 20 'the physical custody of incriminating documents does not of itself protect the custodian against their compulsory production. The question still remains with respect to the nature of the documents and the capacity in which they are held. It may yet appear that they are of a character which subjects them to the scrutiny demanded and that the custodian has voluntarily assumed a duty which overrides his claim of privilege. * * * The principle applies not only to public documents in public offices, but also to records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established. There the privilege which exists as to private papers cannot be maintained.'23 21 As illustrations of documents meeting this 'required records' test, the Court cited with approval state supreme court decisions that business records kept under requirement of law by private individuals in unincorporated enterprises were "public documents, which the defendant was required to keep, not for his private uses, but for the benefit of the public, and for public inspection."24 The non-corporate records treated as public in those cases concerned such individuals as druggists required by statute to keep a record of all sales of intoxicating liquors.25 The corporate and non-corporate businesses required by the Price Control Act to keep records embrace a much greater number of enterprises than those similarly regulated by the states and municipalities. But, since it is conceded that the increased scope of regulation under the wartime measure here involved does not render that Act unconstitutional, the rquired records doctrine which this Court approved as applied to non-corporate businessmen in the state cases would appear equally applicable in the case at bar. 22 In the Heike case, this Court, per Holmes, J., laid down a standard for the construction of statutory immunity provisos which clearly requires affirmance of the decision of the circuit court here: '* * * the obvious purpose of the statute is to make evidence available and compulsory that otherwise could not be got. We see no reason for supposing that the act offered a gratuity to crime. It should be construed, so far as its words fairly allow the construction, as coterminous with what otherwise would have been the privilege of the person concerned.'26 In view of the clear rationale in Wilson, taken together with the ruling in Heike as to how statutory immunity provisos should be construed, the conclusion seems inevitable that Congress must have intended the immunity proviso in the Price Control Act to be coterminous with what would otherwise have been the constitutional privilege of petitioner in the case at bar. Since he could assert no valid privilege as to the required records here in question, he was entitled to no immunity under the statute thus viewed. 23 The traditional rule that re-enactment of a statute creates a presumption of legislative adoption of previous judicial construction may properly be applied here, since the Court in Heike regarded the 1903 immunity statute, 49 U.S.C.A. § 47, there construed as identical, in policy and in the scope of immunity furnished, with the Compulsory Testimony Act of 1893, which has been reenacted by incorporation into the Price Control Act. 24 In addition, scrutiny of the precise wording of § 202(g) of the latter statute indicates that the draftsmen of that section went to some pains to ensure that the immunity provided for would be construed by the courts as being so limited. The construction adopted in the Heike decision was rendered somewhat difficult because neither the Compulsory Testimony Act of 1893 nor the immunity proviso in the 1903 Act made any explicit reference to the constitutional privilege against self-incrimination, with whose scope the Court nonetheless held the immunity to be coterminous. Section 202(g), on the other hand, follows a pattern set by the e curities Act of 1933, 15 U.S.C.A. § 77a et seq., and expressly refers to that privilege, thus apparently seeking to make it doubly certain that the courts would construe the immunity there granted as no broader than the privilege: 25 'No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 * * * shall apply with respect to any individual who specifically claims such privilege.' 26 A comparison of the precise wording of § 202(g) with the wording of immunity provisions contained in earlier statutes27 readily suggests one function intended by the drafters of § 202(g) to be performed by the additional phrases expressly referring to 'privilege'—viz., that of underlining the legislative intention of requiring an exchange of constitutional privilege for immunity, an intent which the Court had previously thought discernable even in the less obvious terms used by the drafters of the earlier statutes. Thus the immunity provisions of the Compulsory Testimony Act can be relied upon here only if the two prerequisites set forth in § 202(g) are satisfied: (1) that the person seeking to avail himself of the immunity could actually have been excused, in the absence of this section from complying with any of its requirements because of his constitutional privilege against self-incrimination, and (2) that the person specifically claim such privilege. Obviously if prerequisite (1) is not fulfilled, the mere fact that the person specifically claims a non-existent privilege was not intended by Congress to entitle him to the benefit of the immunity. And this is so whether the statute be construed with particular reference to its grammer, its historical genesis, or its rational function. 27 Petitioner does not deny that the actual existence of a genuine privilege against self-incrimination is an absolute prerequisite for the attainment of immunity under § 202(g) by a corporate officer who has been compelled by subpoena to produce requiredr ecords; and that, under the Heike ruling, the assertion of a claim to such a privilege in connection with records which are in fact non-privileged is unavailing to secure immunity, where the claimant is a corporate officer. But, while conceding that the statute should be so construed where corporate officials are concerned, the petitioner necessarily attributes to Congress the paradoxical intention of awarding immunity in exchange for a claim of privilege as to records of a claimant engaged in non-corporate business, though his business is similarly subjected to governmental price control, and its required records are, under the Wilson rationale, similarly non-privileged. 28 The implausibility of any such interpretation of congressional intent is highlighted by the unquestioned fact that Congress provided for price regulations enforcible against unincorporated entrepreneurs as well as corporate industry. It is also unquestionable that Congress, to ensure that violations of the statute should not go unpunished, required records to be kept of all relevant buying and selling transactions by all individual and corporate business subject to the statute. If these aspects of congressional intention be conceded, it is most difficult to comprehend why Congress should be assumed to have differentiated sub silentio, for purposes of the immunity proviso, between records required to be kept by individuals and records required to be kept by corporations. Such an assumption carries with it the incongruous result that individuals forced to produce records required to be kept for the Administrator's inspection and use in enforcing the price regulations, would be given a bonus of immunity if engaged in non-corporate business, thus rendering the records of non-corporate enterprise virtually useless for enforcement purposes,28 whereas individuals disclosing the very same type of required records but engaged in corporate enterprise, would not be given that bonus. In effect, this is to say that Congress intended the immunity proviso to frustrate a major aim of its statutory requirement of record-keeping and record inspection so far as it applies to non-corporate business men, but not so far as it applies to corporate officers.29 29 It is contended that to construe the immunity proviso as we have here is to devitalize, if not render meaningless, the phrase 'any requirements'30 which appears in the opening clause of § 202(g): 'No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination * * *.' It is urged that, since § 202 includes among its requirements the furnishing of information under oath, the making and keeping of records and reports, the inspection and copying of records and other documents, and the appearing and testifying or producing of documents, the immunity provided must cover compliance with any one of these requirements. The short answer to that contention is that the immunity provided does cover compliance with any of these requirements as to which a person would have been excused from compliance because of his privilege, were it not for the statutory grant of immunity in exchange for such privilege.31 The express language of the proviso, as well as its historical background, readily suggests this reasonable interpretation. Even those who oppose this interpretation must and do concede that Congress had no intention of removing the excuse of privilege where the privilege is absent from the outset because the records whose production is ordered and concerning which privilege is asserted are corporate records. If this concession is made, surely logic as well as history requires a similar reading of the proviso in connection with validly required non-corporate records, as to which privilege is similarly absent from the outset. 30 If the contention advanced against our interpretation be valid, the Court must have erred in its construction of the immunity proviso in the Heike case. For, the 1893 Act, 49 U.S.C.A. § 46, which it was in effect construing, provides that, 'No person shall be excused from attending and testifying or from producing books, papers, tariffs, contracts, agreements, and documents before the Interstate Commerce Commission * * * for the reason that the testimony or evidence, documentary or otherwise, required of him, may tend to criminate him or subject him to a penalty or forfeiture. But no person shall be prosecuted * * * for or on account of any transaction * * * concerning which he may testify, or produce evidence, documentary or otherwise * * *'. Thus the immunity part of the 1893 statute extended to any documentary as well as oral testimony concerning which there might be a claim of privilege. And included among the documents which the immunity-seeker might be compelled to produce were records maintained by common carriers in compliance with the requirements of the Interstate Commerce Act,32 and hence obviously within the definition of public records set forth in the Wilson and Heike decisions. If the reasoning advanced against the interpretation of § 202(g) we have proposed were valid, then it might equally well be contended that the Court in the Heike decision devitalized, if not rendered meaningless, the phrase, 'documentary or otherwise' in the immunity section of the 1893 Act. 31 Actually, neither the interpretation as applied in the Heike decision nor as expounded here renders meaningless any of the words in the immunity provision. In each case, the immunity proviso is set forth in conjunction with record-keeping requirements. And in each case, where the immunity provided concerns documents whose production might otherwise be excused on the ground of privilege, the documents referred to are and writings whose keeping as records has not been required by valid statute or regulation. Of course all oral testimony by individuals can properly be compelled only by exchange of immunity in return for privilege.33 32 The Court in the Heike case was confronted with the further contention that the 1903 immunity statute, which was immediately before him, had been passed when 'there was an imperious popular demand that the inside working of the trusts should be investigated, and that the people and Congress cared so much to secure the necessary evidence that they were willing that some guilty persons should escape, as that reward was necessary to the end.'34 In the light of the express statements in the legislative history of the Price Control Act as to the enforcement role of the investigatory powers, such an argument would hardly be tenable in the present case. Yet even in the Heike case where such an argument had some elements of plausibility, the Court had no difficulty in rejecting it in favor of the Government's contention that 'the statute should be limited as nearly as may be by the boundaries of the consitutional privilege of whih it takes the place.'35 33 As a final answer, an understanding of the 1893 immunity provision, based on its full historical context, should suffice to explain the limited function contemplated by Congress in incorporating that provision into the 1942 statute. The 1893 provision was enacted merely to provide an immunity sufficiently broad to be an adequate substitute for the constitutional privilege, since previous statutory provision for immunity had been found by the Court in Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, not to be coextensive with the privilege, thus rendering unconstitutional the statutory requirements for compulsory production of privileged documents and oral testimony.36 34 The suggestion has been advanced that the scope of the immunity intended by Congress should be ascertained, not by reference to the judicial and legislative history considered above, but by reference to the principle expounded in Federal Trade Commission v. American Tobacco Co., 1924, 264 U.S. 298, 307, 44 S.Ct. 336, 338, 68 L.Ed. 696, 32 A.L.R. 786, of construing a broad grant of statutory authority so as to avoid attributing to Congress 'an intent to defy the Fourth Amendment or even to come so near to doing so as to raise a serious question of constitutional law.' 35 It is interesting to not that Congress, in enacting the Price Control Bill, apparently did intend to rely upon the principle of American Tobacco in circumstances similar to those in which that principle was originally applied: Namely, to insure that the power of inspection or examination would not conflict with the prohibition against unreasonable searches and seizures contained in the Fourth Amendment. Senator Brown, who was chairman of the sub-committee on the Price Control Bill and one of the managers on the part of the Senate appointed to confer with the House managers on the Senate amendments, expressly stated it to be the view of the conferees that § 202(a), which contained broad authorization to the Administrator to 'obtain such information as he deems necessary or proper to assist him' in his statutory duties, was intended solely to empower the Administrator to 'obtain relevant data to enable him properly to discharge his functions, preferably by requiring the furnishing of information under oath or affirmation or otherwise as he may determine. It is not intended, nor is any other provision of the Act intended, to confer any power of inspection or examination which might conflict with the Fourth Amendment of the Constitution of the United States. See opinion of Justice Holmes in Federal Trade Commission v. American Tobacco Co., 264 U.S. 298, 307, 44 S.Ct. 336, 337, 68 L.Ed. 696, 32 A.L.R. 786.'37 36 It was the abuse of the subpoena power to obtain irrelevant data in the course of a 'fishing expedition' with which the Court was concerned in that case. It is clear that if the Administrator sought to obtain data irrelevant to the effective administration of the statute and if his right of access was challenged on the ground that the evidence sought was 'plainly incompetent or irrelevant to any lawful purpose of the Administrator,'38 that objection could sustain a refusal by the district court to issue a subpoena or other writ to compel inspection. But there is no indication in the legislative history that Congress intended the American Tobacco principle of construction to govern the immunity proviso of subsection (g), particularly since the scope of that proviso had been so well demarcated by the courts prior to its 1942 re-enactment. And it is not insignificant that the one rule of construction which this Court has, in the past, directly and expressly applied to the immunity proviso—that 'It should be construed, so far as its words fairly allow the construction, as coterminous with what otherwise would have been the privilege of the person concerned'39—was enunciated by Mr. Justice Holmes, who gave no sign of repudiating that principle by his subsequent statements in the American Tobacco case. 37 Even if the evidence of congressional intent contained in the legislative history were less clear-cut and persuasive, and constitutional doubts more serious than they appear to us, we sould still be unconvinced as to the applicability of the American Tobacco standard to the construction of the immunity proviso in relation to documentary evidence which is clearly and undeniably relevant, and the recording and keeping of which the Administrator has properly required in advance. For, in construing statutory immunities in such circumstances, we must heed the equally well-settled doctrine of this Court to read a statute, assuming that it is susceptible of either of two opposed interpretations, in the manner which effectuates rather than frustrates the major purpose of the legislative draftsmen. The canon of avoidance of constitutional doubts must, like the 'plain meaning' rule, give way where its application would produce a futile result, or an unreasonable result 'plainly at variance with the policy of the legislation as a whole.'40 In the present case, not merl y does the construction put forward by the petitioner frustrate the congressional intent as manifested by the legislative history, but it also shuts out the illumination that emanates from key words and phrases in the section when considered, as above, in the context of the history of the Compulsory Testimony Act of 1893, and the construction that had been placed upon it and similar provisos, prior to its incorporation into the Price Control Act. 38 There remains for consideration only the question as to whether serious doubts of constitutionality are raised if the Price Control Act is thus construed. This issue was not duly raised by petitioner, and it becomes relevant, if at all, only because such doubts are now said to be present if the immunity proviso is interpreted as set forth above. 39 It may be assumed at the outset that there are limits which the government cannot constitutionally exceed in requiring the keeping of records which may be inspected by an administrative agency and may be used in prosecuting statutory violations committed by the record-keeper himself. But no serious misgiving that those bounds have been overstepped would appear to be evoked when there is a sufficient relation between the activity sought to be regulated and the public concern so that the government can constitutionally regulate or forbid the basic activity concerned, and can constitutionally require the keeping of particular records, subject to inspection by the Administrator. It is not questioned here that Congress has constitutional authority to prescribe commodity prices as a war emergency measure, and that the licensing and record-keeping requirements of the Price Control Act represent a legitimate exercise of that power.41 Accordingly, the principle enunciated in the Wilson case, and reaffirmed as recently as the Davis case, is clearly applicable here: namely, that the privilege which exists as to private papers cannot be maintained in relation to 'records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established.'42 40 Even the dissenting Justices in the Davis case conceded that 'there is an important difference in the constitutional protection afforded their possessors between papers exclusively private and documents having public aspects,'43 a difference whose essence is that the latter papers, 'once they have been legally obtained, are available as evidence.'44 In the case at bar, it cannot be doubted that the sales record which petitioner was required to keep as a licensee under the Price Control Act has 'public aspects.' Nor can there be any doubt that when it was obtained by the Administrator through the use of subpoena, as authorized specifically by § 202(b) of the statute, it was 'legally obtained' and hence 'available as evidence.'45 The record involved in the case at bar was a sales record required to be maintained under an appropriate regulation, its relevance to the lawful purpose of the Administrator is unquestioned, and the transaction which it recorded was one in which the petitioner could lawfully engage solely by virtue of the license granted to him under the statute.46 41 In the view that we have taken of the case, we find it unnecessary to consider the additional contention by the government that, in any event, no immunity attaches to the production of the books by the petitioner because the connection between the books and the evidence produced at the trial was too tenuous to justify the claim. 42 For the foregoing reasons, the judgment of the Circuit Court of Appeals is affirmed. 43 Affirmed. 44 Mr. Justice FRANKFURTER, dissenting. 45 The Court this day decides that when Congress prescribes for a limited Governmental purpose, enforceable by appropriate sanctions, the form in which some records are to be kept, not by corporations but by private individuals, in what in everyday language is a private and not a Governmental business, Congress thereby takes such records out of the protection of the Constitution against self-incrimination and search and seizure. Decision of constitutional issues is at times unavoidable. But in this case the Court so decides when it is not necessary. The Court makes a drastic break with the past in disregard of the settled principle of constitional adjudication not to pass on a constitutional issue—and here a grave one involving basic civil liberties—if a construction that does no violence to the English language permits its avoidance. This statute clearly permits it.1 Instead, the Court goes on the assumption that an immunity statute must be equated with the privilege, although only recently the Court attributed to Congress a gratuitous grant of immunity where concededly the Constitution did not require it, under circumstances far less persuasive than the statutory language and the policy underlying it. See United States v. Monia, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376. 46 Instead of respecting 'serious doubts of constitutionality' by giving what is at least an allowable construction to the Price Control Act which legitimately avoids these doubts, the Court goes outo f its way to make a far-reaching pronouncement on a provision of the Bill of Rights. In an almost cursory fashion, the Court needlessly decides that all records which Congress may require individuals to keep in the conduct of their affairs, because they fall within some regulatory power of Government, become 'public records' and thereby, ipso facto, fall outside the protection of the Fifth Amendment that no person 'shall be compelled in any criminal case to be a witness against himself.' 47 In reaching out for a constitutional adjudication, especially one of such moment, when a statutory solution avoiding it lay ready at hand, the Court has disregarded its constantly professed principle for the proper approach toward congressional legislation. 'When the validity of an act of the Congress is drawn in question, and even if a serious doubt of constitutionality is raised, it is a cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided.' Crowell v. Benson, 285 U.S. 22, 62, 52 S.Ct. 285, 296, 76 L.Ed. 598, quoted by Mr. Justice Brandeis with supporting citations in Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 348, note 8, 56 S.Ct. 466, 484, 80 L.Ed. 688. And see, generally, for duty to avoid constitutional adjudication, Rescue Army v. Municipal Court, 331 U.S. 549, 568 et seq., 67 S.Ct. 1409, 1419, 91 L.Ed. 1666. 48 Departure from a basic canon of constitutional adjudication is singularly uncalled for in a case such as this, where the statute not only permits a construction avoiding constitutional considerations but on fair reading requires it. 49 In conferring powers of investigation upon the Administrator, Congress designed to secure the promptest disclosure of the books and records of the millions of private enterprises subjected to the regulations of the Office of Price Administration. The would contradict that vital aim to attribute to Congress the conflicting purpose of hampering the free flow of knowledge contained in businessmen's books by inviting controversies regarding still undetermined claims of privilege under the Fifth Amendment, in the absence of an expression of such propose made much more manifest than the broad language of § 202(g) which conferred immunity for the very purpose of avoiding such controversies. 50 It is a poor answer to say that if the statute were eventually found to confer immunity only to the extent required for supplying an equivalent for the constitutional privilege, all records would turn out to be unprivileged or would furnish immunity, and in either case refute any excuse for withholding them. Business men are not guided by such abstractions. Obedience is not freely given to uncertain laws when they involve such sensitive matters as opening the books of business. And so, business men would have had a strong incentive to hold back their records, forcing the Administrator to compel production by judicial process. Apart from the use of opportunities for obstructive tactics that can hardly be circumvented when new legislation is tested, delays inevitable to litigation would dam up the flow of needed information. Congress sought to produce information, not litigation. See United States v. Monia, supra, 317 U.S. at page 428, 63 S.Ct. at page 411. 51 In the Monia case the Court considered that the statute, 'if interpreted as the Government now desires, may well be a trap for the witness.' Id., 317 U.S. at page 430, 63 S.Ct. at page 412. We need not speculate here as to potential entrapment. The record discloses that the petitioner asked, through his attorney, whether he was 'being granted immunity as to any and all matters for information obtained as the result of the investigation and examination of these records.' On behalf of the Price Administrator, the reply was 'The witness is entitled to whatever immunity which flows as a matter of law from the production of these books and records which are required to be kept pursuant to MPRs (Maximum Price Regulations) 271 and 426.' Petitioner, himself, thereupon specifically claimed immunity under the statute as well as under the Constitution, and stated that under 'these conditions' he produced the books and records that the subpoena sought. It seems clear that disclosure was here made, records were produced, on the petitioner's justifiable belief based upon the advice of counsel and acquiesced in by the presiding official—that he thereby secured statutory immunity and not constitutional litigation. 52 There is nothing to indicate that in 1942 Congress legislated with a view to litigating the scope of the limitation of the Fifth Amendment upon its powers. To ascertain what Congress meant by § 202(g) we would do well to begin by carefully attending to what Congress said: 'No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (U.S.C.1934 edition, title 49, sec. 46), shall apply with respect to any individual who specifically claims such privilege.' 56 Stat. 23, 30, 50 U.S.C.Supp. V, § 922, 50 U.S.C.A. Appendix, § 922. 53 The text must be put into its context, not merely because one provision of a statute should normally be read in relation to its fellows, but particularly so here because Congress explicitly linked subsection (g) of § 202 to 'any requirements under this section.' Effective price control depended on unimpeded access to relevant information. To that end, § 202 authorized the Administrator to impose the 'requirements' of the section, and those from whom they were exacted were under duty of compliance by subsection (e), while subsection (g) barred any excuse from compliance by a claim of privilege against self-crimination by the assurance of immunity from prosecution.2 54 Subsections (a), (b), (c) and (e) impose these four requirements: persons engaged in the vast range of business subject to the Act may be required to (1) make and keep records, (2) make reports and (3) permit the inspection and copying of records and other documents; such persons as well as others may be required to (4) 'appear and testify or to appear and produce documents, or both, at any designated place.'3 An unconstrained reading of subsection (g) insured prompt compliance with all these requirements by removing any excuse based on the privilege against self-crimination. 55 Here the Administrator required the petitioner to 'keep and make available for examination by the Office of Price Administration * * records of the same kind as he has customarily kept * * *.' § 14(b), MPR 426, 8 F.R. 9546. The Government contends that because the records of petitioner's own business, those that he 'customarily kept,' were required to be so kept by the Administrator, he was compelled to disclose their contents even though they may have incriminated him, and that he was afforded no immunity under subsection (g) because he was not disclosing what were really his records. Surely this is to devitalize the phrase 'any requirements under this section' if not to render it meaningless. 56 The Court supports this devitalization with the 'short answer' that the immunity provided does cover compliance with any of these requirements as to which a person would have been excused from compliance because of his constitutional privilege. The short reply is that, bearing in mind the Court's conclusions as to the scope of the constitutional privilege, only the fourth requirement appears to be thus covered. I do not wish to lay too much stress on the Court's singular interpretation of the plural 'requirements.' Plainly, the Court construes § 202(g) as according immunity only to oral testimony under oath and to the production of any documents which the Administrator did not have the foresight to require to be kept.4 57 The Court thus construes the words 'complying with any requirements under this section' to read 'appearing and testifying or producing documents other than those required to be kept pursuant to this section.' Construction, no doubt, is not a mechanical process and even when most scrupulously pursued by judges may not wholly escape some retrospective infusion so that the line between interpretation and substitution is sometimes thin. But there is a difference between reading what is and rewriting it. The Court here does not adhere to the text but deletes and reshapes it. Such literary freewheeling is hardly justified by the assumption that Congress would have so expressed it if it had given the matter attentive consideration.5 In the Monia case the Court, having concluded that a similar question was present, had no difficulty in answering: 'It is not for us to add to the legislation what Congress pretermitted.' 317 U.S. at page 430, 63 S.Ct. at page 412. 58 Both logic and authority, apart from due regard for our limited function, demonstrate the wisdom of respecting the text. The reach of the immunity given by § 202(g) is spelled out in the incorporated terms of the Compulsory Testimony Act of 1893. These provide that where, as here, documentary evidence is exacted which may tend to incriminate, he who produces it shall not 'be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing, concerning which he may testify, or produce evidence, documentary or otherwise * * *.' 27 Stat. 443, 49 U.S.C. § 46, 49 U.S.C.A. § 46. There is of course nothing in this provision to support the finespun exegesis which the Court puts upon § 202(g). The Government admits as much by acknowledging that 'the literal language of the Compulsory Testimony Act possibly may be so read' as to support the present claim of immunity. But it urges that nothing in the 'language or legislative history' of § 202(g) requires a broader immunity than an adjudication of the scope of the constitutional privilege would exact. 59 The language yiedls no support for the Government's sophisticated reading adopted by the Court. Nor is there anything in the legislative history to transmute the clear import of § 202 into esoteric significance. So far as it bears upon our problem, the legislative history of the Act merely shows that § 202 in its entirety was included for the purpose of 'obtaining information.'6 Nothing in that history throws any light upon the scope of the immunity afforded by subsection (g).7 What is there in this silence of Congress that speaks so loudly to the Court? What are the 'inescapable implications of the legislative history' that compelled its extraordinary reading of this statute? Surely, the fact that the Administrator's authority to require the keeping of records and the making of reports was stricken from the bill on its original passage through the House but was eventually reinserted, reinserted, merely indicates that Congress finally concluded that obtaining information was necessary for effective price regulation.8 60 But the Court reads into § 202(g) the meaning that 'they' put upon the record-keeping provisions that Congress thus reinserted into the bill. 'They,' the 'general Counsel for the OPA,' appeared and testified orally at the Senate Hearings9 and, in urging restoration of the licensing (§ 205(f)) and record-keeping provisions, secured permission to file various briefs and documents with the Committee.10 While there is nothing in the General Counsel's oral testimony that sheds light upon our problem, it does appear from one of the exhibits filed by him that the Court has correctly determined the far-reaching construction that he had given to provisions which the House had rejected as 'redundant.'11 But our task is to determine, as best we can, what Congress meant—not what counsel sponsoring legislation, however disinterestedly, hoped Congress would mean. If counsel's views had been orally expressed to the Committee,12 the Committee might have given some indication of its views. But even if upon such disclosure of counsel's views the Committee had remained silent, this would hardly have furnished sufficient evidence to transmute the language that Congress actually employed to express its meaning into some other meaning. 61 To attribute to Congress familiarity with, let alone acceptance of, a construction solely by reason of the fact that our research reveals its presence among the 60,000-word memoranda which the Chairman of the Senate Committee permitted the General Counsel of the OPA to i le, is surely to defy the actualities of the legislative process. Is there the slenderest ground for assuming that members of the Committee read counsel's submission now relied upon by the Court? There is not a reference to the contentions of the OPA wholly apart from that brief, in any report of a committee of either House or in any utterance on the floor of either House.13 The fact of the matter is that the House had passed the measure before the brief, in type smaller than that of the footnotes in this opinion, appeared in a volume of hearings comprising 560 pages (part of the three volumes of House and Senate Hearings containing 2,865 pages). The Government, in submitting to us the legislative history of the immunity provision with a view to sustaining its claims, did not pretend that the Congress was either aware of the brief or accepted the construction it proffered. The suggestion that members of a congressional committee have read, and presumptively agreed with, the views found in a memorandum allowed to be filed by a witness and printed in appendix form in the hearings on a bill, let alone that both Houses in voting for a measure adopted such views as the gloss upon the language of the Act which it would not otherwise bear, can only be made in a Pickwickian sense. It is hard to believe that even the most conscientious members of the Congress would care to be charged with underwriting views merely because they were expressed in a memorandum filed as was the OPA brief, on which so much reliance is placed in the Court's opinion. If the language of a statute is to be subjected to the esoteric interpretive process that the suggested use of the OPA brief implies, since it is the common practice to allow memoranda to be submitted to a committee of Congress by interests, public and private, often high-minded enough but with their own axes to grind, great encouragement will be given to the temptations of administrative officials and others to provide self-serving 'proof' of congressional confirmation for their private views through incorporation of such materials. Hitherto unsuspected opportunities for assuring desired glosses upon innocent-looking legislation would thus be afforded. 62 We agree with the Government that Congress gave the Administrator broad powers for obtaining information as an aid to the administration and enforcement14 of the Act, and that 'The immunity provision of Section 202(g) was inserted to insure a full exercise of these powers unhampered by the assertion of the privilege against self-incrimination.' Certainly. But how does it follow that Congress thereby intended sub silentio to effectuate this broad purpose by confining the immunity accorded within the undefined controversial scope of the Fifth Amendment? One would suppose that Congress secured its object, as this Court held in the Monia case, by giving immunity and so taking away contentions based on the constitutional privilege. 63 Plainly, it would have sufficed to dispose of the present controversy by holding that Congress granted immunity by § 202(g) to persons who produced their own records, as were the records in this case, and not in their possession as custodians of others, even though required to be kept by § 202. To adapt the language of Mr. Justice Holmes, words have been strained by the Court more than they should be strained in order to reach a doubtful constitutional question. See Blodgett v. Holden, 275 U.S. 142, 148, 276 U.S. 594, 48 S.Ct. 105, 107, 72 L.Ed. 206. 64 And so we come to the Court's facile treatment of the grave constitutional question brought into issue by its disposition of the statutory question. In the interest of clarity it is appropriate to note that the basic constitutional question concerns the scope oft he Fifth Amendment, not the validity of the Price Control Act. The Court has construed the immunity afforded by § 202(g) of the Act as co-extensive with the scope of the constitutional privilege against self-incrimination. Thus construed, the subsection is of course valid, since, by hypothesis, it affords a protection as broad as the Fifth Amendment. Counselman v. Hitchcock, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, Brown v. Walker, 161 U.S. 591, 16 S.Ct. 644, 40 L.Ed. 819. The vice of this construction—and the importance of the point warrants its reiteration—is precisely that it necessitates interpretation of the Constitution instead of avoiding it.15 And if the precedents mean anything this course will be followed in every future case involving a question of statutory immunity. 65 The Court hardly finds a problem in disposing of an issue far-reaching in its implications, involving as they do a drastic change in the relations between the individual and the Government as hitherto conceived. The Court treats the problem as though it were almost self-evident that when records are required to be kept for some needs of Government, or to be kept in a particular form, they are legally considered governmental records and may be demanded as instruments of self-crimination. 66 Ready-made catch-phrases may conceal but do not solve serious constitutional problems. 'Too broadly generalized conceptions are a constant source of fallacy.' Holmes, J., in Lorenzo v. Wirth, 170 Mass. 596, 600, 49 N.E. 1010, 1011, 40 L.R.A. 347. Here the fallacy can be traced to the rephrasing of our problem into terms 'to which, as lawyers, the judges have become accustomed,' Ibid.; then, by treating the question as though it were the rephrased issue, the easy answer appears axiomatic and, because familiar, authoritative. Subtle question-begging is nevertheless question-begging. Thus: records required to be kept by law are public records; public records are non-privileged; required records are non-privileged. 67 If records merely because required to be kept by law ipso facto become public records, we are indeed living in glass houses. Virtually every major public law enactment—to say nothing of State and local legislation—has record-keeping provisions. In addition to record-keeping requirements, is the network of provisions for filing reports. Exhaustive efforts would be needed to track down all the statutory authority, let alone the administrative regulations, for record-keeping and reporting requirements. Unquestionably they are enormous in volume. 68 The Congress began its history with such legislation. Chapter I of the Laws of the First Session of the First Congress—'An Act to regulate the Time and Manner of administering certain Oaths' contained a provision requiring the maintenance of records by persons administering oaths to State officials. 1 Stat. 23, 24. Chapter V—'An Act to regulate the Collection of the Duties imposed by law on the tonnage of ships or vessels, and on goods, wares and merchandise imported into the United States'—contained a provision requiring an importer to produce the original invoice and to make a return concerning the consigned goods with the collector of the port of arrival. 1 Stat. 29, 39—40. 69 Every Congress since 1789 has added record-keeping and reporting requirements. Indeed, it was the plethora of such provisions that led President Roosevelt to establish the Central Statistical Board in 1933 and induced the enactment, in 1942, of the Federal Reports Act, 56 Stat. 1078, 5 U.S.C.A. § 139 et seq. See, generally, Report of the Central Statistical Board, H. Doc. No. 27, 76th Cong., 1st Sess.; Centralization and Coordination of Federal Statistics—Report to the Committee on Appropriations of the House of Representatives, December 4, 1945, 91 Cong. Rec. A5419. On April 25, 1939, the Central Statistical Board reported that, 'Since the end of 1933, the Board has reviewe in advance of dissemination more than 4,600 questionnaries and related forms and plans proposed for use by Federal agencies. The records for the past 2 years show that the Board has received forms from 52 Federal agencies and a number of temporary interdepartmental committees.' See Hearings before the House Committee on Expenditure in the Executive Departments on H.R. 5917, 76th Cong., 1st Sess., at p. 32. The Board, on the basis of a comprehensive survey of the financial and other reports and returns made to 88 Federal agencies by private individuals, farms, and business concerns during the fiscal year ending June 30, 1938, informed Congress as follows: 70 'Counting both the administrative and the nonadministrative reports and returns, the Board's inquiry revealed that some 49,000,000 of the total during the year were collected in accordance with statutory provisions specifically authorizing or directing the collection of reports of the types called for. Approximately 55,000,000 returns were collected by agencies in connection with their performance of functions which were specifically authorized by statutes, although the statutes did not specify the reports. In such cases the information sought was obviously necessary in carrying out required functions. Nearly 27,000,000 returns were collected by Federal agencies on report forms for each of which the legal authority was too general or too indefinite to permit its clear definition. The remaining 5,000,000 returns were made under a variety of types of legal authorities including authorizations implied in appropriations made specifically to support the collection of the reports. 71 'Somewhat less than half of the returns made to Federal agencies on all forms * * * were mandatory by law, in the sense that a penalty is prescribed in case of failure of the respondent to file a required report. Some of these mandatory returns are very elaborate, and as a consequence over 60 percent of the total number of answers on report forms, other than applications, were in accordance with mandatory requirements.' (H. Doc. No. 27, supra, at 11-12.) 72 I do not intend by the above exposition to cast any doubt upon the constitutionality of the record-keeping or reporting provisions of the Emergency Price Control Act or, in general, upon the vast number of similar statutory requirements. Such provisions serve important and often indispensable purposes. But today's decision can hardly fail to hamper those who make and those who execute the laws in securing the information and data necessary for the most effective and intelligent conduct of Government. 73 The underlying assumption of the Court's opinion is that all records which Congress in the exercise of its constitutional powers may require individuals to keep in the conduct of their affairs, because those affairs also have aspects of public interest, become 'public' records in the sense that they fall outside the constitutional protection of the Fifth Amendment. The validity of such a doctrine lies in the scope of its implications. The claim touches records that may be required to be kept by federal regulatory laws, revenue measures, labor and census legislation in the conduct of business which the understanding and feeling of our people still treat as private enterprise, even though its relations to the public may call for governmental regulation, including the duty to keep designated records. 74 If the records in controversy here are in fact public, in the sense of publicly owned, or governmental, records, their non-privileged status follows. See Davis v. United States, 328 U.S. 582, 594, 602, 66 S.Ct. 1256, 1262, 1265, 90 L.Ed. 1453 (dissenting opinion). No one has a private right to keep for his own use the contents of such records. But the notion that whenever Congress requires an individual to keep in a particular form his own books dealing with his own affairs his records cease to be his when he is accused of crime, is indeed startling. 75 A public record is a pul ic record. If the documents in controversy are 'public records' and as such non-privileged in a prosecution under the Price Control Act, why are they not similarly public and non-privileged in any sort of legal action? There is nothing in either the Act or the Court's construction of it to qualify their 'public' nature. Is there any maintainable reason why the Fifth Amendment should be a barrier to their utilization in a prosecution under any other law if it is no barrier here? These records were, as a matter of fact, required to be kept (and hence 'public') quite apart from this Act. See Int.Rev.Code, § 54(a), 26 U.S.C.A.Int.Rev.Code, § 54(a), and Treas. Reg. 111, § 29.54—1. If an examination of the records of an individual engaged in the processing and sale of essential commodities should disclose non-essential production, for example, why cannot the records be utilized in prosecutions for violations of the priorities or selective service legislation? Cf. Harris v. United States, 331 U.S. 145, 67 S.Ct. 1098, 91 L.Ed. 1399; but cf. Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229. 76 Moreover, the Government should be able to enter a man's home to examine or seize such public records, with or without a search warrant, at any time. If an individual should keep such records in his home, as millions do, instead of in his place of business, why is not his home for some purposes and in the same technical sense, a 'public' library? Compare Davis v. United States, 328 U.S. 582, 66 S.Ct. 1256, 90 L.Ed. 1453, and Harris v. United States, supra, with the 'well-stated' opinion in United States v. Mulligan, D.C., 268 F. 893; but see Trupiano v. United States, supra. This is not 'a parade of horribles.' If a man's records are 'public' so as to deprive him of his privilege against self-crimination, their publicness inheres in them for many other situations. 77 Indeed, if these records are public, I can see no reason why the public should not have the same right that the Government has to peruse, if not to use, them. For, public records are 'of a public character, kept for public purposes, and so immediately before the eyes of the community that inaccuracies, if they should exist, could hardly escape exposure.' Evanston v. Gunn, 99 U.S. 660, 666, 25 L.Ed. 306. It would seem to follow, therefore, that these public records of persons engaged in what to the common understanding is deemed private enterprise should be generally available for examination and not barred by the plea that the enterprise would thereby cease to be private. 78 Congress was guilty, perhaps, of no more than curious inconsistency when it provided in § 202(h) of the Act for the confidential treatment of these 'public' records.16 But the seeming inconsistency generally applies to information obtained by the Government pursuant to record-keeping and reporting requirements. See H. Doc. No. 27, supra, at pp. 26 28; 56 Stat. 1078, 1079, 5 U.S.C.A. § 139 et seq.; H.R.Rep. No. 1651, 77th Cong., 2d Sess., at pp. 4—5; ('We (the Bureau of the Census) do not even supply the Department of Justice or anybody else with that information') Hearings before the House Committee on Expenditures in the Executive Departments on H.R. 7590, 74th Cong., 1st Sess., at p. 63. 79 The fact of the matter, then, is that records required to be kept by law are not necessarily public in any except a wordplaying sense. To determine whether such records are truly public records, i.e., are denudd of their essentially private significances, we have to take into account their custody, their subject matter, and the use sought to be made of them. 80 It is the part of wisdom, particularly for judges, not to be victimized by words. Records may be public records regardless of whether 'a statute requires them to be kept' if 'they are kept in the discharge of a public duty' either by a public officer or by persons acting under his direction. Evanston v. Gunn, supra. Chapter I of the first statute passed by Congress, supra, is an example of an act requiring a public record to be kept. 81 Records do not become public records, however, merely because they are required to be kept by law. Private records under such circumstances continue to be private records. Chapter V of the Acts of the First Congress, supra, is an example of such a private record required to be kept by law. 82 Is there, then, any foundation for the Court's assumption that all records required to be kept by law are public and not privileged? Reliance is placed on language in Wilson v. United States, 221 U.S. 361, 36 S.Ct. 538, 55 L.Ed. 771, Ann.Cas. 1912D, 558. The holding in that case has no real bearing on our problem. Wilson, the president of a corporation, in answer to a subpena to produce, refused to surrender the corporation's books and records on the ground that their contents would tend to incriminate him. He appealed to this Court from a judgment committing him for contempt. The case was disposed of on the ground that the books were the corporation's and not 'his private or personal books,' that the 'physical custody of incriminating documents does not of itself protect the custodian against their compulsory production,' and that, therefore, 'the custodian has no privilege to refuse production although their contents tend to criminate him.' 221 U.S. at pages 378, 380, 382, 31 S.Ct. at pages 543, 544, 545. The Court concluded as follows: 83 'The only question was whether, as against the corporation, the books were lawfully required in the administration of justice. When the appellant became president of the corporation, and as such held and used its books for the transaction of its business committed to his charge, he was at all times subject to its direction, and the books continuously remained under its control. If another took his place, his custody would yield. He could assert no personal right to retain the corporate books against any demand of government which the corporation was bound to recognize. 84 'We have not overlooked the early English decisions to which our attention has been called * * * but these cannot be deemed controlling. The corporate duty, and the relation of the appellant as the officer of the corporation to its discharge, are to be determined by our laws. Nothing more is demanded than that the appellant should perform the obligations pertaining to his custody, and should produce the books which he holds in his official capacity in accordance with the requirements of the subpoena. None of his personal papers are subject to inspection under the writ, and his action in refusing to permit the examination of the corporate books demanded fully warranted his commitment for contempt.' 221 U.S. at pages 385, 386, 21 S.Ct. at page 546. 85 The Wilson case was correctly decided. The Court's holding boiled down to the proposition that 'what's not yours is not yours.' It gives no sanction for the bold proposition that Congress can legislate private papers in the hands of their owner, and not in the hands of a custodian, out of the protection afforded by the Fifth Amendment. Even if there were language in the Wilson opinion in that direction, an observation taken from its context would seem to be scant justification for resolving, and needlessly, 'a very grave question of constitutional law, involving the personal security, and privileges and immunities of the citizen.' Boyd v. United States, 116 U.S. 616, 618, 6 S.Ct. 524, 526, 29 L.Ed. 746. 86 The conclusion reached today that all records required to be kept by law are public records cannot lean on the Wilson opinion. This is the language relied upon by the Court: 'The principal (that a custodian has no privilege as to the documents in his custody) applies not only to public documents in public offices, but also to records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation, and the enforcement of restrictions validly established. There the privilege which exists as to private papers cannot be maintained.' 221 U.S. at page 380, 31 S.Ct. at page 544. 87 But Mr. Justice Hughes, the writer of the Wilson opinion, went on to note that 'There are abundant illustrations in the decisions' of this principle that a custodian has no privilege as to the documents in his custody just as no one has a privilege as to public or official records because they are not his private papers. He resorted to these illustrations concerning custodians because the dissenting opinion of Mr. Justice McKenna, while accepting the premise that public records were not privileged, quarreled with the Court's holding as to the absence of a custodian's privilege concerning non-public records, as follows: 'As the privilege is a guaranty of personal liberty, it should not be qualified by construction, and a distinction based on the ownership of the books demanded as evidence is immaterial. Such distinction has not been regarded except in the case of public records, as will be exhibited by a review of the authorities.' 221 U.S. at page 388, 31 S.Ct. at page 547. 88 The illustrations utilized by Mr. Justice Hughes to meet this challenge raised by the dissent stand for the proposition that (a) a custodian has no privilege, and (b) public documents and records are non-privileged, but not at all on any notion that private records required to be kept by law are 'public' records. Before analyzing the eleven precedents or illustrations thus employed, it is worthy of note that the illustrations were derived from the Government's brief. It is significant that that brief, by Solicitor General Frederick W. Lehmann, well-known for his learning, contained no reference to the required records' doctrine. On the contrary the Government cited these cases to support its argument that: 'The immunity granted by the Constitution is purely personal.'17 89 These are the 'illustrations in the decisions': 90 (1) Bradshaw v. Murphy, 7 C. & P. 612, where 'it was held that a vestry clerk who was called as a witness could not, on the ground that it might incriminate himself, object to the production of the vestry books kept under the statute, 58 Geo. III, chap. 69, § 2.' 211 U.S. at page 380, 31 S.Ct. at page 544. 91 Comment.—This is an instance where records were required to be kept by a public officer (for such, in England, was a parish vestry clerk). Clearly the clerk had no privilege as to such records since (1) they were not his; he was merely their custodian, and (2) he was a public officer. 92 (2) State v. Farnum, 73 S.C. 165, 53 S.E. 83, where it was held that the dispenser of the State Dispensary had to disclose to a legislative committee the official books of that State institution. 93 Comment.—Under South Carolina law the dispenser was an officer of the State; the books were true public records; he was their custodian. 94 (3) State v. Donovan, 10 N.D. 203, 86 N.W. 709, 711, where it was held that a register of sales of intoxicating liquor kept by a druggist pursuant to a statute providing that such record 'shall be open for the inspection of the public at all reasonable times during business hours, and any person so desiring may take memoranda or copies thereof' was a public record. 95 Comment.—The State court construed the statute to make the druggist a public officer and, as such, the cuso dian of the register for the State. The court quoted authority to the effect that the register was 'the property of the state, and not of the citizen, and is in no sense a private memorandum.' 10 N.D. at page 209, 86 N.W. at page 711. Are we to infer from the Court's opinion in this case that the books and records petitioner customarily kept were not his property but that of the United States Government, and that they 'shall be open for the inspection of the public at all reasonable times during business hours, and any person * * * may take memoranda or copies thereof'? Ibid. and cf. Evanston v. Gunn, supra. 96 (4) State v. Davis, 108 Mo. 666, 18 S.W. 894, 32 Am.St.Rep. 640, where it was held that a druggist had no privilege as to the prescriptions he filled for sales of intoxicating liquor. 97 Comment.—Here the prescriptions were 'required to be kept by law' but they constituted 'public' records in the pure Wilson sense. The prescriptions belonged to the physicians or their patients, 'and the druggist (was) merely their custodian.' 108 Mo. at page 671, 18 S.W. at page 895. 98 (5) State v. Davis, 68 W.Va. 142, 69 S.E. 639, 32 L.R.A.,N.S., 501, Ann.Cas.1912A, 996 (prescription-keeping case virtually identical with State v. Davis, 108 Mo. 666, 188 S.W. 894, 32 Am.St.Rep. 640). 99 (6) People v. Combs, 158 N.Y. 532, 53 N.E. 527, where it was held that a coroner had no privilege as to official inquest records, required to be filed with the county clerk, over his contention that they were private records because they were false and had been found in his own office. 100 Comment.—'The papers were in a public office, in the custody of a clerk who was paid by the city. On their face, they were public records, and intended to be used as such.' 158 N.Y. at page 539, 53 N.E. at page 529. 101 (7) Louisville & N.R. Co. v. Commonwealth, Ky., 51 S.W. 167, where it was held that a railroad corporation had no privilege as to a tariff sheet. 102 Comment.—The tariff sheet was 'required by law to be publicly posted at the station, and was in fact so posted.' 51 S.W. at page 167. Petitioner is not a railroad corporation and his records were not 'publicly posted.' 103 (8) State v. Smith, 74 Iowa 580, 38 N.W. 492, where it was held that a pharmacist had no privilege as to the monthly reports of liquor sales that he had made to the county auditor pursuant to a statutory reporting requirement. 104 Comment.—The reports in the auditor's office were 'public records of the office, which are open to the inspection of all, and may be used in evidence in all cases between all parties, when competent, to establish any fact in issue for judicial determination.' 74 Iowa at pages 583, 584, 38 N.W. at page 494. Petitioner's records were in his possession and were not open for public inspection. 105 (9) State v. Cummins, 76 Iowa 133, 40 N.W. 124 (same as State v. Smith, supra). 106 (10) People v. Henwood, 123 Mich. 317, 82 N.W. 70 (liquor sales reporting requirement held valid). 107 (11) Langdon v. People, 133 Ill. 382, 24 N.E. 874 held that seizure pursuant to search warrant of official State documents unlawfully in appellant's possession constituted reasonable search 'They were not private papers.' 133 Ill. at page 398, 24 N.E. at page 878. 108 In summary of the authorities cited as illustrations of the principle recognized and applied by the Court in the Wilson case, then, it should be obvious that they neither stand for the proposition that the fact that private records are required to be kept by statute makes them public records by operation of law, nor did Mr. Justice Hughes misconstrue them in reaching the decision in the Wilson case. 109 Were there any doubt as to the point of the illustrations in the Wilson case, surely we could safely permit that doubt to be resolved by the Wilson opinion itself. After reviewing the illustrative cases, Mr. Justice Hughes observed: 'The fundamental ground of decision in this class of cases is that where, by virtue of their character and the rules of law applc able to them, the books and papers are held subject to examination by the demanding authority, the custodian has no privilege to refuse production although their contents tend to criminate him. In assuming their custody he has accepted the incident obligation to permit inspection.' 221 U.S. at pages 381, 382, 31 S.Ct. at page 545. 110 Evidently the dictum in the Wilson case and the authorities therein cited need to be bolstered for the use to which they are put in this case. We are told that 'Other state supreme court decisions, subsequent to the Wilson case, similarly treat as non-privileged, records required by statute to be kept.' These are the five instances cited: 111 (1) Paladini v. Superior Court, 178 Cal. 369, 173 P. 588, where it was held that the statutory procedure whereby the State Market Director could compel the production of the sales records of licensed fish dealers was valid. 112 Comment.—The court did not hold that the records were 'non-privileged,' but disposed of the contention that the statute violated the constitutional privilege against self-incrimination on the ground that 'The proceeding before the state market director is not criminal in its nature, and the order compelling the petitioners to produce their books before the state market director was not in violation of the constitutional provision, which prohibits a court or officer from requiring a defendant in a criminal case to furnish evidence against himself.' 178 Col. at page 373, 173 P. at Page 590. The court did dispose of the contention that the statute violated the Fourth Amendment of the United States Constitution on the ground that the records were not private. But the records here were public records because, since it was conceded that the fish belonged to the State, 'They contain a record of the purchase and sale of the property of the state, by those having a qualified or conditional interest therein.' Ibid. There is no suggestion in this case that petitioner's records were public records because his fruit and vegetables were the property of the United States Government. 113 (2) St. Louis v. Baskowitz, 273 Mo. 543, 201 S.W. 870, where a municipal ordinance requiring junk dealers to keep books of registry recording their purchases and providing that the books be open for inspection and examination by the police or any citizen was upheld against the contention that it violated the State constitutional provision against unreasonable searches and seizures for private purposes. 114 Comment.—The case was disposed of by the court's interpretation of the words 'any citizen' as being limited in meaning to 'one whose property has been stolen.' 273 Mo. at page 576, 201 S.W. at page 880. The records here were 'required to be kept by statute,' it is true, but the court had no occasion to, and did not, go into the question as to whether the records were 'non-privileged.' 115 (3) State v. Legora, 162 Tenn. 122, 34 S.W.2d 1056, where a statute requiring junk dealers to keep a record of their purchases was upheld. 116 Comment.—A record which 'shall at all times be open to inspection of * * * any person who may desire to see the same,' 162 Tenn. at page 124, 34 S.W.2d at page 1057, is, of course, a 'public' record. Evanston v. Gunn, supra; cf. St. Louis v. Baskowitz, supra. 117 (4) State v. Stein, 215 Minn. 308, 9 N.W.2d 763, where a statute requiring licensed dealers in raw furs to keep records of their sales and purchases was upheld. 118 Comment.—The records here were public records for the same reason that the records involved in the Paladini case were public records—'the state is the owner, in trust for the people, of all wild animals.' 215 Minn. at page 311, 9 N.W.2d at page 765. 119 (5) Financial Aid Corporation v. Wallace, 216 Ind. 114, 23 N.E.2d 472, 125 A.L.R. 736, where a statute requiring licensed small loan concerns to keep records and providing for their inspection by the State Department of Financial Institutions was upheld. 120 Comment.—The court had no occasion to, and did nt , go into the question as to whether the records were either 'public' or 'non-privileged.' 121 It appears to me, therefore, that the authorities give no support to the broad proposition that because records are required to be kept by law they are public records and, hence, non-privileged. Private records do not thus become 'public' in any critical or legally significant sense; they are merely the records of an industry or business regulated by law. Nor does the fact that the Government either may make, or has made, a license a prerequisite for the doing of business make them public in any ordinary use of the term. While Congress may in time of war, or perhaps in circumstances of economic crisis, provide for the licensing of every individual business, surely such licensing requirements do not remove the records of a man's private business from the protection afforded by the Fifth Amendment. Even the exercise of the war power is subject to the Fifth Amendment. See, e.g., Hamilton v. Kentucky Distilleries Co., 251 U.S. 146, 155, 156, 40 S.Ct. 106, 107, 108, 64 L.Ed. 194. Just as the licensing of private motor vehicles does not make them public carriers, the licensing of a man's private business, for tax or other purposes, does not under our system, at least so I had supposed, make him a public officer. 122 Different considerations control where the business of an enterprise is, as it were, the public's. Clearly the records of a business licensed to sell state-owned property are public records. Cf., e.g., Paladini v. Superior Court, supra; State v. Stein, supra. And the records of a public utility, apart from the considerations relevant to corporate enterprise, may similarly be teated as public records. Cf., e.g., Louisville & N.R. Co. v. Commonwealth, supra; Financial Aid Corporation v. Wallace, supra. This has been extended to the records of 'occupations which are malum in se, or so closely allied thereto as to endanger the public health, morals, or safety.' St. Louis v. Baskowitz, supra, 273 Mo. at page 554, 201 S.W. at page 873; cf., e.g., State v. Legora, supra; State v. Donovan, supra; State v. Smith, supra. 123 Here the subject matter of petitioner's business was not such as to render it public. Surely, there is nothing inherently dangerous, immoral, or unhealthy about the sale of fruits and vegetables. Nor was there anything in his possession or control of the records to cast a cloud on his title to them. They were the records that he customarily kept. I find nothing in the Act, or in the Court's construction of the Act, that made him a public officer. He was being administered, not administering. Nor was he in any legitimate sense of the word a 'custodian' of the records. I see nothing frivolous in a distinction between the records of an 'unincorporated entrepreneur' and those of a corporation. On the contrary, that distinction was decisive of the Wilson holding: 'But the corporate form of business activity, with its chartered privileges, raises a distinction when the authority of government demands the examination of books.' 221 U.S. at page 382, 31 S.Ct. at page 545. 124 And the Court quoted at length from Hale v. Henkel, 201 U.S. 43, 74, 75, 26 S.Ct. 370, 379, 50 L.Ed. 652: 125 "* * * we are of the opinion that there is a clear distinction in this particular between an individual and a corporation, and that the latter has no right to refuse to submit its books and papers for an examination at the suit of the State. The individual may stand upon his constitutional rights as a citizen. He is entitled to carry on his private business in his own way. His power to contract is unlimited. He owes no duty to the State or to his neighbors to divulge his business, or to open his doors to an investigation, so far as it may tend to criminate him. * * * 126 "Upon the other hand, the corporation is a creature of the State. It is presumed to be incorporated for the benefit of the public. It receives certain special privileges and franchises * * *." 221 U.S. at page 383, 31 S.Ct. at page 545. 127 The distinction between corporate and individual enterprise is one of the deepest in our constitutional law, as it is for the shapers of public policy. 128 The phrase 'required to be kept by law,' then, is not a magic phrase by which the legislature opens the door to inroads upon the Fifth Amendment. Statutory provisions similar to § 202(b) of this Act, requiring the keeping of records and making them available for official inspection, are constitutional means for effective administration and enforcement.18 It follows that those charged with the responsibility for such administration and enforcement may compel the disclosure of such records in conformity with the Fourth Amendment. See Boyd v. United States, supra, 116 U.S. at pages 623, 624, 6 S.Ct. at page 528. But it does not follow that such disclosures are beyond the scope of the protection afforded by the Fifth Amendment. For the compulsory disclosure of a man's 'private books and papers, to convict him of crime, or to forfeit his property, is contrary to the principles of a free government. It is abhorrent to the instincts of an Englishman; it is abhorrent to the instincts of an American. It may suit the purposes of despotic power, but it cannot abide the pure atmosphere of political liberty and personal freedom.' Id., 116 U.S. at page 632, 6 S.Ct. at page 533. 129 The Court in the Boyd case was fully cognizant of the sense and significance of the phrase 'books required by law to be kept for their inspection.' Id., 116 U.S. at pages 623, 624, 6 S.Ct. at page 528. Surely the result of that decision, if not the opinion itself, speaks loudly against the claim that merely by virtue of a record-keeping provision the constitutional privilege against self-incrimination becomes inoperative. The document in controversy in the Boyd case was historically, and as a matter of fact, much more of a 'required record' than the books and records the petitioner here 'customarily kept.' If the Court's position today is correct the Boyd case was erroneously decided.19 130 In disregarding the spirit of that decision, the Court's opinion disregards the clarion call of the Boyd case: obsta principiis. For, while it is easy enough to see this as a petty case and while some may not consider the rule of law today announced to be fraught with unexplored significance for the great problem of reconciling individual freedom with governmental strength, the Boyd opinion admonishes against being so lulled. 'It may be that it is the obnoxious thing in its mildest and least repulsive form; but illegitimate and unconstitutional practices get their first footing in that way, namely, by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy, and leads to gradual depreciation of the right, as if it consisted more in sound than in substance.' Id., 116 U.S. at page 635, 6 S.Ct. at page 535. 131 Violators should be detected, tried, convicted, and punished but not at the cost of needlessly bringing into question constitutional rights and privileges. While law enforcement officers may find their duties more arduous and crime detection more difficult as society becomes more complicated, the constitutional safeguards of the individual were not designed for short-cuts in the administration of criminal justice. 132 And so I conclude that the Court has misconstrued the Fifth Amendment by narrowing the range and scope of the protection it was intended to afford. The privilege against self-incrimination is, after all, 'as broad as the mischief against which it seeks to guard.' Counselman v. Hitchcock, supra, 142 U.S. at page 563, 12 S.Ct. at page 198. If Congress by the easy device of requiring a man to keep the private papers that he has customarily kept can render such papers 'public' and nonprivileged, there is little left to either the right of privacy or the constitutional privilege. 133 Even if there were authority for the temerarious pronouncement in today's opinion, I would insist that such authority was illfounded and ought not to be followed. There is no such authority. The Court's opinion can gain no strength beyond itself. The persuasiveness of its opinion is not enhanced by the endeavor of the majority of the Court, so needlessly reaching out for a constitutional issue, to rest its ominous inroads upon the Fifth Amendment not on the wisdom of their determination but on blind reliance uponn on-persuasive authority. 134 Mr. Justice JACKSON, with whom Mr. Justice MURPHY agrees, dissenting. 135 The protection against compulsory self-incrimination, guaranteed by the Fifth Amendment, is nullified to whatever extent this Court holds that Congress may require a citizen to keep an account of his deeds and misdeeds and turn over or exhibit the record on demand of government inspectors, who then can use it to convict him. Today's decision introduces a principle of considerable moment. Of course, it strips of protection only business men and their records; but we cannot too often remind ourselves of the tendency of such a principle, once approved, to expand itself in practice 'to the limits of its logic.' That it has already expanded to cover a vast area is apparent from the Court's citation of twenty-six federal statutes that present parallels to the situation here under review. It would, no doubt, simplify enforcement of all criminal laws if each citizen were required to keep a diary that would show where he was at all times, with whom he was, and what he was up to. The decision of today, applying this rule not merely to records specially required under the Act but also to records 'customarily kept,' invites and facilitates that eventuality. 136 The practice approved today obviously narrows the protections of the Fifth Amendment. We should not attribute to Congress such a purpose or intent unless it used language so mandatory and unmistakable that it left no alternative, and certainly should not base that inference on 'legislative history' of such dubious meaning as exists in this case. Congress, if we give its language plain and usual meaning, has guarded the immunity so scrupulously as to raise no constitutional question. But if Congress had overstepped, we should have no hesitation in holding that the Government must lose some cases rather than the people lose their immunities from compulsory self-incrimination. However, in this case, the plain language of Congress requires no such choice. It does require, in my view, that this judgment be reversed. 137 Mr. Justice RUTLEDGE, dissenting. 138 With reservations to be noted, I agree with the views expressed by Mr. Justice JACKSON, and with Mr. Justice FRANKFURTER'S conclusions concerning the effect of the immunity provision, § 202(g) of the Emergency Price Control Act.1 139 With them I cannot accept the Court's construction of that section which reduces the statutory immunity to the scope of that afforded by the Fifth Amendment's prohibition against compulsory self-incrimination. This Court has not previously so decided.2 Nor, in my judgment, can the present decision be reconciled with the language of the statute or its purpose obvious on its face. 140 That wording compels testimony and the production of evidence, documentary or otherwise, regardless of any claim of constitutional immunity, whether valid or not.3 But to avoid the constitutional prohibition and, it would seem clearly, also any delay in securing the information or evidence required, the Act promises immunity 'for or on account of any transaction, matter or thing, concerning which he may testify, or produce evidence * * * in obedience to' the subpoena.4 141 The statute thus consists of a command and a promise. In explicit terms the promise is made coextensive with the command. It expressly precludes prosecution, forfeiture or penalty 'for or on account of any transaction, matter or thing' concerning which evidence is produced in compliance with the subpoena.5 Compelling testimony and giving immunity 'for or on account of any transaction, matter or thing, concerning which he may testify' are very different from compelling it and promising that, when given, the person complying 'shall have only the immunity given by the Fifth Amendment and no more.' To constrict the statute's wording so drastically is not simply to interpret, it is to rewrite the congressional language and, in my view, its purpose. If Congress had intended only so narrow a protection, it could easily have said so without adding words to lead witnesses and others to believe more was given. 142 It may be, however, notwithstanding the breadth of the promissory terms, that the statutory immunity was not intended to be so broad as to cover situations where the claim of constitutional right precluded is only frivolous or insubstantial or not put forward in good faith.6 And if, for such a reason, the literal breadth of the wording may be somewhat cut down, restricting the statute's immunity by excluding those situations would neither restrict the effect of the statutory words to that of the Amendment itself nor give them the misleading connotation of the Court's cont ruction. Such a construction would not be departing widely from either the statute's terms or their obvious purpose to give immunity broader than the Amendment's, and would be well within the bounds of statutory interpretation. On the other hand, the Court's reduction of the statutory wording to equivalence in effect with the constitutional immunity, nearly if not quite makes that wording redundant or meaningless; in any event, it goes so far in rewriting the statutory language as to amount to invasion of the legislative function. 143 Whether one or the other of the two broader views of the statute's effect is accepted, therefore, it is neither necessary nor, I think, reasonable or consistent with the statutory wording and object or with this Court's function as strictly a judicial body to go so far in reconstructing what Congress has done, as I think results from reducing the statutory immunity to equivalence with the constitutional one. 144 Since it is not contended that there was not full compliance with the subpoena in this case, that compliance was excessive in the presently material portions of the evidence or information produced, or that the chaim of constitutional immunity precluded was frivolous, insubstantial or not made in good faith, I think the judgment should be reversed by applying the statutory immunity, whether in one or the other of the two forms which may be applied. 145 In this view I am relieved of the necessity of reaching the constitutional issue resulting from the Court's construction, and I express no opinion upon it except to say that I have substantial doubt of the validity of the Court's conclusion and indicate some of the reasons for this. I have none that Congress itself may require the keeping and production of specified records, with appropriate limitations, in connection with business matters it is entitled to and does regulate. That is true not only of corporate records, Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771, Ann.Cas.1912D, 558, but also of individual business records under appropriate specification and limitations, as the numerous instances cited in Mr. Justice FRANKFURTER'S opinion illustrate. 146 But I seriously doubt that, consistently with the Fourth Amendment, as well as the prohibition of the Fifth against compulsory self-incrimination, Congress could enact a general law requiring all persons, individual or corporate, engaged in business subject to congressional regulation to produce, either in evidence or for an administrative agency's or official's examination, any and all records, without other limitation, kept in connection with that business. Such a command would approach too closely in effect the kind of general warrant the Fourth Amendment outlawed. That would be even more obviously true, if there were any difference, in case Congress should delegate to an administrative or executive official the power to impose so broad a prohibition. 147 The authority here conferred upon the Administrator by the Emergency Price Control Act, in reference to record-keeping and requiring production of records, closely approaches such a command. Congress neither itself specifies the records to be kept and produced upon the Administrator's demand nor limits his power to designate them by any restriction other than that he may require such as 'he deems necessary or proper to assist him,' § 202(a), (b), (c), in carrying out his functions of investigation and prescribing regulations under, as well as of administration and enforcement of, the Act. And as the authority to specify records for keeping and production was carried out by the Administrator, the only limitation imposed was that the records should be such as had been 'customarily kept.' § 14(b), M.P.R. 426, 8 Fed.Reg. 9546, 9549. Such a restriction is little, if any, less broad than the one concerning which I have indicated doubt that o ngress itself could enact consistently with the Fourth Amendment. 148 The authorization therefore is one which raises serious question whether, by reason of failure to make more definite specification of the records to be kept and produced, the legislation and regulations involved here do not exceed the prohibition of the Fourth Amendment against general warrants and unreasonable searches and seizures. There is a difference, of course, and often a large one, between situations where evidence is searched out and seized without warrant, and others where it is required to be produced under judicial safeguards. But I do not understand that in the latter situation its production can be required under a warrant that amounts to a general one. The Fourth Amendment stands as a barrier to judicial and legislative as well as executive or administrative excesses in this respect. 149 Although I seriously question whether the sum of the statute, as construed by the Court, the pertinent regulations, and their execution in this case does not go beyond constitutional limitations in the breadth of their inquiry, I express no conclusive opinion concerning this, since for me the statutory immunity applies and is sufficient to require reversal of petitioner's conviction. 1 56 Stat. 23, as amended, 50 U.S.C.App. (Supp. V, 1946) § 901 et seq., 50 U.S.C.A.Appendix, § 901 et seq. 2 'No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (U.S.C., 1934 edition, title 49, sec. 46), shall apply with respect to any individual who specifically claims such privilege.' The Compulsory Testimony Act of 1893 provides: 'No person shall be excused from attending and testifying or from producing books, papers, tariffs, contracts, agreements, and documents before the Interstate Commerce Commission, or in obedience to the subpoena of the commission * * * on the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him, may tend to criminate him or subject him to a penalty or forfeiture. But no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter or thing, concerning which he may testify, or produce evidence, documentary or otherwise, before said commission, or in obedience to its subpoena * * *.' 49 U.S.C.A. § 46. 3 Section 14 of Maximum Price Regulation 426, 8 Fed.Reg. 9546 (1943) provides: 'Records. (a) Every person subject to this regulation shall, so long as the Emergency Price Control Act of 1942, as amended, remains in effect, preserve for examination by the Office of Price Administration all his records, including invoices, sales tickets, cash receipts, or other written evidences of sale or delivery which relate to the prices charged pursuant to the provisions of this regulation. '(b) Every person subject to this regulation shall keep and make available for examination by the Office of Price Administration for so long as the Emergency Price Control Act of 1942, as amended, remains in effect, records of the same kind as he has customarily kept, relating to the prices which he charges for fresh fruits and vegetables after the effective date of this regulation and in addition as precisely as possible, the basis upon which he determined maximum prices for these commodities.' 4 Some of the statutes which include such provisions, applicable to the records of non-corporate as well as corporate business enterprises, are listed below: Shipping Act, 1916, 46 U.S.C. §§ 826, 827, 814, 817, 820, 46 U.S.C.A. §§ 826, 827, 814, 817, 820. Packers and Stockyards Act, 1921, 7 U.S.C. §§ 221, 222, 7 U.S.C.A. §§ 221, 222. Commodity Exchange Act of 1922, 7 U.S.C. §§ 15, 6, 7a, 7 U.S.C.A. §§ 15, 6, 7a. Perishable Agricultural Commodities Act, 1930, 7 U.S.C. §§ 499m, 499i, 7 U.S.C.A. §§ 499m, 499i. Communications Act of 1934, 47 U.S.C. §§ 409, 203, 211, 213(f), 220, 412, 47 U.S.C.A. §§ 409, 203, 211, 213(f), 220, 412. Securities Exchange Act of 1934, 15 U.S.C. §§ 78q, 78u, 15 U.S.C.A. §§ 78q, 78u. Federal Alcohol Administration Act, 1935, 27 U.S.C. §§ 202(c), 204(d), 27 U.S.C.A. §§ 202(c), 204(d), 26 U.S.C. § 2857, 26 U.S.C.A.Int.Rev.Code, § 2857, 15 U.S.C. §§ 49, 50, 15 U.S.C.A. §§ 49, 50. Federal Power c t, 1935, 16 U.S.C. §§ 825(a), 825f(g), 16 U.S.C.A. §§ 825(a), 825f(g). Industrial Alcohol Act of 1935, 26 U.S.C. §§ 3119, 3121(c), 26 U.S.C.A.Int.Rev.Code, §§ 3119, 3121(c). Motor Carrier Act of 1935, 49 U.S.C. §§ 305(d), 304(a)(1), 311(d), 317, 318, 320, 322(g), 49 U.S.C.A. §§ 305(d), 304(a)(1), 311(d), 317, 318, 320, 322(g). National Labor Relations Act, 1935, 29 U.S.C. §§ 156, 161, 29 U.S.C.A. §§ 156, 161. Social Security Act, 1935, 42 U.S.C. § 405(a, d, e, f), 42 U.S.C.A. § 405(a, d—f). Merchant Marine Act, 1936, 46 U.S.C. §§ 1124, 1211, 1114(b), 46 U.S.C.A. §§ 1124, 1211, 1114(b). Bituminous Coal Act of 1937, 15 U.S.C. (1940 ed.) §§ 838, 833(a, e, k), 840 (terminated, as provided in § 849), 15 U.S.C.A. §§ 838, 833(a, e, k), 840, 849. Civil Aeronautics Act of 1938, 49 U.S.C. §§ 644, 483, 487, 492, 622(e) and (g), 673, 49 U.S.C.A. §§ 644, 483, 487, 492, 622(e, g.), 673. Fair Labor Standards Act of 1938, 29 U.S.C. §§ 209, 211, 29 U.S.C.A. §§ 209, 211, 15 U.S.C. §§ 49, 50, 15 U.S.C.A. §§ 49, 50. Natural Gas Act, 1938, 15 U.S.C. §§ 717a, 717g, 717m, 15 U.S.C.A. §§ 717a, 717g, 717m. Railroad Unemployment Insurance Act, 1938, 45 U.S.C. §§ 362(a, b, c, l), 359, 45 U.S.C.A. §§ 362(a—c, l), 359. Water Carriers Act of 1940, 49 U.S.C. §§ 916, 906, 913, 917(d), 49 U.S.C.A. §§ 916, 906, 913, 917(d). Freight Forwarders Act, 1942, 49 U.S.C. § 1017(a, b, d), 1005, 1012, 1021(d), 49 U.S.C.A. §§ 1017(a, b, d), 1005, 1012, 1021(d). In addition to the Price Control Act, the other major regulatory statutes enacted in response to the recent wartime exigencies also contain these provisions: Second War Powers Act, 50 U.S.C.App. (Supp. V, 1946) §§ 633, subsec. 2(a)(3, 4), 50 U.S.C.A.Appendix, § 633, subsec, 2(a)(3, 4). Stabilization Act of 1942, 50 U.S.C.App. (Supp. V, 1946) §§ 967(b), 962, 50 U.S.C.A.Appendix, §§ 967(b), 962. War and Defense Contract Acts, 50 U.S.C.App. (Supp. V, 1946) § 1152(a), (3, 4), 50 U.S.C.A.Appendix, § 1152(a) (3, 4). War Labor Disputes Act, 50 U.S.C.App. (Supp. V, 1946) § 1507(a)(3), (b), 50 U.S.C.A.Appendix, § 1507(a)(3), (b). Very recent regulatory statutes, whose construction may also be affected or determined by the ruling of the Court in the present case, include: Atomic Energy Act of 1946, 42 U.S.C.A. §§ 1812(a)(3), 1810(c) (Supp. 1947), 42 U.S.C.A. §§ 1812(a)(3), 1810(c). Labor Management Relations Act of 1947, Pub.L.No.101, 80th Cong., 1st Sess., § 101, subsecs. 11, 6; § 207(c), June 23, 1947, 29 U.S.C.A. §§ 156, 161, 177(c). 5 Italics have been added here and in all other quotations in which they appear, unless otherwise noted. 6 '* * * the existing authority over prices is indirect and circumscribed and operates through measures which are not appropriate or applicable in all circumstances. It has further been weakened by those who purport to recognize need for price stabilization yet challenge the existence of any effective power. In some cases, moreover, there has been evasion and bootlegging; in other cases the Office of Price Administration and Civilian Supply has been openly defied. 'Faced now with the prospect of inflationary price advances, legislative action can no longer prudently be postponed. Our national safety demands that we take steps at once to extend, clarify, and strengthen the authority of the Government to act in the interest of the general welfare.' Doc.No.332, 77th Cong., 1st Sess. 3 (1941). 7 See 87 Cong.Rec. 9148 (1941) for the precise wording of § 202, which was then numbered § 211. The full text of § 202 as enacted is as follows: '(a) The Administrator is authorized to make such studies and investigations, to conduct such hearings, and to obtain such informa- tion as he deems necessary or proper to assist him in prescribing any regulation or order under this Act, or in the administration and enforcement of this Act and regulations, orders, and price schedules thereunder. '(b) The Administrator is further authorized, by regulation or order, to require any person who is engaged in the business of dealing with any commodity, or who rents or offers for rent or acts as broker or agent for the rental of any housing accommodations, to furnish any such information under oath or affirmation or otherwise, to make and keep records and other documents, and to make reports, and he may require any such person to permit the inspection and copying of records and other documents, the inspection of inventories, and the inspection of defense-area housing accommodations. The Administrator may administer oaths and affirmations and may, whenever necessary, by subpena require any such person to appear and testify or to appear and produce documents, or both, at any designated place. '(c) For the purpose of obtaining any information under subsection (a), the Administrator may by subpena require any other person to appear and e stify or to appear and produce documents, or both, at any designated place. '(d) The production of a person's documents at any place other than his place of business shall not be required under this section in any case in which, prior to the return date specified in the subpena issued with respect thereto, such person either has furnished the Administrator with a copy of such documents (certified by such person under oath to be a true and correct copy), or has entered into a stipulation with the Administrator as to the information contained in such documents. '(e) In case of contumacy by, or refusal to obey a subpena served upon, any person referred to in subsection (c), the district court for any district in which such person is found or resides or transacts business, upon application by the Administrator, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce documents, or both; and any failure to obey such order of the court may be punished by such court as a contempt thereof. The provisions of this subsection shall also apply to any person referred to in subsection (b), and shall be in addition to the provisions of section 4(a). '(f) Witnesses subpenaed under this section shall be paid the same fees and mileage as are paid witnesses in the district courts of the United States. '(g) No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (U.S.C., 1934 edition, title 49, sec. 46), shall apply with respect to any individual who specifically claims such privilege. or disclose any information obtained lish or disclose any information obtained under this Act that such Administrator deems confidential or with reference to which a request for confidential treatment is made by the person furnishing such information, unless he determines that the withholding thereof is contrary to the interest of the national defense and security. '(i) Any person subpenaed under this section shall have the right to make a record of his testimony and to be represented by counsel.' 56 Stat. 23, 30, as amended by § 105 of the Stabilization Extension Act of 1944, 58 Stat. 632, 637, 50 U.S.C., Supp. V, § 922, 50 U.S.C.A.Appendix, § 922. 8 87 Cong.Rec. at 9232; see also id. at 9226. 9 Id., at 9231. 10 Id. at 9233. 11 As pointed out by the Senate Committee, '* * * in amending the House bill, the committee has sought to strengthen it. That bill, when we were not actually at war, might have sufi ced. If the authority granted had proved inadequate, additional powers might have been sought and there might have been time to do so. But the swiftly moving pace of war, with evidences of inflation already apparent, leaves little time for the luxury of experiment. The need for price stability is urgent * * *.' S.Rep.No.931, 77th Cong., 2d Sess. 3 (Jan. 2, 1942). 12 Hearings before the Senate Committee on Banking and Currency on H.R. 5998, 77th Cong., 1st Sess. 192 (1941) (the reference is contained in a brief filed with the Committee by the General Counsel of the Office of Price Administration). 13 Id. at 193. It is apparently conceded that the written statement presented to the Senate Committee by the General Counsel of the OPA in its hearings sets forth the construction that this Court sustains in affirming the judgment of the Circuit Court of Appeals for the Second Circuit in this case. We may accord to the construction expounded during the course of the hearings at least that weight which this Court has in the past given to the contemporaneous interpretation of an administrative agency affected by a statute, especially where it appears that the agency has actively sponsored the particular provisions which it interprets. And we may treat those contemporaneous expressions of opinion as 'highly relevant and material evidence of the probable general understanding of the times and of the opinions of men who probably were active in the drafting of the statute. As such they are entitled to serious consideration * * *.' White v. Winchester Club, 1942, 315 U.S. 32, 41, 62 S.Ct. 425, 430, 86 L.Ed. 619. See also United States v. American Trucking Ass'n, Inc., 1940, 310 U.S. 534, 549, 60 S.Ct. 1059, 1067, 84 L.Ed. 1345; Hassett v. Welch, 1938, 303 U.S. 303, 310, 311, 58 S.Ct. 559, 563, 82 L.Ed. 858. 14 Hearings, supra note 12, at 181; see also id. at 154, 179 80 (oral testimony), 190—200; 88 Cong.Rec. 61, 693—94 (1942); S.Rep.No.931, 77th Cong., 2d Sess. 8—9, 19 (1942). 15 Section 5, 40 Stat. 277, Act Aug. 10, 1917. Although § 4 of the Lever Act, making it unlawful for any person to charge any 'unjust or unreasonable rate or charge' for handling or deai ng in necessaries, was held unconstitutional because of lack of an ascertainable standard of guilt in United States v. L. Cohen Grocery Co., 1921, 255 U.S. 81, 41 S.Ct. 298, 65 L.Ed. 516, 14 A.L.R. 1045, the validity of the licensing and record-keeping provisions was not challenged. 16 Hearings, supra note 12, at 183; see also id. at 154. 17 Id. at 184. The Report of the Senate Committee, following these hearings, recognized the key importance of licensing provisions for effective enforcement of the statute, noting that the 'broad licensing power' which had been given to the Food Administrator under the Lever Act 'was extensively and effectively used.' The Report specifically referred also to the experience of the Fuel Administration, which at first lacked the power to license, then discovered the need for the power, and after acquiring it, secured 'highly effective' enforcement results. The Report concluded that '* * * where there are many sellers, as in retailing for example, it is impossible to determine who is subject to control, much less enforce price regulations, without licensing. Of these facts industry is fully aware. Licensing provides a simple and direct control over violators. * * *' S.Rep.No.931, 77th Cong., 2d Sess. 8, 9. Speaking critically of the Conference Report, Representative Gifford, who was a Manager on the part of the House and had refused to sign the Report and the Statement by the Managers, described licensing then in practice in Canada as a parallel to the licensing proposed by the amended Bill. He called the attention of the House to the Canadian statement of policy: 'These restrictions are not designed to curtail business operations in any way. But by placing every person who in any way handles the commodities named in the order under license, the Board will have the machinery with which to make speedy checks on available stocks and to police more effectively any price-fixing order which may be instituted.' 88 Cong.Rec. 672 (1942). (Rep. Gifford quoted the statement from 'a compiled brief on the licensing methods;' it appears, together with other data referred to by Rep. Gifford, in the section on lisensing methods in the brief presented during the Senate hearings by the General Counsel of the OPA, cited supra note 12, at p. 188.) 18 Hearings, supra note 12, at 184. 19 In asking unanimous consent for the Committee to file its report on the next day, Senator Barkley, the Majority Leader and a member of the Committee, stated on the floor of the Senate on January 2, 1942, that these 'hearings (held before the Senate Committee from December 9—17) have been in print for a week or two.' 87 Cong.Rec. 10142. The Senate vote approving the House Bill as amended was not taken until January 10, more than two weeks after the hearings appeared in printed form. 88 Cong.Rec. 242. The House agreed to the Conference Report on January 26. Id. at 689. The Senate accepted the Conference Report on January 27. Id. at 725. And the Bill was approved and signed by the President on January 30. Id. at 911. It is also of some interest to note the statement, contained in the Senate Report on the Bill, that a subcommittee which had been appointed immediately after the conclusion of the December 9 17 hearings 'extensively revised and strengthened the House bill in the light of the hearings and the onslanght of war.' S.Rep.No.931, 77th Cong., 2d Sess. 6 (Jan. 2, 1942). We assume that this record of the Senate Committee proceedings merits the same prs umption of regularity as the record of a county criminal court. Cf. Foster v. Illinois, 1947, 332 U.S. 134, 138, 67 S.Ct. 1716, 1718, 91 L.Ed. 1955. 20 See Joint Hearings on S. 2475 and H.R. 7200 (Fair Labor Standards Act), 75th Cong., 1st Sess. 61 (1937). 21 Hecht v. Malley, 1924, 265 U.S. 144, 153, 44 S.Ct. 462, 465, 68 L.Ed. 949; see also Missouri v. Ross, 1936, 299 U.S. 72, 75, 57 S.Ct. 60, 62, 81 L.Ed. 46; Sessions v. Romadka, 1892, 145 U.S. 29, 42, 12 S.Ct. 799, 802, 36 L.Ed. 609. 22 See digest of brief for appellant in Wilson v. United States, 1911, 55 L.Ed. 771, 773. 23 Wilson v. United States, 1911, 221 U.S. 361, 380, 31 S.Ct. 538, 544, 55 L.Ed. 771, Ann.Cas.1912D, 558. Holmes, J., in Heike v. United States, 1913, 227 U.S. 131, 143, 33 S.Ct. 226, 228, 57 L.Ed. 450, Ann.Cas.1914C, 128, emphasized that the decision in Wilson went 'upon the absence of constitutional privilege, not upon the ground of statutory immunity in such a case.' 24 Wilson, supra note 23, at page 381 of 221 U.S., at page 544 of 31 S.Ct. In a later decision involving the alleged ability of corporate officers to assert constitutional privilege in relation to records required to be kept under a regulatory statute, Hughes, J., speaking for the Court, further spelled out the implications of the Wilson case and of the 'required records' doctrine: '* * * the transactions to which the required reports relate are corporate transactions, subject to the regulating power of Congress. And, with regard to the keeping of suitable records of corporate administration, and the making of reports of corporate action, where these are ordered by the Commission under the authority of Congress, the officers of the corporation, by virtue of the assumption of their duties as such, are bound by the corporate obligation, and cannot claim a personal privilege in hostility to the requirement.' Baltimore & O.R. Co. v. I.C.C., 1911, 221 U.S. 612, 622, 623, 31 S.Ct. 621, 627, 55 L.Ed. 878. Thus the significant element in determining the absence of constitutional privilege was the fact that the records in question had been validly required to be kept to enable the Commission 'properly to perform its duty to enforce the law.' Id. at page 622 of 221 U.S., at page 626 of 31 S.Ct. The fact that the individuals claiming the privilege were corporate officers was sin ificant only in that the business transactions subject to the Interstate Commerce Act and the records required to be kept were corporate. And, as corporate officers, they were bound by the obligation imposed by the statute upon their corporation to keep the record. In other words, they were deemed custodians of the records for the Interstate Commerce Commission, not merely for the corporation. Had the transactions there regulated, and the records there required, concerned an unincorporated business, Justice Hughes' rationale sustaining the absence of constitutional privilege against self-incrimination would still apply with undiminished force. This decision was cited with approval in United States v. Darby, 1941, 312 U.S. 100, 125, 61 S.Ct. 451, 462, 85 L.Ed. 609, 132 A.L.R. 1430, in support of the Court's holding that it is constitutional for Congress, as a means of enforcing the valid regulations imposed by the Fair-Labor Standards Act, 29 U.S.C.A. § 201 et seq., to require an employer to keep records of wages and hours of his employees. See note 42 infra. 25 Other state supreme court decisions, subsequent to the Wilson case, similarly treat as non-privileged, records required by statute to be kept by such individuals as licensed fish dealers, Paladini v. Superior Court, 1918, 178 Cal. 369, 372, 374, 173 P. 588, 590; junk dealers regulated by municipal ordinance, St. Louis v. Baskowitz, 1918, 273 Mo. 543, 201 S.W. 870, or by statute, State v. Legora, 1931, 162 Tenn. 122, 127, 128, 34 S.W.2d 1056, 1057, 1058; cf. Rosenthal v. New York, 1912, 226 U.S. 260, 268, 269, 33 S.Ct. 27, 29, 57 L.Ed. 212; dealers in raw furs, State v. Stein, 1943, 215 Minn. 308, 9 N.W.2d 763; and licensed money lenders, Financial Aid Corp. v. Wallace, 1939, 216 Ind. 114, 23 N.E.2d 472, 474, 476. 26 Heike, supra note 23, at page 142 of 227 U.S., at page 227 of 33 S.Ct. 27 See analysis of the earlier provisos in 8 Wigmore, Evidence, 511 n. 9 (3d ed.1940), and in the brief submitted by the Government in Heike v. United States, a digest of which appears in 227 U.S. at page 137, 33 S.Ct. at page 226. Whether the stronger wording in the Price Control Act and other recent enactments be deemed to indicate a 'new legislative purpose,' as the majority of the Court in United States v. Monia, 1943, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376, ruled that it did in connection with a procedural point not involved in the present case—or be deemed nothing more than 'a careful rephrasing of a conventional statutory provision,' as the dissenters in Monia, supra, 317 U.S. at page 446, 63 S.Ct. at page 419, believed, the more stringent phrasing of the Price Control Act proviso must, in either view, be regarded as strengthening the applicability of the rule of construction of the Heike case. The precise holding in Monia was that a witness before an investigatory body need not claim his privilege as a prerequisite to earning immunity under a pre-1933 statute which offered immunity without any reference to the need for making such a claim. The majority considered the Heike decision inapplicable to Monia because the relevant terms of the immunity proviso involved in the latter case were so plain and so sharply in contrast with the wording of the enactments after 1933, which (including the Price Control Act) expressly require the assertion of the claim, that Congress could not have intended the pre-1933 statute to require a witness to assert his claim. And it was emphasized that, to construe congressional intention otherwise in those circumstances, might well result in entrapment of witnesses as to testimony concededly privileged. We do not perceive such distinguishing factors in the case at bar, and accordingly consider the Heike rationale fully applicable here. 28 See Judge Delehant's well-reasoned discussion, in Bowles v. Misle, D.C.1946, 64 F.Supp. 835, 843, of the 'public or semi-public' character of records kept by a non-corporate entrepreneur subject in his business to such governmental regulation: '* * * if the regulating authority may be intercepted altogether at the door of a regulated business in its quest of information touching the observance of the law and applicable regulations, its ministry must be fruitless. And it can be no more effective if, realistically viewed, the administrator's examination may be made only at a bargain which absolves the proprietor of the business from the sanctions, whether civil or criminal, by law provided for such violations of the regulations, and, therefore, of the law as examination may disclose. * * *' Compare the dictum in United States v. Mulligan, D.C.N.D.N.Y.1920, 268 F. 893, that records required to be kept by an unincorporated businessman under the Lever Act were not privileged, and that information contained therein was available for use in criminal prosecutions against the record-keeper himself. Like the Price Control Act, the Lever Act contained a compulsory testimony immunity provision. § 25, 40 Stat. 285. The memorandum filed with the Senate Committee, cited supra note 12, at 194, specifically referred to the 'well-stated' opinion in the Mulligan case. 29 The extreme unlikelihood that such a distinctiion, not expressly stated anywhere in the Act, was nevertheless intended by Congress becomes even more apparent in the light of express provision in the statute, § 4(a), making it unlawful for any person subject to the Act, whether in corporate or unincorporated business enterprise, to fail to comply with the record-keeping requirements of § 202(b), and makin it unlawful, § 205(b), for any such person to make 'any statement or entry false in any material respect in any document or report required to be kept or filed' under § 202(b). Even in the absence of the judicial background highlighted by the rationale of the Wilson and Heike decisions, it would be difficult to imagine that records properly required to be kept by the government, for government use in the administration of a regulatory statute, with penalties of fines and imprisonment applicable against any person subject to the statute who fails to keep those records or who falsifies entries in them, could still be regarded by Congress or the public as private records concerning which the recorder may assert a privilege against self-incrimaination. 30 The phrase 'any requirements' appears also in the immunity provision of the Atomic Energy Act of 1946, 42 U.S.C.A. § 1812(a)(3). There, as in the Price Control Act, some of the requirements referred to would, in the absence of the section, be excusable because of privilege—e.g., compelled oral testimony while other requirements, including the compulsory production of records which had been kept pursuant to the statute (§ 1810(c)), would, under the Wilson doctrine, have the same non-privileged (and hence non-immunizing) status as the sales record involved in the present case. Compare also the phraseology used in such statutes as the War and Defense Contract Acts, 50 U.S.C.App. (Supp. V, 1946) § 1152(a)(3, 4), 50 U.S.C.A.Appendix, § 1152(a)(3, 4), and Freight Forwarders Act (1942), 49 U.S.C. § 1017(a, b, d), 49 U.S.C.A. § 1017(a, b, d). 31 Compare the paraphrase of § 202(g) contained in the Committee Reports: '* * * Although no person is excused from complying with any requirement of this subsection because of his privilege against self-incrimination, the immunity provisions of the Compulsory Testimony Act of February 11, 1893, are made applicable with respect to any individual who specifically claims such privilege.' S.Rep.No.931, 77th Cong., 2d Sess. 21; H.R.Rep.No.1409, 77th Cong., 1st Sess. 9. (Italics added here, as elsewhere unless otherwise noted.) 32 Section 6 of the Interstate Commerce Act of Feb. 4, 1887, c. 104, 24 Stat. 380, 49 U.S.C.A. § 6, required every common carrier subject to the provisions of the statute to file with the Commission copies of its schedules and tariffs of rates, fares, and charges, and of all contracts and agreements between carriers. 33 It is further suggested that the presence of statutory provisions for confidential treatment, in certain limited respects, of information obtained by the Administrator is inconsistent with the views of this opinion. We find no such inconsistency in the presence of §§ 4(c) and 202(h), the provisions which specify the types of confidential safeguards intended. 'Section 4(c) affords protection to those persons required to disclose information to the Administrator by making it unlawful for any officer or employee of the Government, or for any adviser or consultant to the Administrator in his official capacity, to disclose or to use for his personal benefit, any information obtained under the bill. Further provision for confidential treatment of such information is found in section 202(b) (canged in Conference to § 202 (h)). * * * Section 202(b) gives further protection to persons furnishing information to the Administrator under the bill by directing the Administrator upon the request of the party furnishing such information, or if he deems such information confidential, not to disclose such information unless he deems that the public interest requires such disclosure.' S.Rep.No.931, 77th Cong., 2d Sess. 20, 21. This is substantially the same sort of confidential treatment provided for by the Hepburn Act of 1906, 34 Stat. 594, amending the Interstate Commerce Act: 'Any examiner who divulges any fact or information which may come to his knowledge during the course of such examination, except in so far as he may be directed by the commission or by a court or judge thereof, shall be subject, upon conviction in any court of the United States of competent jurisdiction, to a fine of not more than $5,000 or imprisonment for a term not exceeding two years, or both.' 49 U.S.C. § 20(8), 49 U.S.C.A.s 20(8). Numberous other statutes have incorporated almost identically worded provisions. See e.g., Motor Carrier Act of 1935, 49 U.S.C. § 322(d), 49 U.S.C.A. § 322(d). In statutes such as these, where Congress validly distinguishes required records from private papers, with respect to the availability of the required documents as evidence in criminal or other proceedings to enforce the statute for whose effectuation they are kept, nothing in logic nor historical practice requires Congress at the same time to treat the records as publid in the sense that they be open at all times to scrutiny by the merely curious. See Colemen v. United States, 6 Cir., 1946, 153 F.2d 400, 402, 404. Congress expressly foreclosed such a result in the Emergency Price Control Act, and this opinion neither requires nor permits it. 34 Heike, supra note 23, at page 141 of 227 U.S., at page 227 of 33 S.Ct. 35 Id. at 141, 142 of 227 U.S., at page 227 of 33 S.Ct. It would appear that the persuasive brief for the Government in this case, prepared with the assistance of eminent counsel, called forth a Holmesian echo. 36 See Heike, supra note 23, at page 142, of 227 U.S., at page 227 of 33 S.Ct. Brown v. Walker, 1896, 161 U.S. 591, 594, 595, 16 S.Ct. 644, 645, 646, 40 L.Ed. 819; Hale v. Henkel, 1906, 201 U.S. 43, 67, 26 S.Ct. 370, 376, 50 L.Ed. 652. See also the statement made in the House by Representative Wise, of the Committee on Interstate and Foreign Commerce, in presenting the bill which became the basis of the 1893 Compulsory Testimony Act: 'The whole scope and effect of the act is simply to meet the decision rendered recently by the Supreme Court in the case known as 'the Councilman (sic) case." 24 Cong.Rec. 503 (1893). 37 88 Cong.Rec. 700 (1942). 38 Endicott Johnson Corp. v. Perkins, 1943, 317 U.S. 501, 509, 63 S.Ct. 339, 343, 87 L.Ed. 424. 39 Heike, supra note 23, at page 142 of 227 U.S., at page 228 of 33 S.Ct. 40 United States v. American Trucking Ass'ns, Inc., 1940, 310 U.S. 534, 543, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345; see also Missouri, Pacific R. Co. v. Boone, 1926, 270 U.S. 466, 472, 46 S.Ct. 341, 343, 70 L.Ed. 688. 'A restrictive interpretation should not be given a statute merely because Congress has chosen to depart from custom or because giving effect to the express language employed by Congress might require a court to face a constitutional question.' United States v. Sullivan, 1948, 332 U.S. 689, 693, 68 S.Ct. 331, 334. 41 Cf. Yakus v. United States, 1944, 321 U.S. 414, 422, 64 S.Ct. 660, 666, 88 L.Ed. 834. 42 Davis v. United States, 1946, 328 U.S. 582, 589, 590, 66 S.Ct. 1256, 1260, 90 L.Ed. 1453. See also United States v. Darby, 1941, 312 U.S. 100, 125, 61 S.Ct. 451, 462, 85 L.Ed. 609, 132 A.L.R. 1430 ('Since * * * Congress may require production for interstate commerce to conform to those conditions (wages and hours), it may require the employer, as a means of enforcing the valid law, to keep a record showing whether he has in fact complied with it. The requirement for records even of the intrastate transaction is an appropriate means to the legitimate end. * * *'); Arrow Distilleries v. Alexander, 7 Cir., 1940, 109 F.2d 397, 404, 405; Di Santo v. United States, 6 Cir., 1937, 93 F.2d 948. Cf. Rodgers v. United States, 6 Cir., 1943, 138 F.2d 992, 995, 996. In Boyd v. United States, 1886, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746, the Court held unconstitutional, as repugnant to the Fourth and Fifth Amendments, an 1874 revenue statute which required the defendant or claimant, on motion of the Government attorney, to produce in court his private books, invoices and papers, or else the allegations of the Government were to be taken as confessed. The document to which thes tatute had been applied in that case was an invoice, which the Government, as well as the defendant, treated throughout the trial and appellate proceedings as a private business record. The Government defended the constitutionality of the statute thus applied on the ground that the action was not against the claimants, but was merely a civil action in rem for the forefeiture of merchandise, in which action the claimants had voluntarily intervened. It argued that in a forfeiture action, private books and papers produced under compulsion have no higher sanctity than other property, since the provision in the Fifth Amendment that no person 'shall be compelled in any criminal case to be a witness against himself' applies only to criminal proceedings in personam. In rejecting the Government's contention, the opinion of the majority of the Court proceeded mainly upon a complex interpretation of the Fourth Amendment, taken as intertwined in its purpose and historical origins with the Fifth Amendment. Under that view, 'a compulsory production of the private books and papers of the owner of goods sought to be forfeited in such a suit (i.e., a suit for a penalty or forfeiture) is compelling him to be a witness against himself, within the meaning of the fifth amendment to the Constitution, and is the equivalent of a search and seizure—and an unreasonable search and seizure—within the meaning of the fourth amendment.' Id., at pages 634, 635 of 116 U.S., at page 534 of 6 S.Ct., see also Id., at page 621 et seq. of 116 U.S. at page 527 of S.Ct. In other words, the majority opinion construed the prohibition of the Fourth Amendment as applying in the foregoing circumstances 'to a returnable writ of seizure describing specific documents in the possession of a specific person.' 8 Wigmore, Evidence 368 (3d ed.1940); see Hale v. Henkel, 1906, 201 U.S. 43, 71, 72, 26 S.Ct. 370, 377, 378, 50 L.Ed. 652. Holding this view of the Fourth Amendment, the majority of the Court nevertheless carefully distinguished the 'unreasonable search and seizure' effected by the statute before it from the 'search and seizure' which Congress had provided for in revenue acts that required manufacturers to keep certain records, subject to inspection (see, e.g., Act of July 20, 1868, c. 186, §§ 19, 45, 15 Stat. 133, 143, regulating distillers and rectifiers): '* * * the supervision authorized to be exercised by officers of the revenue over the manufacture or custody of excisable articles, and the entries thereof in books required by law to be kept for their inspection, are necessarily excepted out of the category of unreasonable searches and seizures. * * * But, when examined with care, it is manifest that there is a total unlikeness of these official acts and proceedings to that which is now under consideration. * * *' Id., at pages 623, 624 of 116 U.S., at page 528 of 6 S.Ct. 43 Davis, supra note 42 at page 602 of 328 U.S., at page 1265 of 66 S.Ct. 44 Ibid. 45 See dissenting opinion in Davis, supra note 42, 328 U.S. at page 614 note 9, 66 S.Ct. at page 1272. See also Amato v. Porter, 10 Cir., 1946, 157 F.2d 719; Coleman v. United States, 6 Cir., 1946, 153 F.2d 400. 46 See also the rationale set forth in 8 Wigmore, Evidence § 2259c (3d ed.1940), a section which was cited with approval by the opinion of the Court in Davis, supra note 42, at page 590 of 328 U.S., at page 1260 of 66 S.Ct.: 'The State requires the books to be kept, but it does not require the officer to commit the crime. If in the course of committing the crime he makes entries, the criminality of the entries exists by his own choice and election, not by compulsion of law. The State announced its requirement to keep the books long before there was any crime; so that the entry was made by reason of a command or compulsion which was directed to the class of entries in general, and not to this specific act. The duty or compulsion to disclose the books existed generically, and prior to the specific act; hence the compulsion is not directed to the criminal act, but is independent of it, and cannot be attributed to it. * * * The same reasoning applies to records required by law to be kept by a citizen not being a public official, e.g., a druggist's report of liquor sales, or a pawnbroker's record of pledges. The only difference here is that the duty arises not from the person's general official status, but from the specific statute limited to a particular class of acts. The duty, or compulsion, is directed as before, to the generic class of acts, not to the criminal act, and is anterior to and independent of the crime; the crime being due to the party's own election, made subsequent to the origin of the duty.' (Italics as in the original.) 1 'A decision could be made either way without contradicting the express words of the act, or, possibly, even any very clear implication.' Holmes, C.J., in Hooper v. Bradford, 178 Mass. 95, 97, 59 N.E. 678. 2 The entire § 202 of the Emergency Price Control Act of 1942, as amended, is as follows: '(a) The Administrator is authorized to make such studies and investigations, to conduct such hearings, and to obtain such information as he deems necessary or proper to assist him in prescribing any regulation or order under this Act, or in the administration and enforcement of this Act and regulations, orders, and price schedules thereunder. '(b) The Administrator is further authorized, by regulation or order, to require any person who is engaged in the business of dealing with any commodity, or who rents or offers for rent or acts as broker or agent for the rental of any housing accommodations, to furnish any such information under oath or affirmation or otherwise, to make and keep records and other documents, and to make reports, and he may require any such person to permit the inspection and copying of records and other documents, the inspection of inventories, and the inspection of defense-area housing accommodations. The Administrator may administer oaths and affirmations and may, whenever necessary, by subpena required any such person to appear and testify or to appear and produce documents, or both, at any designated place. '(c) For the purpose of obtaining any information under subsection (a), the Administrator may by subpena require any other person to appear and testify or to appear and produce documents, or both, at any designated place. '(d) The production of a person's documents at any place other than his place of business shall not be required under this section in any case in which, prior to the return date specified in the subpena issued with respect thereto, such person either has furnished the Administrator with a copy of such documents (certified by such person under oath to be a true and correct copy), or has entered into a stipulation with the Administrator as to the information contained in such documents. '(e) In case of contumacy by, or refusal to obey a subpena served upon, any person referred to in subsection (c), the district court for any district in which such person is found or resides or trana cts business, upon application by the Administrator, shall have jurisdiction to issue an order requiring such person to appear and give testimony or to appear and produce documents, or both; and any failure to obey such order of the court may be punished by such court as a contempt thereof. The provisions of this subsection shall also apply to any person referred to in subsection (b), and shall be in addition to the provisions of section 4(a). '(f) Witnesses subpenaed under this section shall be paid the same fees and mileage as are paid witnesses in the district courts of the United States. '(g) No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (U.S.C., 1934 edition, title 49, sec. 46), shall apply with respect to any individual who specifically claims such privilege. '(h) The Administrator shall not publish or disclose any information obtained under this Act that such Administrator deems confidential or with reference to which a request for confidential treatment is made by the person furnishing such information, unless he determines that the withholding thereof is contrary to the interest of the national defense and security. '(i) Any person subpenaed under this section shall have the right to make a record of his testimony and to be represented by counsel.' 56 Stat. 23, 30, as amended by § 105 of the Stabilization Extension Act of 1944, 58 Stat. 632, 637, 50 U.S.C., Supp. V, § 922, 50 U.S.C.A. Appendix, § 922. 3 Technically there is an additional or fifth requirement—to furnish information 'under oath or affirmation or otherwise'—but this requirement is really covered by the other four. 4 The Administrator required this petitioner to keep 'records of the same kind as he has customarily kept.' § 14(b) of Maximum Price Regulation No. 426, 8 Fed.Reg. 94 6. As a practical matter, therefore, the statute as construed by the Court provides immunity only for compelled oral testimony. 5 But cf. Carroll, Through the Looking Glass, c. 6: "The question is' said Alice, 'whether you can make words mean so many different things.' "The question is,' said Humpty Dumpty, 'which is to be the master—that's all." 6 See H.R. 5479, 77th Cong., 1st Sess., as introduced on August 1, 1941, in the House of Representatives and referred to the Committee on Banking and Currency, at p. 8; H.R. 5990, 77th Cong., 1st Sess., as reported out by the Committee on November 7, 1941, at p. 12 (at the conclusion of the hearings on H.R. 5479, the Committee directed its chairman to introduce this new bill representing the old bill as amended by the Committee in executive session; see H.Rep. 1409, 77th Cong., 1st Sess., p. 3); H.Rep. 1409, supra, at p. 9; 87 Cong.Rec. 9073, 9231; id. at 9232 (Wolcott amendment to strike out all of § 202 because previous amendment of the bill rendered this section for 'obtaining information' redundant); id. at 9233 (Wolcott amendment adopted by the House); S.Rep.No.931, 77th Cong., 2d Sess., p. 21 (H.R. 5990, as passed by the House, amended by reinstating § 202 for the purpose of 'obtaining information'); and see finally the Conference Report accompanying H.R. 5990, H.Rep. 1658, 77th Cong., 2d Sess., pp. 25—26 (agreeing to § 202). 7 Indeed, the only reference to the immunity provision in the legislative documents, see footnote 6 supra, consists merely of practically verbatim repetitions of the provision. 8 The House originally struck out the entire § 202 because a previously adopted amendment had made the section 'redundant.' 87 Cong.Rec. 9232—9233. The previously adopted amendment had inserted a § 203(a) which simply provided that: 'The Administrator and the Board of Administrative Review or any member or commissioner thereof may administer oaths and affirmations, may require by subpena or otherwise the attendance and testimony of witnesses and the production of documents at any designated place. No person shall be excused from complying with any requirements under this section because of his privilege against self-incrimination, but the immunity provisions of the Compulsory Testimony Act of February 11, 1893 (U.S.C., 1934 Ed., title 49, sec. 46), shall apply with respect to any individual who specifically claims such privilege.' Id. at 9226. As passed by the House, then, the bill would have authorized the Administrator to require the production of the records here in issue, but there would have been no question of their being 'public' records, and petitioner would clearly have been accorded the immunity herein claimed. The House Managers yielded as to the record-keeping requirements and the reinstatement of the entire § 202, but there is no mention in their report of the provisions of subsection (g), let alone any indication that there was any difference intended in the scope of the immunity accorded by the two bills. 9 Hearings before the Senate Committee on Banking and Currency on H.R. 5990, 77th Cong., 1st Sess., at pp. 68—71, 112 23, 144—60, 174—81, 550—53. 10 Id. at 154, 175, 180—81. 11 See footnote 8 supra. 12 Every reference in the Court's opinion to p. 181 et seq. of the hearings is to the General Counsel's brief—an exhibit—, not to oral testimony. 13 I do not dispute either (a) that the hearings (including the brief as an exhibit thereto) were printed and available before the Senate passed the bill, or (b) that there is a possibility that a curious Senator (but not a Representative) might have read all this fine print. I mean merely to suggest (a) that in view of the times, the typography, and the length of the text, the chances are remote, and (b) that in view of the importance of the issue it is indeed a hazardous matter to attribute positive congressional meaning to such an improbable source. While it may be presumed that the Senate subcommittee revised the House bill 'in the light of the hearings,' all that means is that they heard what they heard—it does not mean that they read everything they might have read. It would be enough to attribute to a diligent committeeman familiarity with transcribed oral testimony of such volume as that on this bill. But cf. id. at 15: 'Senator Barkley. Mr. Chairman, none of us have read the hearings in the House—or maybe a few of us have'; id. at 26: 'Senator Taft. I have not read the House hearings, I am ashamed to say.' On January 26, 1942, Representative Gifford stated on the floor of the House: 'But this licensing business, 'Compulsory loyalty will crack sooner than the genuine kind.' During the last World War it was loyalty by cooperation. They had licensing, yes, on food products and on fuel, but little of anything else. If the licensee was punished, it was only a slap on the wrist. It he would contribute to the Red Cross he was forgiven. I have a compiled brief on the licensing methods that I could go into at length. An hour would be necessary to properly discuss it and to recite the experiences of ours and other nations. Canada now has it.L et me read to you their statement of policy. These restrictions are not designed to curtail business operations in any way. But by placing every person who in any way handles the commodities named in the order under license, the Board will have the machinery with which to make speedy checks on available stocks and to police more effectively any price-fixing order which may be instituted.' (88 Cong.Rec. 672.) To trace knowledge of the OPA brief to a congressional reader by assuming from this statement that Representative Gifford, who opposed the adoption of these provisions of the bill, was such a reader, and from that to attribute to Congress knowledge of what was in an exhibit to a committee hearing, is so attenuated a process of inferential reasoning as to discredit the whole paraphernalia of legislative history. That the Congress itself does not care to be charged with knowledge of all the extraneous matter for which either House has granted leave to print in the Record is apparent from the rules of the Joint Committee on Printing providing that 'the same shall be published in the Appendix' and 'in 6 1/2 point type.' See Cong.Rec., Dec. 11, 1947, p. A5039. There is, moreover, little basis for concluding that the Gifford 'compiled brief' was the OPA brief—different briefs frequently quote from the same authority. On the contrary, the OPA brief hardly presented the argument that 'Compulsory loyalty will crack sooner than the genuine kind,' nor did it contain material demonstrating either the narrow scope or the weaknesses of World War I licensing. 14 Putting the word 'enforcement' in § 202(a) in italics does little to solve our problem of statutory construction—for enforcement means enforcement. The word is hardly enervated by the extension of immunity to the person compelled to disclose his books and records. The information thus obtained might well assist the Administrator in the enforcement of the Act against the suppliers of, buyers from, or competitors of the owner of the records. As to his suppliers, the records would of course disclose compliance with maximum price regulations; as to the buyers, many regulations established maximum price on a cost-plus basis and the information obtained would be essential to proof of violation; as to the competitors, many regulations established maximum price for new sellers on the basis of their closest competitors, and here again the information obtained might well be essential to the enforcement of the Act. 15 Needless to say, the constitutionality of the Fifth Amendment is not raised! 16 For the text of § 202(h) see note 2 supra. H.R. 5479 as originally introduced (see note 6 supra) would have left it to the Administrator to determine whether the information obtained should be deemed confidential. The bill was changed by the House Committee to its final form whereby the person furnishing the information could request confidential treatment so as to give such persons 'further protection.' H.R.Rep.1409, 77th Cong., 1st Sess., p. 9. 'Further' meant in addition to the statutory immunity afforded by § 202(g)! Ibid. 17 See summary of argument for the United States, 221 U.S. at page 366, 31 S.Ct. at page 539. The Lehmann Brief deserves reading. 18 See note 14, supra. 19 The Boyds had contracted to supply plate glass to the Government on a duty-free price basis. They contended that they had fulfilled this contract out of their stock on hand. They had previously secured a free entry of 29 cases of plate glass and claimed that this shipment replaced in part the glass that they had furnished the Government; the Government asserted that that shipment contained more than the amount of the glass furnished. After the Boyds had secured a free permit and entry of a second shipment of 35 cases of plate glass, but before delivery to them, the goods were seized and the free permit was revoked. In the proceedings for the forfeiture of the 35 cases, the Government, pursuant to the statutory procedure held unconstitutional by the Court, sought and secured production from the Boyds of the invoice covering the first shipment of the 29 cases. This invoice was a 'record required to be kept by statute.' The Act of July 31, 1789, required the importer to make an official entry with the collector at the port of arrival and there produce the original invoice to the collector. 1 Stat. 29, 39—40; as amended by the Act of August 4, 1790, 1 Stat. 145, 161—62; as amended by the Act of March 2, 1799, 1 Stat. 627, 655—56 (invoice must be signed by collector; and see form of oath required to accompany invoice); as amended by the Act of April 20, 1818, 3 Stat. 433, 434, 436; as amended by the Act of March 1, 1823, 3 Stat. 729—30 (no entry without invoice unless importer gives bond to secure production of invoice within stated period), 737 (invoice, certified with collector's official seal, conclusive evidence of value of imported goods in any court of the United States); as amended by the Act of August 30, 1842, 5 Stat. 548, 564—65 (collector authorized to examine any importer and to require production of invoices); as amended by the Act of March 3, 1863, 12 Stat. 737—38 (requiredi nvoices to be in triplicate and indorsed prior to shipment to this country by a consular officer who 'shall deliver to the person producing the same one of said triplicates, to be used in making entry of said goods, wares, or merchandise; shall file another in his office, to be there carefully preserved; and shall, as soon as practicable, transmit the remaining one to the collector of the port of the United States at which it shall be declared to be the intention to make entry of said goods, wares, or merchandise'), 740 (penalty for wilful destruction or concealment of invoices) and (district judge where it appears to his satisfaction that fraud on revenue has been committed or attempted shall authorize collector to seize invoices); as amended by the Act of June 30, 1864, 13 Stat. 202, 217—18 (invoice must be made out in the weights and measures of the country from which importation made); as amended by the Act of July 18, 1866, 14 Stat. 178, 187 (seizure of invoices); as amended by the Act of March 2, 1867, 14 Stat. 546, 547 (seizure of invoices); as amended by the Act of June 22, 1874, 18 Stat. 186, 187 (§ 5—seizure of invoices—held unconstitutional in Boyd case). For administrative requirements as to form, contents, filing and keeping of invoices, in effect at time of entry involved in Boyd case, see General Regulations under the Customs and Navigation Laws (1884) Arts. 314—34; see also Elmes, Customs (1887) c. VII. 1 56 Stat. 23, 30 (§ 202(g)), as amended, 50 U.S.C.App. § 901 et seq., 50 U.S.C.A.Appendix, § 901 et seq., incorporating the provisions of the Compulsory Testimony Act of 1893, 27 Stat. 443, 49 U.S.C. § 46, 49 U.S.C.A. § 46, quoted in the Court's opinion in note 2. 2 Neither Heike v. United States, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.1914C, 128, nor Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771, Ann.Cas.1912D, 558, principally relied upon by the Court, approached such a ruling. The Wilson case dealt only with corporate records, and the claim of a corporate officer having their custody to constitutional immunity against being required to produce them. None were required by law to be kept, in the sense that any federal law required that they be kept and produced for regulatory purposes. The only ruling was that a corporate officer has no personal immunity against producing corporate records, which are of course not his own, and that the corporation has no immunity of its own under the Fifth Amendment's guaranty. The decision is not pertinent to the presently tendered problem. The Heike decision is equally not apropos. The exact ruling was that the evidence, from the production of which h e claimed right of immunity, constitutional as well as statutory, arose 'did not concern any matter of the present charge. Not only was the general subject of the former investigation wholly different, but the specific things testified to had no connection with the facts now in proof much closer than that all were dealings of the same sugar company.' 227 U.S. 131, 143, 33 S.Ct. 226, 228. The actual ruling therefore, apart from the fact that a corporate officer claimed immunity in large part for producing corporate records, see Id., 227 U.S. at pages 142, 143, 33 S.Ct. at page 228, was that the petitioner had not brought himself within the scope of the statutory authorization, namely, because the 'transaction, matter or thing' concerning which he had testified had no substantial connection with the matters involved in his prosecution. The decision is authority for nothing more than that the immunity at the most does not attach when the constitutional claim precluded, but said to bring the statute into play, is insubstantial. The dictum stressed in the Court's opinion that the statute 'should be construed, so far as its words fairly allow the construction, as coterminous with' (227 U.S. at page 142, 33 S.Ct. at page 228) the constitutional immunity, not only was unnecessary, but as the clause itself emphasized explicitly negative exact equivalence. 3 The wording of the Compulsory Testimony Act neither requires nor suggests that the right to the immunity given should turn on the validity or invalidity of the constitutional claim which is precluded. But at the least the Act would seem clearly to cover both valid and substantially doubtful ones. 4 See the text of the Compulsory Testimony Act of 1893 quoted in note 2 of the Court's opinion. 5 The express limitation of the immunity to testimony or evidence produced in obedience to the subpoena excludes immunity for volunteered testimony or evidence, i.e., such as is given in excess of the subpoena's requirement. But the terms of the statute purport to exclude no other. 6 Cf. Heike v. United States, 227 U.S. 131, 33 S.Ct. 226, 57 L.Ed. 450, Ann.Cas.1914C, 128. See note 2 supra.
01
335 U.S. 281 69 S.Ct. 1 93 L.Ed. 3 MacDOUGALL et al.v.GREEN et al. No. 348. Argued Oct. 18, 1948. Decided Oct. 21, 1948. Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division. Messrs. John Abt, of New York City, and Richard F. Watt, of Chicago, Ill., for appellants. Mr. William C. Wines, of Chicago, Ill. for appellees Dwight H. Green, Governor and others. Mr. Melvin F. Wingersky, of Chicago, Ill., for appellees, Michael J. Flynn, Clerk of Cook County, Illinois, and others. PER CURIAM. 1 This action was brought before a three-judge court convened in the Northern District of Illinois under 28 U.S.C. § 2281 and § 2284, 28 U.S.C.A. § 2281, 2284. The object of the action is an injunction against the enforcement of a provision which, in 1935, was added to a statute of Illinois and which requires that a petition to form and to nominate candidates for a new political party be signed by at least 25,000 qualified voters, 'Provided, that included in the aggregate total of twenty-five thousand (25,000) signatures are the signatures of two hundred (200) qualified voters from each of at least fifty (50) counties within the State.' Ill.Rev.Stat. c. 46, § 10—2(1947). Appellants are the 'Progressive Party,' its nominees for United States Senator, Presidential Electors, and State offices, and several Illinois voters. Appellees are the Governor, the Auditor of Public Accounts, and the Secretary of State of Illinois, members of the Boards of Election Commissioners of various cities, and the County Clerks of various counties. The District Court found want of jurisdiction and denied the injunction 80 F.Supp. 725. Appellants invoke the jurisdiction of this Court under 28 U.S.C. § 1253, 28 U.S.C.A. § 1253. 2 The action arises from the finding of the State Officers Electoral Board that appellants had not obtained the requisite number of signatures from the requisite number of counties and its consequent ruling that their nominating petition was 'not sufficient in law to entitle the said candidates' names to appear on the ballot.' The appellants' claim to equitable relief against this ruling is based upon the peculiar distribution of population among Illinois' 102 counties. They allege that 52% of the State's registered voters are residents of Cook County alone, 87% are residents of the 49 most populous counties, and only 13% reside in the 5o least populous counties. Under these circumstances, they say, the Illinois statute is so discriminatory in its application as to amount to a denial of the due-process, equal-protection, and privileges-and-immunities clauses of the Fourteenth Amendment, as well as Article I, §§ 2 and 4, Article II, § 1, and the Seventeenth Amendment of the Constitution of the United States. 3 It is clear that the requirement of 200 signatures from at least 50 counties gives to the voters of the less populous counties of Illinois the power completely to block the nomination of candidates whose support is confined to geographically limited areas. But the State is entitled to deem this power not disproportionate: of 25,000 signatures required, only 9,800, or 39%, need be distributed; the remaining 61% may be obtained from a single county. And Cook County, the largest, contains not more than 52% of the State's voters. It is allowable State policy to require that candidates for state-wide office should have support not limited to a concentrated locality. This is not a unique policy. See New York Laws 1896, c. 909, § 57, now N.Y.Elec.Law § 137(4); 113 Laws of Ohio 349, Gen.Code, § 4785—91 (1929), now Ohio Code Ann. (Cum.Supp.1947) § 4785—91; Mass.Acts 1943, c. 334, § 2, now Mass.Ann.Laws c. 53, § 6 (1945). To assume that political power is a function exclusively of numbers is to disregard the practicalities of government. Thus, the Constitution protects the interests of the smaller against the greater by giving in the Senate entirely unequal representation to populations. It would be strange indeed, and doctrinaire, for this Court, applying such broad constitutional concepts as due process and equal protection of the laws, to deny a State the power to assure a proper diffusion of political initiative as between its thinly populated counties and those having concentrated masses, in view of the fact that the latter have practical opportunities for exerting their political weight at the polls not available to the former. The Constitution a practical instrument of government—makes no such demands on the States. Colegrove v. Green, 328 U.S. 549, 66 S.Ct. 1198, 90 L.Ed. 1432, and Colegrove v. Barrett, 330 U.S. 804, 67 S.Ct. 973, 91 L.Ed. 1262. 4 On the record before us, we need not pass upon purely local questions, also urged by appellants, having no federal constitutional aspect. 5 Judgment affirmed. 6 Mr. Justice RUTLEDGE. 7 In its facts and legal issues this case is closely analogous to Cologrove v. Green, 328 U.S. 549, 66 S.Ct. 1198, 90 L.Ed. 1432. It presents serious constitutional questions crucial to the validity of Illinois election procedures and their application to the imminently impending general election. That a bare majority of this Court resolve them one way and three others hold opposing views only emphasizes their substantial character and supreme importance. These qualities are not diminished by the fact that the Attorney General of Illinois, appearing for the three members of the so-called 'State Certifying Board,'1 has conceded in his brief the validity of appellants' position and at the bar of this Court has confessed error in the decision of the District Court. Nor is it insignificant or irrelevant that the application of the statutory procedures made by the state officials in practical effect denies to a substantial body of qualified voters the right to exercise their suffrage in behalf of candidates of their choice. 8 Forced by the exigencies of their situation, appellants have invoked federal equity jurisdiction in vindication of their rights. They seek injunctive relief, in effect, to compel placing the names of their candidates upon the ballot for the general election to be held on November 2. For present purposes we may assume that appellants have acted with all possible dispatch. Even so, we find ourselves confronted on the eve of the election with the alternatives of denying the relief sought or of directing the issuance of an injunction. 9 This choice, in my opinion, presents the crucial question and the only one necessarily or properly now to be decided. Beyond the constitutional questions it poses delicate problems concerning the propriety of granting the relief in the prevailing circumstances. Even if we assume that appellants' constitutional rights have been violated, the questions arise whether, in those circumstances, the equity arm of the federal courts can now be extended to give effective relief; and whether the relief, if given, might not do more harm than good, might not indeed either disrupt the Illinois election altogether or disfranchise more persons than have been disfranchised by the application of the questioned Illinois procedures. 10 Every reason existing in Colegrove v. Green, supra, which seemed to me compelling to require this Court to decline to exercise its equity jurisdiction and to decide the constitutional questions is present here. See the opinion concurring in the result, 328 U.S. at page 564, 66 S.Ct. at page 1208, 90 L.Ed. 1432. Indeed the circumstances are more exigent and therefore more compelling to that conclusion. 11 We are on the eve of the national election. But twelve days remain. Necessarily some of these would be consumed in remanding the cause to the District Court and in its consideration, formulation and issuance of an injunction in essentially specific terms. The ballots, as certified by the state officials, are in process of printing and distribution. Absentee ballots have been distributed. Illinois is one of the more populous states. Millions of ballots will be required, not only in the state but in Cook County alone. It is true that, on the short record before us and in the necessarily brief time available for preparing both the record and the briefs, appellees who oppose granting the relief have not made an absolutely conclusive factual showing that new ballots, containing the names of appellants' candidates, could not possibly be printed and distributed for use at the election. But they suggest with good reason that this could not be done. The task would be gigantic. Even with the mobilization of every possible resource, it is gravely doubtful that it could be accomplished. The risk would be very large that it could not be done. Even if it could for all except absentee voters, they would be disfranchised. Issuance of the injunction sought would invalidate the ballots already prepared, including the absentee ballots, and those now in course of preparation. 12 The sum of these considerations, without regard to others not now necessary to state, forces me to conclude that the relief sought could be had at this late stage in the electoral process only at the gravest risk of disrupting that process completely in Illinois or of disfranchising Illinois voters in perhaps much greater numbers than those whose interests appellants represent. That is a risk which, in my judgment, federal courts of equity should not undertake and indeed are not free to undertake within the historic limits of their equity jurisdiction. 13 Accordingly, I express no opinion concerning the constitutional and other questions presented. As in Colegrove v. Green, supra, I think the case is one in which, for the reasons stated, this Court may properly, and should, decline to exercise its jurisdiction in equity. Accordingly, but solely for this reason, I agree that the judgment refusing injunctive relief should be affirmed. 14 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK and Mr. Justice MURPHY concur, dissenting. 15 I think that the 1935 amendment of the Illinois Election Code, Ill.Rev.Stat. c. 46, § 10—2(1947), as construed and applied in this case, violates the Equal Protection Clause of the Fourteenth Amendment. 16 That statute requires the nominating petition of a new political party, which places candidates on the ballot for the general election, to contain 200 signatures from each of at least 50 of the 102 counties in the state. The statute does not attempt to make the required signatures proportionate to the population of each county. One effect of this requirement is that the electorate in 49 of the counties which contain 87% of the registered voters could not form a new political party and place its candidates on the ballot. Twenty-five thousand of the remaining 13% of registered voters, however, properly distributed among the 53 remaining counties could form a new party to elect candidates to office. That regulation thus discriminates against the residents of the populous counties of the state in favor of rural sections. It therefore lacks the equality to which the exercise of political rights is entitled under the Fourteenth Amendment. 17 Free and honest elections are the very foundation of our republican form of government. We are dealing here with important political rights of the people—the voting for electors provided by Article II, § 1, of the Constitution; the right of the people to elect senators, guaranteed by the Seventeenth Amendment; the right of the people to choose their representatives in Congress, guaranteed by Article I, § 2, of the Constitution. Discrimination against any group or class of citizens in the exercise of these constitutionally protected rights of citizenship deprives the electoral process of integrity. The protection which the Constitution gives voting rights covers not only the general election but also extends to every integral part of the electoral process, including primaries. United States v. Classic, 313 U.S. 299, 61 S.Ct. 1031, 85 L.Ed. 1368; Smith v. Allwright, 321 U.S. 649, 64 S.Ct. 757, 88 L.Ed. 987, 151 A.L.R. 1110. When candidates are chosen for the general election by a nominating petition, that procedure also becomes an integral part of the electoral process. It is entitled to the same protection as that which the Fourteenth Amendment grants any other part. 18 None would deny that a state law giving some citizens twice the vote of other citizens in either the primary or general election would lack that equality which the Fourteenth Amendment guarantees. See Nixon v. Herndon, 273 U.S. 536, 47 S.Ct. 446, 71 L.Ed. 759. The dilution of political rights may be as complete and effective if the same discrimination appears in the procedure prescribed for nominating petitions. See State ex rel. Ragan v. Junkin, 85 Neb. 1, 122 N.W. 473, 23 L.R.A.,N.S., 839. It would, of course, be palpably discriminatory in violation of the Equal Protection Clause if this law were aimed at the Progressive Party in the manner that the state law in Nixon v. Herndon, supra, was aimed at Negroes. But the effect of a state law may bring it under the condemnation of the Equal Protection Clause however innocent its purpose. It is invalid if discrimination is apparent in its operation. The test is whether it has some foundation in experience, practicality, or necessity. See Skinner v. State of Oklahoma, 316 U.S. 535, 541, 542, 62 S.Ct. 1110, 1113, 86 L.Ed. 1655. 19 It is not enough to say that this law can stand that test because it is designed to require statewide support for the launching of a new political party rather than support from a few localities. There is no attempt here, as I have said, to make the required signatures even approximately proportionate to the distribution of voters among the various counties of the state. No such proportionate allocation could of course be mathematically exact. Nor would it be required. But when, as here, the law applies a rigid, arbitrary formula to sparsely settled counties and populous counties alike, it offers no basis whatever to justify giving greater weight to the individual votes of one group of citizens than to those of another group. This legislation therefore has the same inherent infirmity as that which some of us saw in Colegrove v. Green, 328 U.S. 549, 569, 66 S.Ct. 1198, 1210, 90 L.Ed. 1432. The fact that the Constitutional itself sanctions inequalities in some phases of our political system1 does not justify us in allowing a state to create additional ones. The theme of the Constitution is equality among citizens in the exercise of their political rights. The notion that one group can be granted greater voting strength than another is hostile to our standards for popular representative government. 20 Federal courts should be most hesitant to use the injunction in state elections. See Wilson v. State of North Carolina, 169 U.S. 586, 596, 18 S.Ct. 435, 439, 42 L.Ed. 865. If federal courts undertook the role of superintendence, disruption of the whole electoral process might result, and the elective system that is vital to our government might be paralyzed. Cf. Johnson v. Stevenson, 5 Cir., 170 F.2d 108. The equity court, moreover, must always be alert in the exercise of its discretion to make sure that its decree will not be a futile and ineffective thing. But the case, as made before us, does not indicate that either of those considerations should deter us in striking down this unconstitutional statute and in freeing the impending Illinois election of its impediments. The state officials who are responsible for the election and who at this bar confessed error in the decision of the District Court make no such intimation or suggestion. We are therefore not authorized to assume that our decree would interfere with the orderly process of the election. 1 The State Certifying Board is composed of the Governor, the Auditor of Public Accounts and the Secretary of State, and petitions for the formation of new state-wide political parties are filed with this board. Ill.Rev.Stat. c. 46 (1947) §§ 10—2, 10 4. On the filing of timely objection to such petitions, the certifying board transmits the petitions and the objections to the State Officers Electoral Board, which is not a party to this action. After passing on the objection, the State Officers Electoral Board informs the State Certifying Board of its ruling, and the certifying board is required to 'abide by and comply with the ruling so made to all intents and purposes.' Ill.Rev.Stat. c. 46 (1947) § 10—10. Where objection is not made, or where it is made and overruled, the new party and the names of its candidates are certified by the State Certifying Board to the several county clerks; the clerks or the local boards of election commissioners, both groups being parties to this action, thereupon are required to print ballots containing the names of the candidates thus certified. Ill.Rev.Stat. c. 46 (1947) § 10—14. 1 The Federalist No. 62 explained the equality of representation of the States in the Senate as follows: 'If indeed it be right, that among a people thoroughly incorporated into one nation, every district ought to have a proportional share in the government, and that among independent and sovereign States, bound together by a simple league, the parties, however unequal in size, ought to have an equal share in the common councils, it does not appear to be without some reason that in a compound republic, partaking both of the national and federal character, the government ought to be founded on a mixture of the principles of proportional and equal representation. 'the equal vote allowed to each State is at once a constitutional recognition of the portion of sovereignty remaining in the individual States, and an instrument for preserving that residuary sovereignty. So far the equality ought to be no less acceptable to the large than to the small States; since they are not less solicitous to guard, by every possible expedient, against an improper consolidation of the States into one simple republic. 'Another advantage accruing from this ingredient in the constitution of the Senate is, the additional impediment it must prove against improper acts of legislation. No law or resolution can now be passed without the concurrence, first, of a majority of the people, and then, of a majority of the States.'
12
335 U.S. 291 69 S.Ct. 73 93 L.Ed. 12 MANDEL BROS., Inc.v.WALLACE. No. 16. Argued Oct. 14, 1948. Decided Nov. 8, 1948. Mr. Leonard S. Lyon, of Los Angeles, Cal., for petitioner. Mr. Charles J. Merriam, of Chicago, Ill., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The respondent, owner of Wallace and Hand patent No. 2,236,387, filed a complaint against this petitioner for infringement of claims 1 to 6, 8 to 13, 15 and 16. The District Court held the claims invalid for want of patentable invention and dismissed the complaint. 67 F.Supp. 814. The United States Court of Appeals for the Seventh Circuit held the claims valid and reversed. 164 F.2d 861. The United States Court of Appeals for the Second Circuit had previously affirmed a district court's invalidation of the same patent. Wallace v. F. W. Woolworth Co., D.C., 45 F.Supp. 465; Id., 2 Cir., 133 F.2d 763. To resolve the conflict we granted certiorari. 2 The patent is for an 'improved' cosmetic preparation to retard or inhibit perspiration. Prior to application for the patent (1938), many antiperspirants were on the market containing acid salts of a metal, usually aluminum chloride or aluminum sulfate. The acidity produced by these acid-reacting salts is an astringent which retards perspiration. But, as stated in the patent specifications, the acid sometimes irritates the skin and also rots clothing to which the acid may adhere, particularly when that clothing is heated by ironing. Thus in the old antiperspirants the astringent qualities of the acid were desirable because essential to their effectiveness in retarding perspiration; on the other hand, the skin irritating and cloth corroding qualities of the acid were obviously undesirable. This was the problem as posed by the patent application. 3 The patent specifications asserted and the District Court found that though standard alkalies would neutralize and thus reduce acidity and consequent skin irritation and cloth corrosion, these alkalies would by neutralizing acidity also reduce the astringency essential to check perspiration. The claimed discovery of the patent is in adding to the old acid-salts cosmetics certain types of the reactive amino chemical group, particularly urea. This addition, the patentees asserted, results in an improved compound which checks perspiration but neither irritates the skin nor corrodes the clothing. 4 The District Court found that the addition of urea to the older preparations greatly reduced whatever likelihood there had been that application of the preparation would irritate skin1 or corrode garments. It found that the patentees were the first persons to use urea as a corrosion inhibiting agent in an antiperspirant. But the District Court also found that prior to the patentees' alleged discovery the use of urea as an anticorrosive agent was already a matter of public knowledge, and that it had previously been used as a corrosion inhibitor in compounds other than antiperspirants. As a consequence of these findings, the District Court held the patent invalid. The District Court and the United States Court of Appeals in the case of Wallace v. F. W. Woolworth Co., supra, had held the patent invalid for the same reason. 5 Long prior to this patent, it was generally recognized in the chemical field that urea would react with acids, bases, and salts to produce new substances. Urea had been in general use wherever these results were desirable for chemical stabilizations. And respondent concedes that before application was made for this patent it was commonly known, at least by chemists, that urea would react with acids in a manner which would reduce their corrosiveness. These facts are made clear by this record, by the opinions of the four courts that considered this patent, and by their discussions of the prior patents relied on by the respondent here. 6 Prior patents (Schu pphaus, No. 514,838, and Koch No. 2,011,292) had suggested use of urea as a stabilizer against decomposition of chemical combinations into deleterious acidic substances. It may be assumed that these patents standing alone would not have taught these patentees to experiment with urea to solve their cosmetic problem. They do, however, show the state of the prior art and point to the possibility of using urea to inhibit unwanted decomposition of substances containing acid or acid salts. Indeed, Koch dealt with the addition of urea to aluminum salts. And Missbach, in No. 2,069,711, proposed to protect clothes from the deleterious effects of dry cleaning fluids by the use of urea to prevent injury due to acidic substances brought about by acidic reactions of carbon tetrachloride. He claimed his invention provided 'an effective corrosion inhibitor.' 7 Shipp patent No. 2,174,534 pointed out that 'certain uses of sulfuric acids on textiles are so advantageous that endeavors have been made to so treat textiles with sulfuric acid as to obtain the desired effects but to avoid the undesirable effects.' The undersirable result Shipp wanted to eliminate was the 'marked degrading or disintegrating effect on cellulose fibers' of 'strong sulfuric acid.' He therefore proposed use of an agent 'capable of inhibiting or at least greatly retarding the normal degrading action of strong sulfuric acid upon cellulose.' The 'inhibiting' agent there proposed was urea or other materials such as 'an amide alone or an amide and an amine * * *.' The corrosion 'inhibiting' agents here are amino groups which include urea. 8 Respondent contends that the Shipp patent is irrelevant. He urges that the Shipp preparation merely retards corrosion on cloth whereas respondent's stops corrosion completely. He also points out that Shipp dealt with sulfuric acid and not an acid salt as is involved in this patent. He argues that the teachings of the Shipp and other patents would not have led a chemist skilled in his art to undertake the experiment which eventuated in the success of these patentees. He takes this position because in the use of alkalies and even of urea with plain acids, the acids did not retain their full effectiveness as antiperspirants. The natural conclusion of a chemist, he argues, would have been that urea would result in the same failure if combined with the acid salts involved in his patent. But it did not. Urea combined with acid salts brought about the desired result. This result he therefore contends was a 'paradoxical' one, unpredictable by a skilled chemist. Consequently, he says, the discovery rose to the level of patentable invention. 9 But we think that the state of the prior art was plainly sufficient to demonstrate to any skilled chemist searching for an anticorrosive agent that he should make the simple experiment that was made here. The patentees knew that urea was in general use as a stabilizing agent with acid and salts. Moreover, the patentees knew that standard alkalies had been successfully employed in prior patents for their anticorrosive effect. It is not surprising therefore that after experimenting with various standard alkalies in an effort to find a corrosion inhibitor that would not greatly reduce acidic astringency, the patentees promptly turned to urea. Their success was immediate. 10 As the United States Court of Appeals for the Second Circuit pointed out when this patent was before it (133 F.2d 764): '* * * skillful experiments in a laboratory, in cases where the principles of the investigations are well known, and the achievement of the desired end requires routine work rather than imagination, do not involve invention.' These established principles of law would dispose of the case except for the position taken by the United States Court of Appeals in this case that the cosmetic problem here was remote and unrelated to the problems considered in the prior art. For this reason that court held that patentees in the field of cosmetics were not bound by prior art knowledge disclosed by the Shipp and other patents. The court therefore considered this patent almost as though patentees were writing on a clean sheet. Accordingly it held that the use of urea in the cosmetics field with the results here obtained were patentable invention. 11 In this the court was in error. As we have pointed out, the general store of chemical knowledge in 1938 was such that any one working on any problem of acidic corrosion and irritation would naturally and spontaneously have tried urea. All that these patentees did was to utilize in a cosmetic preparation, publicly available knowledge that urea would inhibit acidic corrosion. The step taken by the patentees in advance of past knowledge was too short to amount to invention. They merely applied an old process of inhibition to a new cosmetic use. This is not invention. Dow Chemical Co. v. Halliburton Oil Well Cementing Co., 324 U.S. 320, 327, 65 S.Ct. 647, 650, 89 L.Ed. 973. 12 Reversed. 13 Mr. Justice DOUGLAS would reverse the judgment on the authority of Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 131, 68 S.Ct. 440, 442, which was decided after the decision of the Court of Appeals in this case. 1 Petitioner points out that the District Court in the Woolworth case found the evidence before it inadequate to show that the old preparations had resulted in substantial skin irritation and urges a like inadequacy of evidence here. But the District Court here found that 'the astringent materials may attack the skin of sensitive individuals' and that 'a residue of acid remained which sometimes irritated the skin.'
78
335 U.S. 297 69 S.Ct. 70 93 L.Ed. 16 HOINESSv.UNITED STATES. No. 20. Argued Oct. 21, 1948. Decided Nov. 8, 1948. Mr. Herbert Resner, of San Francisco, Cal., for petitioner. Mr. Harry I. Rand, of Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Petitioner was a seaman on the S.S. Escanaba Victory, a vessel owned by the United States and operated under an agreement between the War Shipping Administration1 and the American-South African Line, Inc., the provisions of which are unnecessary to relate here. He was injured while the vessel was docked at the port of San Francisco, California, and brought this suit in admiralty against the United States2 under the Suits in Admiralty Act 46 U.S.C.A. § 741 et seq.3 41 Stat. 525, 46 U.S.C. § 742, 46 U.S.C.A. § 742. The libel alleged that the United States maintains offices and principal places of business in the Northern District of California where the suit was brought, but it did not allege that petitioner was a resident of that district4 nor that the vessel was found there at the time suit was filed. The United States did not appear specially but answered to the merits, leaving all questions of jurisdiction to the court. The District Court raised the question of jurisdiction sua sponte and, being of opinion that jurisdiction was lacking dismissed the libel. 75 F.Supp. 289. 2 Its opinion was dated August 5, 1946, and on the same day it entered an order reading as follows: 3 'It is ordered: 4 'That the libel herein is dismissed for lack of jurisdiction, and that respondents have judgment for costs. 5 'Counsel for respondents will submit findings of fact and conclusions of law in accordance with the rules of court and the opinion filed herewith.' 6 On October 14, 1946, it filed 'Findings of Fact and Conclusions of Law' and a decree. The decree after formal recitals stated: 'Wherefore, by reason of the law and the evidence and the premises, and the findings of fact and conclusions of law, as aforesaid, it is ordered, adjudged and decreed that the above-entitled Court has no jurisdiction over the subject matter of the action, and that the libel be dismissed. 7 On October 18, 1946, petitioner filed a petition for appeal stating that he was 'aggrieved by the rulings, findings, judgment and decree made and entered herein on October 14, 1946.' The appeal was allowed on the same day. 8 The Court of Appeals by a divided vote dismissed the appeal, holding that the first order was the final one and that the decree of October 14, 1946, was not appealable. 9 Cir., 165 F.2d 504. The case is here on certiorari. 9 I. We find it unnecessary to determine whether the order of August 5 or that of October 14, 1946, was the final decision5 from which an appeal could be taken within the meaning of § 128 of the Judicial Code, 36 Stat. 1133, 28 U.S.C. (1946 Ed.) § 225; 62 Stat. 929, 28 U.S.C. § 1291, 28 U.S.C.A. § 1291. The appeal was taken within three months of the earlier of the two and was therefore timely. 43 Stat. 940, 28 U.S.C. (1946 Ed.) § 230. And although the petition for appeal referred solely to the second order and not to the first, that defect was of such a technical nature that the Court of Appeals should have disregarded it in accordance with the policy expressed by Congress in R.S. § 954, 28 U.S.C. (1946 Ed.) § 777.6 10 The mandate of that statute is for a court to disregard niceties of form and to give judgment as the right of the cause shall appear to it. It seems to us hypertechnical to say that the appeal papers did not bring the sole issue of the case fairly before the Court of Appeals. Thus the assignments of error framed in the appeal attacked the basis of the first order as well as the second. What appellant sought to have reviewed was plain. The failure to use the words August 5, 1946, if that be taken as the date of the final decision, was as insubstantial as a misspelling of the words would have been, since the words used identified the rulings which were challenged, and in no way altered the scope of review. Cf. Reconstruction Finance Corporation v. Prudence Securities Advisory Group, 311 U.S. 579, 582, 61 S.Ct. 331, 333, 85 L.Ed. 364; Georgia Hardwood Lumber Co. v. Compania De Navegacion Transmar, S.A., 323 U.S. 334, 336, 65 S.Ct. 293, 294, 89 L.Ed. 280. 11 II. The ruling of the District Court that the provisions of § 2 of the Suits in Admiralty Act, directing where suits shall be brought,7 were jurisdictional was in our view erroneous. Those provisions properly construed relate to venue. 12 The section relates not to libels in rem but to libels in personam. A similar provision in § 5 of the Tucker Act, 24 Stat. 506, 28 U.S.C. (1946 Ed.) § 762, 28 U.S.C. § 1402, 28 U.S.C.A. § 1402, was held to prescribe venue and hence could be and was waived by failure to object before pleading to the merits. United States v. Hvoslef, 237 U.S. 1, 11, 12, 35 S.Ct. 459, 462, 59 L.Ed. 813, Ann.Cas.1916A, 286; Thames & Mersey Marine Ins. Co. v. United States, 237 U.S. 19, 24, 35 S.Ct. 496, 497, 59 L.Ed. 821, Ann.Cas.1915D, 1087. An analogous provision in the Jones Act, 41 Stat. 1007, 46 U.S.C. § 688, 46 U.S.C.A. § 688, was construed the same way. Panama R. Co. v. Johnson, 264 U.S. 375, 384, 385, 44 S.Ct. 391, 392, 393, 68 L.Ed. 748. And we recently indicated that that was the correct construction of comparable provisions of § 2 of the Public Vessels Act, 43 Stat. 1112, 46 U.S.C. § 782, 46 U.S.C.A. § 782 (Canadian Aviator, Ltd., v. United States, 324 U.S. 215, 224, 65 S.Ct. 639, 644, 89 L.Ed. 901), an act which is similar in purpose and design to the present one. See American Stevedores v. Porello, 330 U.S. 446, 452, 453, 67 S.Ct. 847, 850, 851, 91 L.Ed. 1011. 13 Congress, by describing the district where the suit was to be brought, was not investing the federal courts 'with a general jurisdiction expressed in terms applicable alike to all of them'. See Panama R. Co. v. Johnson, supra, 264 U.S. page 384, 44 S.Ct. 393, 68 L.Ed. 748. It was dealing with the convenience of the parties in suing or being sued at the designated places. The purpose of the Act was to grant seamen relief against the United States in its own courts. The concepts of residence and principal place of business obviously can have no relevance when applied to the United States. It is ubiquitous throughout the land and, unlike private parties, is not centered at one particular place. The residence or principal place of business of the libelant and the place where the vessel or cargo is found may be the best measure of the convenience of the parties. But if the United States is willing to defend in a different place, we find nothing in the Act to prevent it. 14 The judgment is reversed and the case is remanded to the District Court for further proceedings in conformity with this opinion. 15 Reversed and remanded. 1 The United States Maritime Commission now stands in its shoes. See 60 Stat. 501. 2 Other parties were also sued but they were dismissed from the case. 3 Section 2 of that Act provides in part: 'That in cases where if such vessel were privately owned or operated, or if such cargo were privately owned and possessed, a proceeding in admiralty could be maintained at the time of the commencement of the action herein provided for, a libel in personam may be brought against the United States or against such corporation, as the case may be, provided that such vessel is employed as a merchant vessel or is a tugboat operated by such corporation. Such suits shall be brought in the district court of the United States for the district in which the parties so suing, or any of them, reside or have their principal place of business in the United States, or in which the vessel or cargo charged with liability is found. * * * Upon application of either party the cause may, in the discretion of the ocurt, be transferred to any other district court of the United States.' 4 The record shows the petitioner's residence was in Oregon. 5 This is the kind of problem which could be appropriately handled through the rule making authority of the Court of Appeals. Cf. Commissioner of Internal Revenue v. Bedford's Estate, 325 U.S. 283, 288, 65 S.Ct. 1157, 1159, 89 L.Ed. 1611. 6 That section reads as follows: 'No summons, writ, declaration, return, process, judgment, or other proceedings in civil causes, in any court of the United States, shall be abated, arrested, quashed, or reversed for any defect or want of form; but such court shall proceed and give judgment according as the right of the cause and matter in law shall appear to it, without regarding any such defect, or want of form, except those which, in cases of demurrer, the party demurring specially sets down, together with his demurrer, as the cause thereof; and such court shall amend every such defect and want of form, other than those which the party demurring so expresses; and may at any time permit either of the parties to amend any defect in the process or pleadings, upon such conditions as it shall, in its discretion and by its rules, prescribe.' After the dismissal of the appeal in this case, the foregoing section was repealed, effective September 1, 1948. 62 Stat. 992, § 39. And see Revision of Title 28, U.S.Code, H.Rep.No.308, 80th Cong., 1st Sess., p. A 239. But the policy expressed in § 954 was preserved as respects cases pending at the time of the repeal, since the repealing statute provides that 'Any rights or liabilities now existing under such sections or parts thereof shall not be affected by this repeal.' And see Rules 1, 15, 61 and 81, Rules of Civil Procedure. 7 See note 3, supra.
89
335 U.S. 303 69 S.Ct. 93 93 L.Ed. 24 FORD MOTOR CO.v.UNITED STATES. COMMERCIAL INV. TRUST CORPORATION et al. v. UNITED STATES. Nos. 1 and 2. Argued Oct. 11, 1948. Decided Nov. 15, 1948. Appeals from the District Court of the United States for the Northern District of Indiana. [Syllabus from pages 303-305 intentionally omitted] Mr. Charles E. Hughes, Jr., of New York City, for appellants. Mr. Albert Holmes Baldridge, of Oklahoma City, Okla., for appellee. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 These cases were brought here on appeal, prior to the revision of Title 28, United States Code, under what was § 345 and since September 1 has become § 2101 of that Title, to review final decrees of the United States District Court for the Northern District of Indiana in a suit in equity brought by the United States under § 4 of the Sherman Law, 26 Stat. 209, as amended, 36 Stat. 1167, 15 U.S.C. § 4, 15 U.S.C.A. § 4. The cases present another phase of a multifarious litigation which has been occupying the attention of the federal judicial system for more than a decade. United States v. General Motors Corp., D.C.N.D.Ind., 26 F.Supp. 353; United States v. General Motors Corp., 7th Cir., 121 F.2d 376, certiorari denied 314 U.S. 618, 62 S.Ct. 105, 86 L.Ed. 497, rehearing denied 314 U.S. 710, 62 S.Ct. 178, 86 L.Ed. 566; United States v. General Motors Corp., D.C.N.D.Ill., 2 F.R.D. 346; United States v. General Motors Corp., D.C.N.D.Ill., 2 F.R.D. 528; Chrysler Corp. v. United States, 314 U.S. 583, 62 S.Ct. 356, 86 L.Ed. 471, rehearing denied 314 U.S. 716, 62 S.Ct. 476, 86 L.Ed. 570; Chrysler Corp. v. United States, 316 U.S. 556, 62 S.Ct. 1146, 86 L.Ed. 1668. An analytical summary of this litigation will make clear the immediate issues before us and, indeed, largely dispose of them. 2 On May 27, 1938, indictments were returned in the District Court of the United States for the Northern District of Indiana, South Bend Division, against the three leading automobile manufacturers and the companies which financed the sale of their automobiles. One indictment was against the present appellants, Ford Motor Company, and Commercial Investment Trust Corporation, Commercial Investment Trust, Inc., and Universal Credit Corporation, these three referred to collectively as CIT; another against Chrysler Corporation and Commercial Credit Company; a third against General Motors Corporation and its subsidiary, General Motors Acceptance Corporation, to be abbreviated as GMAC. The indictments charged the automobile manufacturers and the jointly named finance companies with violations of the Sherman Law by influencing dealers who sold the automobiles of the respective manufacturers to give the finance companies the business of financing the dealers' wholesale purchases and retail sales of automobiles. 3 Following these charges, negotiations were set afoot to secure the elimination through consent decrees of the practices described in the indictments. As to the Ford and Chrysler groups, the Government, on November 7, 1938, filed suits in equity and arranged for the dismissal of their indictments. (For present purposes we are not further concerned with Chrysler.) Although Ford and CIT formally resisted the complaint, denying its allegations and pleading affirmative defenses, negotiations for a consent decree proceeded. Efforts toward an amicable settlement with General Motors and GMAC failed. The Government therefore pressed the criminal charges against them. In view of the competitive conditions in the automobile industry it obviously became of crucial importance to Ford not to consent to any restraints beyond those which would fall upon General Motors through the contingencies of litigation against it. But it would not have been enough merely to provide that restraints which Ford accepted should eventually be lifted to the extent not imposed upon General Motors at some remote time defined merely by the vicissitudes of litigation. Protection against competitive disadvan tage, the appropriateness of which the Government recognized, required a time certain at the end of which the restraints against Ford would expire if General Motors were still free of them. 4 Accordingly, the consent decree, entered on November 15, 1938, assured Ford essential equality of position with the unconsenting General Motors by two explicit conditions. Their terms are fully set out in the margin;1 their essence can be briefly summarized. Paragraph 12 forbids Ford from acquiring control of any finance company. After enumerating various forbidden forms of financial interest, the paragraph provides that, if the Government should not have obtained a final decree against General Motors by January 1, 1941, requiring it to divest itself of all interest in GMAC, its affiliated finance company, the prohibition against Ford would cease. The second express condition, designed to relieve from restraints imposed by earlier paragraphs in the decree against various means of influencing dealers to patronize CIT, is found in paragraph 12a. That paragraph addressed itself to the possible eventualities of the criminal proceeding against General Motors and GMAC: (1) Its termination with a result other than a judgment of conviction; (2) a general verdict of guilty; (3) a special verdict of guilty; (4) a plea of guilty or nolo contendere. Upon the first contingency all restrictive terms of the decree against Ford would be suspended until similar restraints were imposed upon General Motors and GMAC. The second was to be 'deemed to be a determination of the illegality of any agreement, act or practice of General Motors Corporation which is held by the trial court, in its instructions to the jury, to constitute a proper basis for the return of a general verdict of guilty.' The third and fourth were, respectively, to be deemed determinations of the illegality of 'any agreement, act or practice' which was their subject matter. 5 These provisions furnish a litmus-paper test for determining what restraints survive the result of the proceeding against General Motors and GMAC. What was not illegal for General Motors was not longer to be prohibited to Ford. The sword of justice was to strike both alike. Paragraph 12a further defines how and when the restraints were to be relaxed. Sub-paragraph (3) provides that after the entry of a decree against General Motors, or after the entry of a judgment of conviction in the pending criminal proceedings 'or after January 1, 1940 (whichever date is earliest), the court upon application of any respondent from time to time will enter orders' suspending any restraint against it (with exceptions not now relevant) 'to the extent that it is not then imposed, and until it shall be imposed, in substantially identical terms' upon General Motors or GMAC. 6 On November 17, 1939, the jury returned a general verdict of guilty against General Motors, the Court of Appeals for the Seventh Circuit affirmed the judgment upon that verdict, 121 F.2d 376, and this Court denied further review. 3114 U.S. 618, 62 S.Ct. 105, 86 L.Ed. 497; 314 U.S. 710, 62 S.Ct. 178, 86 L.Ed. 566. 7 On October 4, 1940, the Government finally brought a suit in equity against General Motors seeking divestiture of its control of GMAC. But it was then too late for a decree to be entered before the lapse of Ford's agreement not to become affiliated with a finance company. On December 21, 1940, therefore, the Government made a motion asking to have paragraph 12 modified by moving forward the date when the prohibition against affiliation would expire if a decree against General Motors had not then been entered. Each year after that, as the new deadline came near the Government made a new motion to have it extended, and year after year Ford consented to the extension. On December 31, 1945, the Government again moved to have the prohibition against affiliation extended, this time to January 1, 1947. Ford now resisted the motion, and on May 4, 1946, both Ford and CIT filed motions of their own. They asked the District Court to suspend sub-paragraph (i) and (k) of paragraph 6 and sub-paragraph (d) of paragraph 7 and to modify sub-paragraph (e) of paragraph 6 on the ground that the practices enjoined by these provisions of the decree were not 'held by the trial court, in its instructions to the jury, to constitute a proper basis for the return of a general verdict of guilty.' Ford also moved that 'an order be entered pursuant to paragraph 12 * * * that nothing therein shall preclude the Manufacturer from acquiring and retaining ownership of and/or control over or interest in any finance company * * *.' The District Court denied the motions by Ford and CIT and granted the Government's motion for extension of the prohibition against affiliation to January 1, 1947. The present appeals followed. Although the particular extension of paragraph 12 appealed from has expired, the equity suit against General Motors has not yet been set down for trial and the Government's motion for a further extension has been held in abeyance pending the outcome of these appeals. It is not a moot question therefore whether the District Court properly granted the extension to January 1, 1947. See Southern Pacific Co. v. Interstate Commerce Commission, 219 U.S. 433, 452, 31 S.Ct. 288, 294, 55 L.Ed. 283; Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498, 514 516, 31 S.Ct. 279, 283, 55 L.Ed. 310. 8 The restraints imposed against Ford by sub-paragraphs 6(e), 6(i), 6(k) and 7(d) must survive the outcome of the conviction against General Motors if the language of the trial judge's charge to the jury in the criminal prosecution of General Motors can fairly be equated with the language of those sub-paragraphs. If, on the other hand, the judge's charge falls short of holding illegal what those sub-paragraphs proscribed, appellants are entitled to a suspension of sub-paragraphs 6(i), 6(k) and 6(d) and a modification of sub-paragraph 6(e). 9 First, then, to summarize the contents of these provisions of the decree.2 Sub-paragraph 6(i) precludes Ford from arranging with CIT or any other finance company 'that an agent of the Manufacturer and an agent of the finance company shall together be present with any dealer or prospective dealer for the purpose of influencing the dealer to patronize' the finance company. Sub-paragraph 6(k) provides that 'the Manufacturer shall not recommend, endorse or advertise the Respondent Finance Company or any other finance company or companies to any dealer or to the public * * *.' Sub-paragraph 7(d), the counterpart of 6(i), is directed against CIT. Sup-paragraph 6(e) restrains Ford from establishing 'any practice, procedure or plan for the retail or wholesale financing of automobiles for the purpose of enabling Respondent Finance Company or any other finance company or companies to enjoy a competitive advantage in obtaining the patronage of dealers' not equally available to any other finance company. Modification of this sub-paragraph is asked only to the extent necessary to permit them freedom to act in a manner otherwise permissible, if suspension of sub-paragraphs 6(i), 6(k) and 7(d) is granted. 10 This brings us to the trial judge's instructions, which, insofar as relevant, are fully set forth below.3 Their plain effect is to draw a line between such practices as cancellation of a dealer's contract, or refusal to renew it, or discrimination in the shipment of automobiles, as a means of influencing dealers to use GMAC, all of which fall within the common understanding of 'coercion,' and other practices for which 'persuasion,' 'exposition' or 'argument' are fair characterizations. As a mere matter of interpreting language, the Government hardly challenges the fitness of the terms 'persuasion,' 'exposition' or 'argument,' which the jury was charged were open to General Motors, to cover acts such as arranging for the presence of agents of both Ford and CIT with a view to putting the claims of CIT to a dealer or recommending, endorsing, and advertising CIT to a dealer. But all these acts were specifically forbidden Ford by the consent decree. The Government's insistence is that since the indictment charged that advertising, endorsement and recommendation violated the Sherman Law and since evidence was introduced to support the charge, the jury might have found General Motors and GMAC guilty of 'coercion' at least partly on the basis of that evidence. But sub-paragraph 12(a)(2) was not designed to authorize speculative reconstruction of the jury's process in reaching its verdict. It provided a definite standard for ascertaining what rules of law were at a future date to be made binding on a competitor of Ford. The rules which the trial judge formulated against General Motors were thereafter to be the rules of law against Ford. The trial judge used the word 'coercion' to summarize practices which, if the jury found them to exist, would call for a verdict against General Motors. He used the words 'persuasion,' 'exposition' and 'argument' to describe conduct which, in common usage, is not 'coercion' and therefore would not support such a verdict. Nothing in other portions of the judge's charge erases or blurs this line of distinction. The restraints imposed by the paragraphs appellants seek to have suspended are properly described by the terms 'exposition,' 'persuasion' and 'argument.' So long as these paragraphs remain in effect and so long there is no comparable decree enjoining their substance against General Motors and GMAC, Ford and CIT cannot do without risk of violating the consent decree that which General Motors and GMAC are free to do. Only a lawyer who is obtuse or reckless would advise Ford and CIT that they would subject a dealer to 'persuasion,' 'exposition' or 'argument' without the hazard of contempt of the paragraphs under discussion. Thus the conditions have been fulfilled which entitled Ford and CIT to suspension of the restraints imposed by those terms of the decree. 11 There remains for consideration the question whether the District Court properly extended the prohibition against affiliation between Ford and a finance company. This was the sixth time that the Government had applied for extension. The equity suit begun more than six years earlier had not yet been brought to trial. The court was faced at the same time with a motion for suspension of the prohibition against affiliation which was made by appellants under the express provision of paragraph 12 reserving the right to such a motion. The court denied the appellant's motion and granted the Government's on the ground, (1) that the 'time clause' of paragraph 12 was subsidiary to the 'main purpose' of paragraph 12 which was (68 F.Supp. 828) 'to provide that the test of the permanancy of the bar against affiliation was to abide the outcome of the civil antitrust suit against General Motors Corporation,' and (2) 'That the purpose and intent of the decree will be carried out if Ford Motor Company is given the opportunity at any future time to propose a plan for the acquisition of a finance company, and to make a showing that such plan is necessary to prevent Ford Motor Company from being placed at a competitive disadvantage * * *.' 12 The Government seeks to support these conclusions by insisting on a mechanical application of the decision in Chrysler Corp. v. United States, 316 U.S. 556, 62 S.Ct. 1146, 86 L.Ed. 1668, involving a parallel prohibition against Chrysler. The Chrysler case was decided on June 1, 1942. In the intervening years the factors of the problem have drastically changed. More than nine years have elapsed since the criminal prosecution against General Motors was concluded; what was at the time of the Chrystler decision a two-year delay in obtaining a civil decree against General Motors has now stretched into a ten-year delay. Even then, six and a half years ago, this Court characterized the District Court's finding that the Government had proceeded 'diligently and expeditiously' as 'markedly generous.' 316 U.S. at page 563, 62 S.Ct. at page 1150, 86 L.Ed. 1668. At that time the Court also found support for the District Court in the fact that 'the complete cessation of the manufacture of new automobiles and light trucks has drastically minimized the significance of the competitive factor.' Id., 316 U.S. at page 564, 62 S.Ct. at page 1150. But circumstances that were found extenuating on behalf of the Government two years after the entry of the decree are hardly compelling ten years afterward. While a showing that continuance of the bar against affiliation would cause competitive disadvantage may not, as a practical matter, unreasonably have been called for at a time when competition in the industry was completely suspended during the indeterminate period of war, the resumption of full-scale competition makes such a showing unnecessary. And this is unaffected by the fact that automobiles are still in short supply. The appe lants agreed for a limited term to refrain from pursuing conduct which, in the absence of an adjudication that it was illegal, they were otherwise free to pursue and which General Motors has always been free to pursue. There has been no such adjudication and successive extensions of the term have expired. The crucial fact now is not the degree of actual disadvantage but the persistence of an inequality against which the appellants had secured the Government's protection. Yet the Government seeks a change in the express terms of the decree which would perpetuate that inequality. The Government has not sustained the burden of showing good cause why a court of equity should grant relief from an undertaking well understood and carefully formulated. If the Government seeks to outlaw possible arrangements by Ford with a finance corporation, it must establish its case in court against Ford as against General Motors and not draw on a consent which by its very terms is not available. 13 The judgment is reversed and the cause remanded for proceedings not inconsistent with this opinion. 14 Reversed. 15 Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of these cases. 16 Mr. Justice BLACK, dissenting. 17 The Court appears to accept the argument of appellants that this consent decree must be treated as though it were a contract between private persons for purchase of an automobile. But a consent decree is not a contract. A consent decree in an antitrust proceeding like a decree entered after a contest, must be treated as a judicial determination and order made in the public interest. United States v. Swift & Co., 286 U.S. 106, 114, 115, 52 S.Ct. 460, 462, 76 L.Ed. 999. That means, I would suppose, that before the restraints in this decree are lifted, a showing a should be made that such action would not tend to generate future violations of the antitrust laws. No such showing has been made here. As I see the case, modification of the decree under the circumstances shown will aid and encourage destruction of competition contrary to law. For so far as existing effective court restraints are concerned, modification will give Ford freedom to help the appellant finance companies crush their competitors. 18 Even though Ford and Commercial Investment Trust Corporation (C.I.T.) made no admission of the facts charged in the original complaint, the undenied allegations of the bill were sufficient to support the decree's prohibition against future competition-destroying practices. Swift & Co. v. United States, 276 U.S. 311, 327, 48 S.Ct. 311, 315, 72 L.Ed. 587. In very brief summary, those facts, so far as relevant to the view I take, are these: 19 At the time the decrees were entered, Ford made and sold about 25% of all cars in the United States, Chrysler 25% and General Motors 44%. Ford and the others sell to dealers about four billion dollars' worth of cars yearly, requiring cash on delivery. The dealers then sell to retail customers. About 60% of the retail sales are on credit. Dealers not permitted to sell other makes of cars are wholly dependent upon Ford's, G.M.'s or Chrysler's favorable treatment for their business lives. The dealer agencies are for one year, but the agency contracts can be canceled on short notice and without cause. The dealers are thus economic dependents of the company whose cars they sell. While there are about 375 independent finance companies, C.I.T. and its subsidiaries, appellants here, prior to entry of this court decree, furnished about 82% of the money for Ford dealer purchases, and 70% of that furnished for Ford retail purchases. The favored companies got this major percentage of Ford car loans because Ford supplied them with offices at its factories, kept them informed of sales, gave more liberal payment terms to its dealers who dealt with C.I.T., required dealers to keep their books and records open so that Ford could prevent transactions with other finance companies, sent Ford factory representati es with C.I.T. agents to help 'persuade' dealers to do business with C.I.T., and required dealers who handled loans through others to make satisfactory explanations to Ford. 20 This Ford favored finance company, C.I.T., asks modification. One reason suggested for modification is that the C.I.T. group has lost a portion of Ford financing since the decree subjected them to competition with other finance companies. They complain of the decree not because it stifles competitive practice; quite the contrary, they complain because the decree infringes on C.I.T.'s monopolistic sanctuary. 21 In substance, the modifications requested are, (1) that Ford be permitted to acquire ownership, control, or an interest in a finance company; (2) that Ford be permitted to endorse, recommend, or advertise particular finance companies to its dealers; (3) that Ford be permitted to arrange with finance companies that its representatives go with agents of the favored company to dealers to 'influence' those dealers to negotiate loans for themselves and retail purchasers only with the favored companies. Freedom to influence dealers would appear to offer a perfect opportunity for Ford and the favored finance companies to deprive Ford dealers and retail purchasers of all benefits in the way of low interest rates and liberal loan terms the dealers and retailers might otherwise obtain from competition among the hundreds of finance companies in the country. For it is sure, if the undenied allegations of the complaint be accepted, as they should be at this stage, that the economic power of Ford over its dealers is so great that dealers who desperately need Ford cars will be helpless to resist Ford's 'influence' and 'persuasion,' whether legalistically called 'coercion' or not. Due to Ford's power, what dealer could afford to draw nice distinctions between 'persuasion' and 'coercion'? I can hardly believe that the showing of an agreement between Ford and C.I.T. to return to their old methods of 'persuasion' would fail to support a finding of unreasonable restraint of trade. 22 It must be remembered that Ford neither promised, nor is it required by this court's action, to refrain from using its overpowering influence to 'persuade' its dealers in the same old way. Ford and C.I.T. rely here on no showing of an intent to abide by the antitrust law; they rely on the literal language of what they treat as a contract with government prosecutors. But government officers have no power, by contract or otherwise, to permit violations of the law, even should they attempt to do so, which in this case I do not think they did. Had General Motors been acquitted on the criminal charge of violating the antitrust laws, there would be merit in the contention of Ford that government officers should not insist on continuance of this injunction against Ford. General Motors was not acquitted, but was convicted under an indictment alleging the same type of economic pressure practices enjoined by this consent decree. And the trial judge charged the jury that they had 'a right to find these Defendants guilty' if they found that the Government had 'proved the acts beyond all reasonable doubt that are averred in this indictment.' True the court charged the jury that acts of mere 'persuasion' were not enough, and that General Motors must have used its power 'as a club to coerce.' And the court explained dictionary differences in the abstract between 'persuasion' and 'coercion.' But the jury was considering a concrete set of facts in which the language used by General Motors, in the abstract, might only amount to 'persuasion,' while the language plus General Motor's economic power might amount to 'coercion.' And the jury's verdict of guilty, viewed in the light of the court's charge, means to me that the persuasion plus economic power charged and proved in the General Motors case, which were in substance the identical acts and practices charged and enjoined in this case, showed use of 'a club to coerce' in violatio of the antitrust laws. I therefore agree with the finding of the District Court here in denying Ford's motion modify, namely that the agreements, acts, and practices such as here enjoined constituted a proper basis for the general verdict of guilty in the General Motors case. Consequently, I think that the Government has fairly met the consent decree's condition with reference to the conviction of General Motors. 23 Nor do I believe that in the present state of the record this Court should lift the ban against Ford's acquisition of or affiliation with a finance company. The law prohibits acquisition by one corporation of the whole or any part of the stock of 'another corporation * * * where the effect of such acquisition may be * * * to restrain * * * commerce in any section or community, or tend to create a monopoly of any line of commerce.' 38 Stat. 731, 732, 15 U.S.C. § 18, 15 U.S.C.A. § 18. There can be no doubt that affiliation between Ford and a certain group of finance companies will lessen the opportunity of other finance companies to compete for the automobile loan contracts both of dealers and retail purchasers. And where the volume of business as here involves 25% of all automobile sales (and eventually probably in excess of 90%) the tendency to monopoly is aggravated. 24 Ford relies upon allegations made in its motion to modify, to the effect that it will be competitively injured if denied an opportunity to affiliate with a finance company and to 'persuade' its dealers to borrow from that company alone, so long as General Motors is allowed to 'persuade' its dealers to borrow from a General Motors affiliate or subsidiary. But Ford has not proposed to the Court any legally allowable plan for affiliation, nor has it shown the Court that continuance of the decree will cause it to suffer a competitive disadvantage in the sale of cars. Failure of proof in these two respects was held an adequate ground for denying a motion of Chrysler Corporation to amend a decree precisely like this one. Chrysler Corp. v. United States, 316 U.S. 556, 564, 62 S.Ct. 1146, 1150, 86 L.Ed. 1668. We should take the same action in this case where the District Court specifically has found that Ford had failed to prove that continuance of the decree would subject Ford to a competitive disadvantage. Moreover, it is difficult to imagine how Ford could be suffering a competitive disadvantage in the sale of cars in today's famished car market. So far as this record shows, Ford would not lose the sale of a single car by leaving this decree as it is. And Ford does not rely on a desire to make a profit, secret or open, out of loans its dealers must obtain to pay Ford, or loans retail purchasers must get to pay dealers. If Ford professed a desire to make loans as a finance company in open competition with other finance companies, that would be one thing. It is quite another to ask a court of equity to lift its ban in order that Ford may dictate loan terms for dealers and retail purchasers after Ford has sold the cars in the market. The only competitive disadvantage that this record reveals is that from which Ford dealers, Ford retail purchasers, and independent loan agencies will suffer when the modification of this decree gives Ford and C.I.T. the green light. 25 Furthermore, the Court's action here means that the Chrysler decree must be modified without the showing this Court required in the Chrysler case. And it means that future destruction of competition in automobile financing by Ford, Chrysler, and General Motors has the tacit approval of this Court. For if Ford should after today 'affiliate' with C.I.T., or renew its 'persuasion' of dealers, could it be expected that this Court would thereafter hold these other companies legally responsible, even if it should be thought that today's permitted conduct ran afoul of the anti-trust law? Is it conceivable that if Ford now 'affiliates' with C.I.T., Ford's 'vested interest,' acquired with this Court's tacit approval, would be aken from Ford by a federal court? 26 Much talk about refined distinctions in the court's charge in the General Motors case cannot create doubts as to the effect of the decision today. The result will be destruction of competition in automobile financing. Hereafter dealers and retail purchasers cannot depend on competition to keep interest rates at a fair level. Their sole hope for low interest rates and loans on liberal terms will be the spontaneous generosity of Ford, General Motors, and Chrysler. It may be that monopoly in automobile loans is a good thing, but the anti-trust laws assume that competition is better. 27 I would affirm this judgment. 28 Mr. Justice RUTLEDGE concurs in this dissent. 29 Mr. Justice DOUGLAS joins in this opinion insofar as it protests against lifting the ban on Ford's acquisition of or affiliation with a finance company. 1 '12. The Respondent Finance Company shall not pay to any automobile manufacturing company and the Manufacturer shall not obtain from any finance company any money or other thing of value as a bonus or commission on account of retail time sales paper acquired by the finance company from dealers of the Manufacturer. The Manufacturer shall not make any loan to or purchase the securities of Respondent Finance Company or any other finance company, and if it shall pay any money to Respondent Finance Company or any other finance company with the purpose or effect of inducing or enabling such finance company to offer to the dealers of the Manufacturer a lower finance charge than it would offer in the absence of such payment, it shall offer in writing to make, and if such offer is accepted it shall make, payment upon substantially similar bases, terms and conditions to every other finance company offering such lower finance charge; provided, however, that nothing in this paragraph contained shall be construed to prohibit the Manufacturer from acquiring notes, bonds, commercial paper, or other evidence of indebtedness of Respondent Finance Company or any other finance company in the open market. 'It is an express condition of this decree that notwithstanding the provisions of the preceding paragraph of this paragraph 12 and of any other provisions of this decree, if an effective final order or decree not subject to further review shall not have been entered on or before January 1, 1941, requiring General Motors Corporation permanently to divest itself of all ownership and control of General Motors Acceptance Corporation and of all interest therein, then and in that event, nothing in this decree shall preclude the Manufacturer from acquiring and retaining ownership of and/or control over or interest in any finance company, or from dealing with such finance company and with the dealers in the manner provided in this decree or in any order of modification or suspension thereof entered pursuant to paragraph 12a. The court, upon application of the respondents or any of them, will enter an order or decree to that effect at the foot of this decree, and the right of any respondent herein to make the application and to obtain such order or decree is expressly conceded and granted. '12a. It is a further express condition of this decree that: '(1) If the proceeding now pending in this court against General Motors Corporation instituted by the filing of an indictment by the Grand Jury on May 27, 1938, No. 1039, or any further proceeding initiated by reindictment of General Motors Corporation for the same alleged acts, is finally terminated in any manner or with any result except by a judgment of conviction against General Motors Corporation and General Motors Acceptance Corporation therein, then and in that event every provision of this decree except those contained in this subparagraph (1) of this paragraph 12a of paragraph (1) of this paragraph 12a of operative and be suspended, until such time as restraints and requirements in terms substantially identical with those imposed herein shall be imposed upon General Motors Corporation and General Motors Acceptance Corporation and their subsidiaries either (a) by consent decree, or (b) by final decree of a court of competent jurisdiction not subject to further review or (c) by decree of such court which although subject to further review continues effective. The court reserves jurisdiction upon application of any party to enter orders at the foot of this decree in accordance with the provisions of this paragraph. '(2) A general verdict of guilty returned against General Motors Corporation in said proceeding, followed by the entry of judgment thereon, shall be deemed to be a determination of the illegality of any agreement, act or practice of General Motors Corporation which is held by the trial court, in its instructions to the jury, to constitute a proper basis for the return of a general verdict of guilty. A special verdict of guilty returned against General Motors Corporation in said proceeding, followed by the entry of judgment thereon, shall be deemed to constitute a determination of the illegality of any agreement, act or practice of General Motors Corporation which is the subject of such special verdict of guilty. A plea of guilty or nolo contendere by General Motors Corporation followed by the entry of judgment of conviction thereon, shall be deemed to be a determination of the illegality of any agreement, act or practice which is the subject matter of such plea. The determination, in the manner provided in this clause, of the illegality of any agreement, act or practice of General Motors Corporation shall (for the purposes of clause (3) of this paragraph) be considered as the equivalent of a decree restraining the performance by General Motors Corporation of such agreement, act or practice, unless or until such judgment is reversed, or unless such determination is based, in whole or in part, (a) upon the ownership by General Motors Corporation of General Motors Acceptance Corporation, or (b) upon the performance by General Motors Corporation of such agreement, act or practice in combination with some other agreement, act or practice with which the respondents are not charged in the indictment heretofore filed against them by the Grand Jury on May 27, 1938, No. 1041; '(3) After the entry of a consent decree against General Motors Corporation, or after the entry of a litigated decree, not subject to further review, against General Motors Corporation by a court of the United States of competent jurisdiction, or after the entry of a judgment of conviction against General Motors Corporation in the proceeding hereinbefore referred to, or after January 1, 1940 (whichever date is earliest), the court upon application of any respondent from time to time will enter orders: '(i) suspending each of the restraints and requirements contained in sub-paragraphs (d) to (f) and (h) to (i), inclusive, of paragraph 6 of this decree to the extent that it is not then imposed, and until it shall be imposed, in substantially identical terms, upon General Motors Corporation and its subsidiaries, and suspending each of the restraints and requirements contained in sub-paragraphs (a), (c) and (d) of paragraph 7 of this decree to the extent that it is not imposed and until it shall be imposed in substantially identical terms, upon General Motors Acceptance Corporation and its subsidiaries, either (w) by consent decree, or (x) by final decree of a court of competent jurisdiction not subject to further review, or (y) by decree of such court which, although subject to further review, continues effective, or (z) by the equivalent of such a decree as defined in clause (2) of this paragraph; provided, however, that if the provisions of a consent or litigated decree against General Motors Corporation in its subsidiaries corresponding to subparagraphs (j) and (k) of paragraph 6 of this decree are different from said sub-paragraphs of this decree, then upon application of the respondents any provision or provisions of said sub-paragraphs will be modified so as to conform to the corresponding provisions of such General Motors Corporation decree; '(ii) suspending each of the restraints and requirements contained in the remaining sub-paragraphs (a), (b), (c) and (g) of paragraph 6 to the extent that it is not then imposed, and until it shall be imposed, upon General Motors Corporation and its subsidiaries in any manner specified in the foregoing sub-clause (i) of clause (3), if any respondent shall show to the satisfaction of the court that General Motors Corporation or its subsidiaries is performing any agreement, act or practice prohibited to the Manufacturer by said remaining sub-paragraphs, and suspending each of the restraints and requirements contained in sub-paragraph (b) of paragraph 7 of this decree to the extent that it is not imposed, and until it shall be imposed, upon General Motors Acceptance Corporation and its sub- sidiaries in any said manner, if any respondent shall show to the satisfaction of the court that General Motors Acceptance Corporation is performing any agreement, act or practice prohibited to Respondent Finance Company by said sub-paragraph (b) of paragraph 7; '(iii) Suspending the restraints of sub-paragraph (d) of paragraph 7 of this decree as to Respondent Finance Company, in the event that the restraints of sub-paragraph (i) of paragraph 6 of this decree are suspended as to the Manufacturer. '(4) The right of the respondents or any of them to make any application for suspension of any provision of this decree in accordance with the provisions of this paragraph and to obtain such relief is hereby expressly granted. 'In the event that at any time prior to the date when General Motors Corporation had permanently divested itself of all ownership and control of and interest in General Motors Acceptance Corporation, General Motors Acceptance Corporation shall make available to dealers of General Motors Corporation in any area a finance charge, on all or any class of automobiles sold by dealers of General Motors Corporation, less than the finance charge then generally available to dealers of the Manufacturer within such area, nothing in this decree shall prevent the Manufacturer from making, and the Manufacturer may make, adjustments, allowances or payments to or with all of its dealers in such area who agree to reduce to an amount approved by the Manufacturer (but not less than that then made available by General Motors Acceptance Corporation) the finance charges which such dealers of the Manufacturer in such area receive from any class of retail purchasers of automobiles, provided that such adjustments, allowances or payments shall not discriminate among such dealers in such area.' 2 Their full text is as follows: '(6.) (e) Except as provided by sub-paragraphs (j) and (k) of this paragraph 6. '(i) the Manufacturer shall not establish any practice, procedure or plan for the retail or wholesale financing of automobiles for the purpose of enabling Respondent Finance Company or any other finance company or companies to enjoy a competitive advantage in obtaining the patronage of dealers through any service, facility or privilege extended by the Manufacturer pursuant to such practice, procedure or plan if such service, facility or privilege or a service, facility or privilege corresponding thereto, is not made available upon its written request to any other finance company upon substantially similar terms and conditions; and '(ii) so long as the Manufacturer shall continue to afford any service, facility or privilege not otherwise specifically referred to in this decree to Respondent Finance Company or any other finance company or companies, it shall not refuse to afford similar or corresponding services, facilities or privileges upon substantially similar terms and conditions and upon written request to any other finance company for the purpose of giving Respondent Finance Company or any other finance company or companies a competitive advantage in obtaining the patronage of dealers; provided that it shall not be a violation of this decree for the Manufacturer to afford such service, facility or privilege only to registered finance companies as defined in sub-paragraph (j) of this paragraph 6 or only to a finance company designated in writing to the Manufacturer by the dealer or prospective dealer; 'the written request shall specify in each instance the particular service, facility or privilege desired; '(6.) (i) The Manufacturer shall not, except in each instance upon written request of the dealer or prospective dealer, arrange or agree with Respondent Finance Company or any other finance company that an agent of the Manufacturer and an agent of the finance company shall together be present with any dealer or prospective dealer for the purpose of influencing the dealer to patronize Respondent Finance Company or such other finance company; provided, however, that it shall not be a violation of this decree for the Manufacturer to assist any dealer or prospective dealer, because of said dealer's or prospective dealer's financial situation or requirements, by joint conference with him and a representative of a particular finance company, to obtain special facilities or services (such term not including only the financing of the shipment or delivery of automobiles to such dealer or prospective dealer and/or only the purchase or acquisition of retail time sales paper from him in the regular course of business) from the particular finance company and, in part consideration of such special facilities or services, for such dealer or prospective dealer to arrange to do business with such finance company on an exclusive basis for a reasonable period of time as may be agreed between them; '(6.) (k) The Manufacturer shall not recommend, endorse or advertise the Respondent Finance Company or any other finance company or companies to any dealer or to the public; provided, however, that nothing in this decree contained shall prevent the Manufacturer in good faith: '(1) From adopting from time to time a plan or plans of financing retail sales of new automobiles made by the Manufacturer or from time to time withdrawing or modifying the same; '(2) From recommending to its dealers the use of such plans; '(3) From advertising to the public and recommending the use of such plans. '7. The Respondent Finance Company: '(d) Shall not, except upon written request of the dealer or prospective dealer, arrange or agree with the Manufacturer that an agent of the Manufacturer and an agent of Respondent Finance Company shall together be present with any dealer or prospective dealer for the purpose of influencing the dealer or prospective dealer to patronize Respondent Finance Company; provided, however, that it shall not be a violation of this decree for Respondent Finance Company by joint conference with a dealer or prospective dealer and a representative of the Manufacturer to agree to furnish to such dealer or prospective dealer, because of his financial situation or requirements, special facilities or services (such term not including only the financing of the shipment or delivery of automobiles to such dealer or prospective dealer and/or only the purchase or acquisition of retail time sales paper from him in the regular course of business) and in part consideration of such special facilities or services to arrange for the dealer or prospective dealer to do business with Respondent Finance Company on an exclusive basis for such reasonable period of time as may be agreed between them.' 3 'It is not unreasonable for the General Motors Company to have a finance company. It is not unreasonable for the General Motors Company to have contracts with its dealers for a year or to have a cancellation clause in them. They have a perfect right to have a finance company and to recommend its use. They have a perfect right to cancel a contract from their dealer as long as they are not performing any unreasonable act. 'They have a right to determine whom they will sell their cars to, and they have a right to determine whom they will not sell their cars to because cars are their product and they are their property and no law compels them to sell them to any man they don't want to sell them to; but that is not the charge in this case. The charge is not that by having difficulty in contracts in itself, these defendants did anything wrong; it is not charged here that to recommend the use of GMAC there is anything wrong; it is not charged here that cancellation for cause is anything wrongful; but the Government's theory in this case is irrespective of these contracts and independent of them and outside of them the conditions have been asserted that they, under the designation of those to the grand jurors unknown, the actions have been such that the possibility, the ability to cancel, the ability to refuse to renew a contract, have been used as clubs upon the dealers to force them to use GMAC and that these acts that are complained of were acts that were used to force the dealers to use GMAC, the Government insists that these acts inspired by that motive have been such as to result in cancellations that otherwise would not have occurred; in discriminations that would not otherwise have occurred in the shipment of cars in interstate commerce and in refusals to renew that would not otherwise have occurred, and in the use of GMAC when it otherwise would not have been used. 'In other words, the Government has no right to complain, and it may not complain of the defendants' right to limit its sales of cars to persons whom it may select, its right to determine who it shall sell to, its rights to determine upon what terms it will sell, its right to pick its own dealers. 'It can only complain if the defendants do sufficient of these acts charged in the indictment as constitute duress upon the dealer to accomplish a result that would have otherwise not have been accomplished, and to make a dealer do something that he would not have done of his own free will. 'That; almost, is the question in this case—whether the dealer could act as a freeman; whether he could act of his own free will. 'The defendants say: "We never imposed any restrictions upon that freedom of action.' 'The Government says it did and there is that question. If it did—if the defendants did that sort of thing—and if it resulted in an unreasonable restriction and unreasonable restraint of interstate commerce, then you would have a right to find them guilty. 'If they did not do it, this lawsuit is at an end, and that is a question which you have got to decide. 'You know, you have heard of the terms: 'Exposition; 'Persuasion; 'Argument; 'Coercion. 'They are different steps. They are graduated steps that I suppose every salesman goes through, except perhaps the last. 'In Exposition one may expound the merits of that which he has to sell; he may explain its nature and by his exposition make a clear picture of what he has. 'By persuasion he may endeavor to persuade the person to whom he is talking to accept that which he has to offer. 'There is little advancement in his further progress, to argue. 'Persuasion means something softer than argument, perhaps, but he may argue with him, and argue with him the respective merits of his product and other products being offered to the person to whom he makes his offer. 'All of these are proper. 'He may not go beyond that and use something that it within his power to use as a club to coerce the person to accept that which he has to offer. 'You must remember that, after all, this coercion, if you find that coercion exists, then the ultimate question is; Has that resulted in unreasonable restraint of interstate commerce? And that is a question for you to determine from all of the evidence.' Quite apart from Ford's and CIT's consent to forego the opportunities outlawed by sub-paragraphs 6(e), (i), (k) and 7(d), the Government urges that a court of equity should refuse to suspend or modify them by claiming that the practices restrained by those paragraphs are in any event illegal under the Sherman Law. But since this has neither been admitted nor proven, and since ascertainment of illegality under the Sherman Law normally depends on the circumstances of a particular situation and the inferences they yield, the appellants have a right to insist that, so long as interdiction of these practices has not been decreed against General Motors, the Government be put to its proof. The lifting of the restraints imposed by the consent decree does not, of course, affect the liability of Ford for any violations of the Sherman Law that the Government may establish in court. Moreover, to the extent that such restraints may at some future date be imposed on General Motors, they will, by sub-paragraph 12a(3) equally fetter Ford.
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335 U.S. 329 69 S.Ct. 91 93 L.Ed. 41 ECKENRODEv.PENNSYLVANIA R. CO. No. 28. Argued Oct. 22, 1948. Decided Nov. 15, 1948. Mr. B. Nathaniel Richter, of Philadelphia, Pa., for petitioner. Mr. Owen B. Rhoads, of Philadelphia, Pa., for respondent. PER CURIAM. 1 This was a suit in the United States District Court for the Eastern District of Pennsylvania in which the petitioner claimed damages under the Federal Employers' Liability Act1 and the Boiler Inspection Act2 for the death of her husband while in the respondent's employ as a brakeman. 2 In response to specific interrogatories, the jury absolved the respondent of liability under the Boiler Inspection Act, but found that there had been such negligence as to create liability under the Federal Employers' Liability Act. It returned a verdict for petitioner. Judgment was entered upon the verdict. 3 The respondent moved the Court to set aside the verdict and the judgment entered thereon in accordance with its motion for directed verdict under Rule 50 of the Federal Rules of Civil Procedure, 28 U.S.C.A. The judgment was vacated; the verdict set aside, and judgment entered in favor of the respondent. The District Court was of the opinion that there was no evidence upon which a finding of negligence could be predicated, and that, in any event, there was no evidence of a causal relation between the claimed negligence and the accident. 71 F.Supp. 764. 4 Upon appeal to the United States Court of Appeals for the Third Circuit, the judgment was affirmed. A rehearing was granted, and there was an affirmance with one judge dissenting. 164 F.2d 996. 5 There is a single question presented to us: Was there any evidence in the record upon which the jury could have found negligence on the part of the respondent which contributed, in whole or in part,3 to Eckenrode's death? Upon consideration of the record, the Court is of the opinion that there is no evidence, nor any inference which reasonably may be drawn from the evidence, when viewed in a light most favorable to the petitioner, which can sustain a recovery for her. 6 Accordingly, the judgment is affirmed. 7 Affirmed. 8 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE dissent. 1 35 Stat. 65, 53 Stat. 1404, 45 U.S.C. § 51, 45 U.S.C.A. § 51. 2 36 Stat. 913, as amended, 45 U.S.C. § 23, 45 U.S.C.A. § 23. 3 45 U.S.C. § 51, 45 U.S.C.A. § 51.
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335 U.S. 355 69 S.Ct. 112 93 L.Ed. 61 UNITED STATESv.URBUTEIT. No. 13. Argued Oct. 13, 14, 1948. Nov. 22, 1948. As Amended Dec. 6, 1948. Messrs. Philip B. Perlman, Sol. Gen., of Washington, D.C., Alexander M. Campbell, Asst. Atty. Gen., Philip Elman, Sp. Asst. to Atty. Gen., and William W. Goodrich and Bernard D. Levinson, Attys., Federal Security Agency, both of Washington D.C., for the United States. Mr. H. O. Pemberton, of Tallahassee, Fla., for respondent. Opinion of the Court by Mr. Justice DOUGLAS, announced by Mr. Justice REED. 1 The United States filed a lib l under the Federal Food, Drug, and Cosmetic Act, 52 Stat. 1044, 21 U.S.C. § 334, 21 U.S.C.A. § 334, seeking seizure of 16 machines labeled 'Sinuothermic.' The libel alleged that the device was misbranded within the meaning of the Act, 52 Stat. 1050, 21 U.S.C. § 352(a), 21 U.S.C.A. § 352(a), in that representations in a leaflet entitled 'The Road to Health' relative to the curative and therapeutic powers of the device in the diagnosis, cure, mitigation, treatment and prevention of disease were false and misleading. It charged that the leaflet had accompanied the device in interstate commerce. 2 Respondent, Fred Urbuteit, appeared as claimant of several of the devices. He admitted that the devices and leaflets had been shipped in interstate commerce, but denied that they were shipped together or that they were related to each other. He also denied that the statements made in the leaflet were false or misleading. The case was tried without a jury and the articles were ordered condemned. The judgment was reversed by the Court of Appeals. 164 F.2d 245. The case is here on certiorari to resolve the conflict between it and Kordel v. United States, 335 U.S. 345, 69 S.Ct. 106. 3 Respondent Urbuteit terms himself a naturopathic physician and conducts the Sinuothermic Institute in Tampa, Florida. The machines against which the libel was filed are electrical devices allegedly aiding in the diagnosis and cure of various diseases and physical disorders such as cancer, diabetes, tuberculosis, arthritis, and paralysis. The alleged cures effected through its use are described in the allegedly false and misleading leaflet, 'The Road to Health,' published by Urbuteit and distributed for use with the machines. 4 Urbuteit shipped from Florida a number of these machines to one Kelsch, a former pupil of his who lives in Ohio. Kelsch used these machines in treating his patients and, though he did not receive them as a merchant, he sold some to patients. As part of this transaction Urbuteit contracted to furnish Kelsch with a supply of leaflets, which were sent from Florida to Ohio at a different time than when the machines were forwarded. Kelsch used the leaflets to explain the machines to his patients. 5 The leaflets seem to have followed the shipment of the machines. But as Kordel v. United States, supra, holds, that is immaterial where the advertising matter that was sent was designed to serve and did in fact serve the purposes of labeling. This machine bore only the words, U.S. Patent Sinuothermic Trade Mark. It was the leaflets that explained the usefulness of the device in the diagnosis, treatment, and cure of various diseases. Measured by functional standards, as § 201(m)(2) of the Act, 21 U.S.C.A. § 321(m)(2), permits, these leaflets constituted one of the types of labeling which the Act condemns. 6 The power to condemn is contained in § 304(a) and is confined to articles 'adulterated or misbranded when introduced into or while in interstate commerce'.1 We do not, however, read that provision as requiring the advertising matter to travel with the machine. The reasons of policy which argue against that in the case of criminal prosecutions under § 303, 21 U.S.C.A. § 333, are equally forcible when we come to libels under § 304(a). Moreover, the common sense of the matter is to view the interstate transaction in its entirety—the purpose of the advertising and its actual use. In this case it is plain to us that the movements of machines and leaflets in interstate commerce were a single interrelated activity, not separate or isolated ones. The Act is not concerned with the purification of the stream of commerce in the abstract. The problem is a practical one of consumer protection, not dialectics. The fact that the false literature leaves in a separate mail does not save the article from being misbranded. Where by functional standards the two transactions are integrated, the requirements of § 304(a) are satisfied, though the mailings or shipments are at different times. 7 The Court of Appeals held that certain evidence tendered by Urbuteit as to the therapeutic or curative value of the machines had been erroneously excluded at the trial, a ruling that we are not inclined to disturb. Petitioner claims, however, that the error was not prejudicial. The argument is that since the evidence of the false and misleading character of the advertising as respects the diagnostic capabilities of the machines was overwhelming, that false representation was adequate to sustain the condemnation, though it be assumed that the therapeutic phase of the case was not established. We do not reach that question. Since the case must be remanded to the Court of Appeals, that question and any others that have survived will be open for consideration by it. 8 Reversed. 9 Mr. Justice BLACK, Mr. Justice FRANKFURTER, Mr. Justice MURPHY, and Mr. Justice JACKSON dissent for the reasons stated in their dissent in Kordel v. United States, 335 U.S. 345, 69 S.Ct. 106, although this case arises under the limitation of § 304(a), 'while in interstate commerce,' which has a different scope from § 301(k), while 'held for sale after shipment in interstate commerce.' 1 The relevant portion of this section reads as follows: 'Any article of food, drug, device, or cosmetic that is adulterated or misbranded when introduced into or while in interstate commerce * * * shall be liable to be proceeded against while in interstate commerce, or at any time thereafter, on libel of information and condemned in any district court of the United States within the jurisdiction of which the article is found * * *.'
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335 U.S. 345 69 S.Ct. 106 93 L.Ed. 52 KORDELv.UNITED STATES. No. 30. Argued Oct. 14, 1948. Decided Nov. 22, 1948. Rehearing Denied Dec. 20, 1948. See 335 U.S. 900, 69 S.Ct. 298. Mr. Arthur D. Herrick, of New York City, for petitioner. Mr. Philip B. Perlman, Sol. Gen., of Washington, D.C., for respondent. Opinion of the Court by Mr. Justice DOUGLAS, announced by Mr. Justice REED. 1 This case and United States v. Urbuteit, 335 U.S. 355, 69 S.Ct. 112, decided this day, are here on certiorari to resolve a conflict among the circuits in the construction of the Federal Food, Drug, and Cosmetic Act of June 25, 1938. 52 Stat. 1040, 21 U.S.C. § 301 et seq., 21 U.S.C.A. § 301 et seq. 2 Kordel was charged by informations containing twenty counts of introducing or delivering for introduction into interstate commerce misbranded drugs. He was tried without a jury, found guilty, and fined two hundred dollars on each count, 66 F.Supp. 538. This judgment was affirmed on appeal. 164 F.2d 913. 3 Kordel writes and lectures on health foods from information derived from studies in public and private libraries. Since 1941 he has been marketing his own health food products, which appear to be compounds of various vitamins, minerals and herbs. The alleged misbranding consists of statements in circulars or pamphlets distributed to consumers by the vendors of the products, relating to their efficacy. The petitioner supplies these pamphlets as well as the products to the vendors. Some of the literature was displayed in stores in which the petitioner's products were on sale. Some of it was given away with the sale of products; some sold independently of the drugs; and some mailed to customers by the vendors. 4 It is undisputed that petitioner shipped or caused to be shipped in interstate commerce both the drugs and the lite ature. Seven of the counts charged that the drugs and literature were shipped in the same cartons. The literature involved in the other counts was shipped separately from the drugs and at different times—both before and after the shipments of the drugs with which they were associated. The question whether the separate shipment of the literature saved the drugs from being misbranded within the meaning of the Act presents the main issue in the case. 5 Section 301(a) of the Act prohibits the introduction into interstate commerce of any drug that is adulterated or misbranded.1 It is misbranded according to § 502(a) if its 'labeling is false or misleading in any particular' and unless the labeling bears 'adequate directions for use'. § 502(f). The term labeling is defined in § 201(m) to mean 'all labels2 and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) accompanying such article.' Section 303 makes the violation of any of the provisions of § 301 a crime.3 6 In this case the drugs and the literature had a common origin and a common destination. The literature was used in the sale of the drugs. It explained their uses. Nowhere else was the purchaser advised how to use them. It constituted an essential supplement to the label attached to the package. Thus the products and the literature were interdependent, as the Court of Appeals observed. 7 It would take an extremely narrow reading of the Act to hold that these drugs were not misbranded. A criminal law is not to be read expansively to include what is not plainly embraced within the language of the statute (United States v. Resnick, 299 .S. 207, 57 S.Ct. 126, 81 L.Ed. 127; Kraus & Bros. v. United States, 327 U.S. 614, 621, 622, 66 S.Ct. 705, 707, 708, 90 L.Ed. 894), since the purpose fairly to apprise men of the boundaries of the prohibited action would then be defeated. United States v. Sullivan, 332 U.S. 689, 693, 68 S.Ct. 331, 334; Winters v. People of State of New York, 333 U.S. 507, 68 S.Ct. 665. But there is no canon against using common sense in reading a criminal law, so that strained and technical constructions do not defeat its purpose by creating exceptions from or loopholes in it. See Roschen v. Ward, 279 U.S. 337, 339, 49 S.Ct. 336, 73 L.Ed. 722. 8 It would, indeed, create an obviously wide loophole to hold that these drugs would be misbranded if the literature had been shipped in the same container but not misbranded if the literature left in the next or in the preceding mail. The high purpose of the Act to protect consumers who under present conditions are largely unable to protect themselves in this field4 would then be easily defeated. The administrative agency charged with its enforcement5 has not given the Act any such restricted construction.6 The textual structure of the Act is not agreeable to it. Accordingly, we conclude that the phrase 'accompanying such article' is not restricted to labels that are on or in the article on package that is transported. 9 The first clause of § 201(m)—all labels 'upon any article or any of its containers or wrappers'—clearly embraces advertising. or descriptive matter that goes with the package in which the articles are transported. The second clause 'accompanying such article'—has no specific reference to packages, containers or their contents as did a predecessor statute. See Seven Cases v. United States, 239 U.S. 510, 513, 515, 36 S.Ct. 190, 191, 192, 60 L.Ed. 411, %.l.r.a./ 1916D, 164. It plainly includes what is contained within the package whether or not it is 'upon' the article or its wrapper or container. But the second clause does not say 'accompanying such article in the package or container,' and we see no reason for reading the additional words into the text. 10 One article or thing is accompanied by another when it supplements or explains it, in the manner that a committee report of the Congress accompanies a bill. No physical attachment one to the other is necessary. It is the textual relationship that is significant. The analogy to the present case is obvious. We need not labor the point. 11 The false and misleading literature in the present case was designed for use in the distribution and sale of the drug, and it was so used. The fact that it went in a different mail was wholly irrelevant whether we judge the transaction by purpose or result. And to say that the prior or subsequent shipment of the literature disproves that it 'is' misbranded when introduced into commerce within the meaning of § 301(a), is to overlook the integrated nature of the transactions established in this case. 12 Moreover, the fact that some of the booklets carried a selling price is immaterial on the facts shown here. As stated by the Court of Appeals, the booklets and drugs were nonetheless interdependent; they were parts of an integrated distribution program. The Act cannot be circumvented by the easy device of a 'sale' of the advertising matter where the advertising performs the function of labeling. 13 Petitioner points out that in t e evolution of the Act the ban on false advertising was eliminated, the control over it being transferred to the Federal Trade Commission. 52 Stat. 114, 15 U.S.C. § 55(a), 15 U.S.C.A. § 55(a). We have searched the legislative history in vain, however, to find any indication that Congress had the purpose to eliminate from the Act advertising which performs the function of labeling. Every labeling is in a sense an advertisement. The advertising which we have here performs the same function as it would if it were on the article or on the containers or wrappers. As we have said, physical attachment or contiguity is unnecessary under § 201(m)(2). 14 There is a suggestion that the offense in this case falls under § 301(k) of the Act which includes misbranding of a drug while it is held for sale after shipment in interstate commerce.7 Since the informations contain no such charge, it is therefore claimed that the judgment must be reversed. We do not agree. Section 301(k) has a broad sweep, not restricted to those who introduce or deliver for introduction drugs in interstate commerce.8 See United States v. Sullivan, supra. Nor is it confined to adulteration or misbranding as is § 301(a). Id. It is, however, restricted to cases where the article is held for sale after shipment in interstate commerce; and, unlike § 301(a), it does not reach situations where the manufacturer sells directly to the consumer. Cf. United States v. Urbuteit, supra. Hence we conclude that we do not disturb the statutory scheme when we refuse to take from § 301(a) what is fairly included in it in order to leave the matter wholly to the service of § 301(k). The reach of § 301(a) is in this respect longer. Such a transfer to § 301(k) would create a new hiatus in the Act and thus disturb the pattern which we discern in it. 15 We have considered the other objections tendered by petitioner and find them without merit. 16 Affirmed. 17 Mr. Justice BLACK, with whom Mr. Justice FRANKFURTER, Mr. Justice MURPHY and Mr. Justice JACKSON concur, dissenting. 18 I agree with the Court's interpretation of § 502(a) and § 201(m) of the Federal Food, Drug, and Cosmetic Act. These sections considered together provide a definition for the 'misbranding' of drugs. I agree that a drug is misbranded within the meaning of the statute if false and misleading written, printed, or graphic matter is either placed upon the drug, its container or wrappers, or used in the sale of the drug as a supplement to the package label to advise consumers how to use the drug. I agree that false labels may, within the meaning of the statute, 'accompany,' that is go along with, a drug on its interstate journey even though not in the same carton, on the same train, in the same mail, or delivered for shipment the same day. But these agreements do not settle all the problems in this case. 19 The Federal Food, Drug, and Cosmetic Act does not purport to make all misbranding of drugs within the foregoing definition a federal offense. Congressional power to pass the Act is based upon the commerce clause. Consequently misbranding is only an offense if the misbranded drugs bear the statutorily defined relationships to interstate commerce. For illustration, if a person misbranded a drug which had not been and was not thereafter introduced into interstate commerce, there would be no violation of the federal Act, whatever violation there might be of state law. 20 As we pointed out in United States v. Sullivan, 332 U.S. 689, 68 S.Ct. 331, the Federal Food, Drug and Cosmetic Act creates several offenses each of which separately depends upon the relationshi the misbranded drug then bears to interstate commerce. Section 301(a) forbids the 'introduction or delivery for introduction into interstate commerce' of misbranded drugs; § 301(b) forbids misbranding while the drugs are 'in interstate commerce'; § 301(c) prohibits the 'receipt' of such drugs in interstate commerce; and § 301(k) forbids misbranding while drugs are 'held for sale after shipment in interstate commerce'. 21 The twenty counts of the information upon which this petitioner's conviction rests, charge that he had introduced drugs into interstate commerce, and that 'when' he so introduced the drugs, they were 'misbranded * * * in that * * * statements appearing in * * * bulletins and booklets accompanying' the drugs 'were false and misleading.' (Emphasis supplied.) The undisputed evidence as to thirteen of these counts showed that when the drugs were 'introduced' into interstate commerce for shipment, they were not within any fair meaning of the word 'accompanied' by the printed matter relied on as 'labeling.' The evidence under one count was that the drugs were shipped July 10, 1942, while the booklets said to be 'labels' were sent a year and a half later, January 18, 1944. Thus, each of these counts charged a violation of the separate and distinct offense of introducing misbranded drugs into interstate commerce, prohibited by § 301(a). The evidence proves the offense, if any, of violation of § 301(k), which prohibits the misbranding of drugs while held for sale after an interstate shipment. 22 The Court's interpretation of § 301(a) seems to me to create a new offense to make it a crime to introduce drugs into interstate commerce if they should subsequently be misbranded, even so long as eighteen months later while held for sale. This judicial action is justified in part on the ground that the offense Congress created in § 301(k) for holding misbranded drugs for sale after interstate shipment might not reach all situations covered by the congressionally created offense defined by § 301(a). If as the Court believes, Congress in § 301(k) has limited the situations for which it will direct punishment for holding misbranded articles for sale, I cannot agree that we should rewrite § 301(a) so as to broaden its coverage. If Congress left a hiatus, Congress should fill it if it so desires. While I do not doubt the wisdom of separating these offenses as Congress has here done, we must remember that there are dangers in splitting up one and the same transaction into many offenses. See Blockburger v. United States, 284 U.S. 299, 304, 305, 52 S.Ct. 180, 182, 76 L.Ed. 306. 23 These are serious offenses. While petitioner was fined only $200 on each count, or a total of $4,000, the maximum allowable punishment was $1,000 per count and imprisonment for one year, or for three years under other circumstances. § 303(a). The approach of Congress in this field of penal regulation has been cautious. The language used by Congress in the present law in defining new offenses has been marked by precision. I think we should exercise a similar caution before reading into the 'introduction into interstate commerce' offense, conduct which patently fits into the 'held for sale' offense. 24 I would reverse the judgment here insofar as it rests on the thirteen counts in which the Government charged offenses under § 301(a) and failed to prove them. 1 Section 301 in relevant part reads as follows: 'The following acts and the causing thereof are hereby prohibited: '(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded. '(b) The adulteration or misbranding of any food, drug, device, or cosmetic in interstate commerce. '(c) The receipt in interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise. '(k) The alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, or cosmetic, if such act is done while such article is held for sale after shipment in interstate commerce and results in such article being misbranded.' 2 The term label is defined as 'a display of written, printed, or graphic matter upon the immediate container of any article'. § 201(k). 3 'Sec. 303. (a) Any person who violates any of the provisions of section 301 shall be guilty of a misdemeanor and shall on conviction thereof be subject to imprisonment for not more than one year, or a fine of not more than $1,000, or both such imprisonment and fine; but if the violation is committed after a conviction of such person under this section has become final such person shall be subject to imprisonment for not more than three years, or a fine of not more than $10,000, or both such imprisonment and fine. '(b) Notwithstanding the provisions of subsection (a) of this section, in case of a violation of any of the provisions of section 301, with intent to defraud or mislead, the penalty shall be imprisonment for not more than three years, or a fine of not more than $10,000, or both such imprisonment and fine.' The informations, in charging violations of § 301(a), did not allege that the acts committed were done 'with intent to defraud'. Hence the maximum penalty was imprisonment for not more than a year, or a fine of not more than $1,000, or both. Prosecution by information was therefore authorized by the statute (see Duke v. United States, 301 U.S. 492, 57 S.Ct. 835, 81 L.Ed. 1243) and by Rule 7(a) of the Federal Rules of Criminal Procedure, 18 U.S.C.A. 4 See United States v. Dotterweich, 320 U.S. 277, 280, 64 S.Ct. 134, 136, 88 L.Ed. 48; United States v. Sullivan, supra, 332 U.S. 689, at page 696, 68 S.Ct. 331, at pages 335, 336. 5 See § 701 and § 201(c); 1940 Reorg. Plan No. IV, § 12, 54 Stat. 231, 5 U.S.C. § 133u, 5 U.S.C.A. § 133u. 6 The Federal Security Agency by regulation (21 C.F.R.Cum.Supp. § 2.2) has ruled: 'Labeling includes all written, printed, or graphic matter accompanying an article at any time while such article is in interstate commerce or held for sale after shipment or delivery in interstate commerce.' 7 See note 1, supra. 8 The purpose of § 301(k) was described in H.R.Rep.No.2139, 75th Cong., 3d Sess. 3 (1938), as follows: 'In order to extend the protection of consumers contemplated by the law to the full extent constitutionally possible, paragraph (k) has been inserted prohibiting the changing of labels so as to misbrand articles held for sale after interstate shipment.'
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335 U.S. 359 69 S.Ct. 114 93 L.Ed. 64 GRAND RIVER DAM AUTHORITYv.GRAND-HYDRO. No. 6. Argued Oct. 12, 13, 1948. Decided Nov. 22, 1948. Rehearing Denied Dec. 20, 1948. See 335 U.S. 900, 69 S.Ct. 298. Mr. Howard E. Wahrenbrock, of Washington, D.C., for The United States as amicus curiae. Mr. Robert L. Davidson, of Tulsa, Okl., for petitioner. [Argument of Counsel from page 360 intentionally omitted] Messrs. Robert Dade Hudson, of Tulsa, Okl., and S. Frank Fowler, of Knoxville, Tenn., for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 The federal question in this action for condemnation under Oklahoma law is whether the Federal Power Act1 had so far affected the use or value of certain land for power site purposes as to render inadmissible expert testimony which gave recognition to that land's availability for a power site. We hold that it had not. We thus see no adequate reason to reverse the Supreme Court of Oklahoma which had held that such testimony was properly admitted in a state condemnation proceeding. 2 This action was brought by the petitioner, Grand River Dam Authority, in the District Court for Mayes County, Oklahoma, to condemn and to award damages for the taking of 1,462.48 acres of that land from the respondent, Grand-Hydro. Four hundred and seventeen of these acres have been used by the petitioner as a site for its hydroelectric project, near Pensacola, on the Grand River in Oklahoma. The Commissioners, appointed by the court to assess the damages sustained by the appropriation of these lands, awarded the respondent $281,802.74. Each party, however, objected and demanded a jury trial. That trial resulted in a verdict and judgment for $136,250. On appeal, the Supreme Court of Oklahoma reversed the judgment and remanded the case for a new trial in conformity with its opinion. That opinion is important in determining the issues before us. 192 Okl. 693, 139 P.2d 798. Six judges concurred in the opinion, one in the result and two dissented. 3 In 1945, the new trial resulted in a verdict and judgment for $800,000, together with interest on $518,197.26 from January 19, 1940, which was the date on which the amount fixed by the Com issioners had been paid into court. The Supreme Court of Oklahoma affirmed this judgment, seven to two. 201 P.2d 225. We denied certiorari, 332 U.S. 841, 68 S.Ct. 263, but, on rehearing, granted it, 333 U.S. 852, 68 S.Ct. 729, because of the possible significance of the case in relation to the Federal Power Act. The United States filed a brief as amicus curice, at each stage of the proceedings, supporting the contentions of the petitioner.2 4 The petitioner is a conservation and reclamation district, created in 1935 by the Oklahoma Legislature. It is a corporate agency of the State with power to develop and sell water power and electric energy in the Grand River Basin.3 The respondent is a private corporation, organized in 1929 under the laws of Oklahoma. It has the usual powers of a public utility, including the power to develop and use the waters of the Grand River, construct dams, generate and distribute electricity and acquire by right of eminent domain, purchase or otherwise, real and personal property for its purposes. The Grand River is treated as a nonnavigable stream, tributary to the Arkansas River which is a navigable stream. 5 Long prior to this litigation the respondent acquired the acreage in question for use in its proposed development of hydroelectric power on the Grand River. In 1931, it obtained from the State Conservation Commission a state license and permit to appropriate the waters of Grand River for beneficial use, to construct a dam on that river, and there to develop hydroelectric power for sale.4 The respondent, however, never has filed with the Federal Power Commission any declaration of intention or application for a federal license relative to this project. 6 In February, 1934, the City of Tulsa filed an action in an Oklahoma court against the respondent and others seeking an adjudication of certain water rights in Spavinaw Creek and in the Grand River near Pensacola. During the pendency of that action the Oklahoma Legislature created the Grand River Dam Authority, petitioner herein, and granted to it exclusive authority to develop the Grand River in the manner described in the Act. In effect, the petitioner thus acquired a state priority over the respondent, although the respondent held title to certain water rights and to the land needed for the project. The petitioner thereupon was made a party to the Tulsa action. However, before filing its answer and cross-petition, the petitioner entered into an agreement for the voluntary assignment to it by the respondent of the latter's rights to appropriate certain river waters for the project.5 It likewise secured from the respondent the latter's title to 45 acres essential to the dam site. In due course, judgment was rendered aw rding to the petitioner a prior right to control and appropriate the required water from the river and stating that the respondent had no right therein. The petitioner secured from the respondent a voluntary conveyance of title to ten additional acres and also of certain rights of entry upon 362 acres. These made up the 417 acres referred to as the dam site. As later found by the Supreme Court of Oklahoma— 7 'The conveyances of the land were made on condition that the consideration would later be determined by agreement or condemnation and the assignment was on the condition provided for therein: 8 "It is understood, however, that this assignment and conveyance shall not, in any way, affect or impair the title of Grand-Hydro to any lands owned by it, or any interests therein, and if any lands or interest therein owned by the said Grand-Hydro, are acquired by the Grand River Dam Authority by purchase or condemnation, the value thereof or damage thereto shall be ascertained and determined as though this assignment and conveyance had never been made." Grand River Dam Authority v. Grand-Hydro, 201 P.2d 227. 9 The parties being unable to agree upon the price for the land, the petitioner filed the present action in February, 1939. The petition made no reference to the Federal Power Act or to rights claimed thereunder. The petitioner, on the other hand, based its claim upon the right to acquire the land by condemnation 'in the manner provided by general law with respect to condemnation' which had been granted to the petitioner by the Grand River Dam Authority Act.6 The project was to be located on the upper reaches of the Grand (or Neosho) River, near Pensacola, above the river's confluence with Spavinaw Creek. In the meantime, on December 15, 1937, the petitioner had filed with the Federal Power Commission a declaration of intention under § 23(b) of the Federal Power Act.7 In that declaration the petitioner stated that— 10 'The construction of said project will probably not affect present or prospective navigation for the reason that the Grand River is not a navigable stream in law or in fact, and the navigability of the Arkansas and Mississippi rivers will not be appreciably affected thereby. The construction of said project will not affect any public lands or reservations of the United States, or the interests of interstate or foreign commerce.' 11 If the Commission had agreed with the foregoing statement, § 23(b) would have permitted construction of the dam merely upon petitioner's compliance with state laws. However, on February 11, 1938, the Commission found that— 12 '(c) The co struction and operation of said project as proposed by the declarant will affect navigable stages of the Arkansas River, a navigable water of the United States, to which said Grand River is tributary; 13 'The Commission therefore finds that: 14 'The construction and operation of said project in the manner proposed by the declarant will affect the interests of interstate commerce.' 15 Thereupon, the petitioner sought and, on July 26, 1939, secured from the Commission the federal license required for the project as one affecting navigable waters and reservations of the United States. The petitioner however, has not, by amendment or otherwise, based its right of condemnation in the present case upon the Federal Power Act or upon any federal license issued thereunder. 16 This proceeding was brought in an Oklahoma court, by a government agency of Oklahoma, to exercise a right of condemnation granted by Oklahoma. It does not seek to condemn or to award damages for water rights. It seeks only to condemn certain land and to assess damages due to the taking of that land. At the original trial, the court excluded from the jury evidence of the value of the land insofar as such evidence was based upon the availability of that land for a dam site. On appeal, the Supreme Court of Oklahoma held that such exclusion constituted reversible error and it remanded the case for retrial in conformity with its opinion. That opinion stated the law of Oklahoma as follows: 17 'The measure of compensation in such case is the fair market or cash value of the land condemned. City of Tulsa v. Creekmore, 167 Okl. 298, 29 P.2d 101, 102. In that case the court, speaking of the elements to be considered in determining market value, said: 18 "It is the market value that is the test and not its value for some particular use to which it might be subjected, although its adaptability to this particular use may be considered as one of the factors in ascertaining the market value when they enter into and affect the cash market value of the property. Revell v. City of Muskogee, 36 Okl. 529, 121 P. 833; Public Service Co. v. Leatherbee, 311 Ill. 505, 143 N.E. 97.' 19 'And in the syllabus by the court the fair cash or market value of land taken in eminent domain is defined as follows: 20 "By fair market value is meant the amount of money which a purchaser willing but not obliged to buy the property would pay to an owner willing but not obliged to sell it taking into consideration all uses to which the land was adapted and might in reason be applied.' 21 'With reference to the question of adaptability or availability for a particular use as an element in determining market value, the court held as follows: 22 "In determining the market value of a piece of real estate for the purposes of a taking by eminent domain, it is not merely the value of the property for the use to which it has been applied by the owner that should be taken into consideration, but the possibility of its use for all purposes, present and prospective, for which it is adapted and to which it might in reason be applied, must be considered, and its value for the use to which men of prudence and wisdom and having adequate means would devote the property if owned by them must be taken as the ultimate test.' 23 'The above case contains a reasonably clear statement of the law obtaining in this State and which must be applied here. The condemnee is ordinarily entitled to compensation measured not only by the value of the land for the use to which he has applied it, but the value thereof for all possible purposes, present and prospective, to which he or his ordinary grantee might legally apply the same.' Grand Hydro v. Grand River Dam Authority, 192 Okl. 693, 694, 139 P.2d 798, 800. 24 After retrial and on a second appeal to it, the Supreme Court of Oklahoma reaffirmed the law of that State in the following terms, and pointed to the federal question which the petitioner and the United States, as amicus curiae, now place before us: 25 'In this appeal the new or different facts and issues presented consist of the competency of the testimony, as presented in the last trial, of the expert witnesses as to the market value of the dam site; the submission of such testimony to the jury under proper instructions; the effect of Grand-Hydro's lack of a permit from the Federal Power Commission; the trial court's refusal to allow counsel to argue to the jury that the condemned land had no dam site value because of such fact; and the allowance of interest. 26 'Appellant contends that the passage of the act creating the Authority was, in effect, a forfeiture of the Grand-Hydro (state) permit and therefore it was not entitled to recover the dam site value of the lands condemned. If such was the intent of the legislature in passing the act, it was in violation of the Constitution, article 2, section 24. The state cannot, through its law making body, remove the principal value of private property and through its established agency, acquire the property by condemnation, basing the reimbursement to the owner on the reduced value. If it were otherwise it would be possible to circumvent the above section of our Constitution. 27 'The testimony of the expert witnesses as introduced was, therefore, competent to prove the dam site value of the property and was in accord with our opinion on the former appeal. * * * 28 'Although the Authority had been granted a license by the Federal Power Commission granting it the exclusive right to use the 417 acre tract as a dam site, it could not thereby take private property without just compensation.' Grand River Dam Authority v. Grand-Hydro, 201 P.2d 227, 228. 29 As the question is thus presented whether the Federal Power Act has so far affected the use or value of this land for power site purposes as to deprive it of all fair market value for those purposes and thus deprive the evidence of such value of all probative weight in this case, the fact that the state court purported to rest its decision largely on state law does not eliminate our duty to consider the question to the extent that it arises under federal law.8 Again, it is suggested that the Federal Power Act has superseded the state law and has set up a new standard of valuation binding upon the state even in a condemnation proceeding under state law. It is, of course, for us to examine whether questions of federal law were necessarily, although only impliedly, adjudicated by the state court. We accept the law of Oklahoma, set forth in the above quotations, as stating the proper measure of the value to be given to this land in this state proceeding. The respective parties have put different interpretations upon this statement of the Oklahoma law but the Supreme Court of that State has settled the issue in favor of the respondent's interpretation. The petitioner points to the following statement of the Oklahoma court: 30 'The condemnee is ordinarily entitled to compensation measured not only by the value of the land for the use to which he has applied it, but the value thereof for all possible purposes, present and prospective, to which he or his ordinary grantee might legally apply the same.' (Emphasis supplied.) Grand Hydro v. Grand River Dam Authority, 192 Okl. 693, 694, 139 P.2d 798, 800. 31 The petitioner then argues that, by virtue of its special act of incorporation, it holds a grant from Oklahoma of the exclusive right to develop this power site insofar as the State is concerned, and that it holds a grant from the United States of the only federal license t at has been issued for the development of this site. The respondent, on the other hand, holds neither a state permit nor a federal license to use this land for a power site, although it originally acquired the land for that purpose and later conveyed it to the petitioner for that purpose, under an agreement which has postponed, until now, the determination of its purchase price. The petitioner, with the help of the respondent's conveyance to it of this land and of the respondent's assignment to it of certain water rights, has secured judicial recognition of a prior right in itself to appropriate under state law certain water from the river, and has secured from the Federal Power Commission the above-mentioned license required under the Federal Power Act. Thus equipped, the petitioner has erected its dam on the dam site. 32 Accordingly, if the correct interpretation of the law of Oklahoma is that, in order for the respondent to introduce evidence of the value of the land for a dam site, the respondent must show not only that the land is reasonably and lawfully usable for that purpose, but also that the respondent itself holds a valid state permit or federal license for the construction of the dam on that land, then it is clear that the evidence would not be admissible. However, the Supreme Court of Oklahoma has settled this issue in favor of the respondent by holding that such a permit or license is not necessary in order for the evidence to be considered. As to the state permit, it has held expressly in its second opinion, as quoted at page 9 of this opinion (335 U.S. 369, 69 S.Ct. at page 119) that the Grand River Dam Authority Act did not deprive the respondent of its right to compensation from the petitioner for the value of the dam site as such. In fact, the court there said that such a result would violate the Constitution of Oklahoma. In that same opinion, as quoted at page 9 of this opinion (69 S.Ct. at page 119) that court settled the issue that possession of a federal license by the respondent was not necessary in order for the respondent to introduce evidence of the value of this land as a dam site. The court so held when it expressly approved the action of the trial court in admitting the evidence in question when offered on behalf of the respondent in the absence of any federal license to the respondent and in the face of the federal license already issued to the petitioner. 33 The Supreme Court of Oklahoma stands squarely upon the law of the case which it announced upon the first appeal of this case. Its original statement as made at that time and as further interpreted on the second appeal holds that it was enough, for the present purposes, that the use of the land for a dam site was a reasonable and lawful use to which the land might be applied, without showing that the respondent itself held a permit or license authorizing it to build the dam. It may be surmised that the Supreme Court of Oklahoma, in approving the admission of the testimony by the trial court, also treated the petitioner as being the respondent's 'ordinary grantee' of the title to this land. It is not necessary for us to determine whether that court relied upon one or the other, or both, of these alternatives. Reliance on either would make the disputed evidence admissible under the Oklahoma law. 34 Under this interpretation of the state law the answer to the remaining federal question is obvious. It is clear that the Federal Power Act cannot be said to have so far affected the use of this land for a power site as to destroy or otherwise render valueless the owner's right to use it for that purpose. That Act merely has attached conditions to the use of the land for a power site. The Act seeks to encourage rather than to prohibit the development of power sites. It seeks to preserve or enhance, not to destroy, their value as such. While the Act has limited the time and manner of the use of this particular land for a power site, the Act has left great benefits availabl to the owner from such a use of the land. The present large development of this site by the petitioner under a federal license is convincing proof of the value and availability of the land for that purpose. 35 In a voluntary purchase of this land by the petitioner, as a willing purchaser, from the respondent, as a willing and unobligated seller, the value of it as a power site inevitably would have entered into the negotiated price. The petitioner and the respondent long have been competitors for the development of this site for power purposes. Each was granted by state law, a right to condemn the land but the petitioner gained a priority over the respondent by virtue of the Grand River Dam Authority Act. The petitioner's purchase amounts to an acquisition of private property for a public use. The petitioner makes no claim to any right to make use of the natural asset of water power in the streams of the State without paying the fair market value of the land occupied for that purpose. 36 As between these two corporations seeking to determine the sales price of this land, the Federal Power Act placed no limitation upon their voluntary negotiations. The present proceeding is in substance a part of their original agreement for the sale of the land by the respondent to the petitioner. 37 If either the United States, or its licensee as such, were seeking to acquire this land under the Federal Power Act, it might face different considerations from those stated above. The United States enjoys special rights and power in relation to navigable streams and also to streams which affect interstate commerce. The United States, however, is not a party to the present case. It is not asserting its right to condemn this land. The petitioner, likewise, is not seeking to enforce such rights as it might have to condemn this land by virtue of its federal license.9 Accordingly, we express no opinion upon what would be the appropriate measure of value in a condemnation action brought by the United States or by one of its licensees in reliance upon rights derived under the Federal Power Act. 38 It has been suggested that the provisions of the Federal Power Act bearing upon the allowance of a valuation for the project as part of the rate base of a federal licensee may be material in this case.10 Whatever the relation of those provisions may be to this project, it is not such as to change the Oklahoma law as to the fair market value of the land between the parties to this case. It may be that, at some later date when the petitioner, as a federal licensee, shall br ready to sell power, the Commission or other appropriatbody will then give consideration to the value to be allowed for this land in the petitioner's rate base. There is, however, nothing in the Federal Power Act that purports to prescribe the price which a purchaser of land may pay voluntarily and in good faith for land which it later incorporates into a project. There also is nothing in the Act which prescribes that the seller rather than the purchaser, or that the condemnee, rather than the condemnor, of land acquired for a project must absorb the reduction, if any, which is to be made later in the allowance of value for that land in the purchaser's rate base as compared with the original price paid for it by the purchaser in a negotiated purchase or in a state condemnation proceeding. As to the question whether the Federal Power Act should be interpreted as actually superseding the state law of condemnation and as restricting the measure of valuation which lawfully may be used by the courts of Oklahoma in a condemnation action for the acquisition of land for power site purposes by an agency of that State, there is nothing in the Federal Power Act to indicate that an attempt has been made by Congress to make such a nationwide change in state laws.11 39 There also has been a suggestion made of the possible materiality in this case of those provisions of the Federal Power Act which relate to the price to be paid by the United States in the event that it takes over the project of a licensee upon or after the expiration of a federal license.12 The issues raised by that suggestion are comparable to those just discussed in relation to the rate base of a federal project, except that such a recapture of the project is even more remote than the determination of a rate base for the computation of rates to be charged for its product. We accordingly express no opinion upon the issues which may arise when, as and if the abovementioned proceedings may be taken. 40 For these reasons, the judgment of the Supreme Court of Oklahoma is affirmed. 41 Affirmed. 42 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK, Mr. Justice MURPHY and Mr. Justice RUTLEDGE join, dissenting. 43 The result of this decision, no matter how it is rationalized, is to give the water-power value of the current of a river to a private party who by reason of federal law neither has nor can acquire any lawful claim to it. The United States has asserted through the Federal Power Act its exclusive dominion and control over this water power.1 That Act specifies how one may acquire a license to exploit it, § 23(b), and the conditions under which the licensee must operate. See First Iowa Hydro-Electric Co-op. v. Federal Power Comm., 328 U.S. 152, 66 S.Ct. 906, 90 L.Ed. 1143. 44 Petitioner has such a license. Respondent has none and, for reasons unnecessary to relate here, concededly cannot obtain one. Respondent therefore has no claim to the water-power value which the law can recognize, if the policy of the Federal Power Act is to be respected. When respondent's claim is recognized, the effect is to make petitioner pay a private claimant for a privilege which only the United States can grant. 45 That is the bald result whether the condemnation takes place in a state or a federal court. Whatever the procedure, the conse quence is to give private parties an entrenched property interest in the public domain, which the Federal Power Act was designed to defeat. 46 The public burden is the same and the impairment of the policy of the federal act is identical whether the judgment is entered by a state or a federal court. Never before, I believe, has a federal right been allowed less protection in a state court than it is entitled to r ceive in the federal court.2 1 41 Stat. 1063, as amended, 49 Stat. 838, 16 U.S.C. §§ 791a 825r, 16 U.S.C.A. §§ 791a—825r. 2 The United States has a further interest in the case because the petitioner's project has been financed largely through a federal loan and grant agreement. At the time of filing its brief in support of the petition for certiorari, the Government held approximately $14,000,000 of the petitioner's revenue bonds. See also, Act of July 31, 1946, 60 Stat. 743, as to the refinancing of these bonds. 3 Grand River Dam Authority Act Okla.Sess.L.1935, c. 70, Art. 4, Sen.Bill No. 395; Okla.Sess.L.1936—1937, c. 70, Art. 1, Sen.Bill No. 299, and Art. 2, House Bill No. 3; Okla.Stat.Ann. tit. 82, § 861—881 (1938). The power of eminent domain is granted to the petitioner by § 2(f) of the original Act. 'Section 2. Powers, Rights and Privileges.— '(f) To acquire by condemnation any and all property of any Kind, real, personal, or mixed, or any interest therein within or without the boundaries of the District necessary or convenient to the exercise of the powers, rights, privileges and functions conferred upon it by this Act, in the manner provided by general law with respect to condemnation;' Okla.Sess.L.1935, c. 70, Art. 4. 4 Okla.Rev.L.1910, c. 40; Okla.Sess.L.1927, c. 70, House Bill No. 62; Okla.Stat.Ann. tit. 82, §§ 451—510 (1938). 5 This lower court proceeding is thus described in Grand Hydro v. Grand River Dam Authority, 192 Okl. 693, 697, 698, 139 P.2d 798, 803, 804. 6 See note 3, supra. 7 'Sec. 23. * * * '(b) * * * Any person, association, corporation, State, or municipality intending to construct a dam or other project works across, along, over, or in any stream or part thereof, other than those defined herein as navigable waters, and over which Congress has jurisdiction under its authority to regulate commerce with foreign nations and among the several States shall before such construction file declaration of such intention with the Commission, whereupon the Commission shall cause immediate investigation of such proposed construction to be made, and if upon investigation it shall find that the interests of interstate or foreign commerce would be affected by such proposed construction, such person, association, corporation, State, or municipality shall not construct, maintain, or operate such dam or other project works until it shall have applied for and shall have received a license under the provisions of this Act. If the Commission shall not so find, and if no public lands or reservations are affected, permission is hereby granted to construct such dam or other project works in such stream upon compliance with State laws.' 49 Stat. 846, 16 U.S.C. § 817, 16 U.S.C.A. § 817. 8 See Enterprise Irrigation Dist. v. Farmers Mutual Canal Co., 243 U.S. 157, 164, 37 S.Ct. 318, 320, 61 L.Ed. 644; Nutt v. Knut, 200 U.S. 12, 19, 26 S.Ct. 216, 219, 50 L.Ed. 348; and United States v. Bellingham Bay Boom Co., 176 U.S. 211, 218, 20 S.Ct. 343, 346, 44 L.Ed. 437. See also, Davis v. Wechsler, 263 U.S. 22, 24, 25, 44 S.Ct. 13, 14, 68 L.Ed. 143; and American Railway Express Co. v. Levee, 263 U.S. 19, 44 S.Ct. 11, 68 L.Ed. 140. 9 41 Stat. 1074, 16 U.S.C. § 814, 16 U.S.C.A. § 814. 10 41 Stat. 1073, 16 U.S.C. §§ 812, 813, 16 U.S.C.A. §§ 812, 813, and see 41 Stat. 1071, as amended, 49 Stat. 844, 1 U.S.C. § 807, 16 U.S.C.a. § 807. 11 Even in a condemnation action brought in a district court of the United States under authority of the Federal Power Act, the practice and procedure is to conform as nearly as may be with that in the courts of the state where the property is situated. See 41 Stat. 1074, 16 U.S.C. § 814, 16 U.S.C.A. § 814. 12 41 Stat. 1071, as amended, 49 Stat. 844, 16 U.S.C. § 807, 16 U.S.C.A. § 807. 1 The exclusive control which the United States has in the water power of a navigable stream (United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 69, 33 S.Ct. 667, 674, 57 L.Ed. 1063; United States v. Appalachian Electric Power Co., 311 U.S. 377, 427, 428, 61 S.Ct. 291, 308, 309, 85 L.Ed. 243) extends to the water power of a non-navigable stream where private command over it is inconsistent with the federal program of control over navigation. United States v. Willow River Co., 324 U.S. 499, 509, 65 S.Ct. 761, 767, 89 L.Ed. 1101. Federal regulation and control has the same effect in each case. State of Oklahoma ex rel. Phillips v. Guy F. Atkinson Co., 313 U.S. 508, 525, 61 S.Ct. 1050, 1059, 85 L.Ed. 1487. It has been found in this case (and is unchallenged here) that the construction and operation of this project will affect the navigable stages of the Arkansas River, a navigable water of the United States, to which the Grand River is tributary. See H.R.Doc.No.242, 67th Cong., 2d Sess. 123 (1921); H.R.Doc.No.107, 76th Cong., 1st Sess. 6 (1939); Act of August 18, 1941, 55 Stat. 645. 2 Article VI of the Constitution makes Acts of Congress 'the supreme Law of the Land' and directs that 'the Judges in every State shall be bound thereby'.
78
335 U.S. 331 69 S.Ct. 85 93 L.Ed. 43 ADKINSv.E. I. DU PONT DE NEMOURS & CO., Inc. No. 1. Argued on Motion for Leave to Proceed In Forma Pauperis Oct. 18, 1948. Decided Nov. 22, 1948. Mr. John W. Porter, Jr., of Muskogee, Okl., for petitioner. Mr. G. C. Spillers, of Tulsa, Okl., for respondent. [Syllabus from page 332 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court. 1 The questions presented chiefly involve the scope and application of the statute which authorizes a citizen to prosecute or defend actions in federal courts 'without being required to prepay fees or costs or for the printing of the record in the appellate court * * * upon filing in said court a statement under oath in writing, that because of his poverty he is unable to pay the costs of said suit or action or of such writ of error or appeal, or to give security for the same, * * *'.1 2 This action was filed in the United States District Court for the Northern District of Oklahoma by P. V. Adkins. Mr. Adkins died while the litigation was pending and his wife having been appointed administratrix of his estate was substituted as plaintiff. The original complaint claimed overtime compensation, damages and attorneys' fees on behalf of Mr. Adkins and twelve other employees of the respondent2 'under and pursuant to the Fair Labor Standards Act of 1938 (Title 29, U.S.C.A. Secs. 201—219) and Executive Order #9240 as amended (Title 40 U.S.C.A. following Sec. 326 (note)) * * *.'3 3 From a dismissal of her complaint in the District Court and the denial by that court of her motion to set the dismissal aside and grant a new trial, petitioner filed in the District Court a motion to appeal to the United States Court of Appeals for the Tenth Circuit. She also filed a motion that the appeal be allowed in forma pauperis. Her affidavit in support of this motion stated that petitioner was a widow 74 years of age; the estimated costs of the appeal record would be approximately $4,000; all she had was a home, inherited from her husband, appraised at $3,450; her only source of income was rent from parts of her home; and without such income she would not be able to purchase the necessities of life. No objection appears to have been filed to her motion to appeal in forma pauperis, but the motion was denied by the court. Apparently denial was for two reasons: (1) She could not proceed in forma pauperis where there were twelve other claimants involved who had no affidavits of poverty; (2) the court assumed that petitioner's lawyers were employed on a contingent fee basis, and was of opinion that she therefore could not appeal in forma pauperis unless the lawyers either prepaid the costs, gave security for costs or filed an affidavit of their poverty along with petitioner and all other claimants. 4 Petitioner then filed an application for appeal in forma pauperis in the United States Court of Appeals. This application was denied. The denial, so the record indicates, was on the ground that to appeal in forma pauperis, Mrs. Adkins, the twelve employees, and all the members of the law firm representing her would have to make affidavits of poverty. 5 Petitioner then went back to the District Court. Ten of the twelve employees filed affidavits in each of which this statement appeared; '* * * because of my poverty I am unable to pay or give security for the costs ($4,000) of such appeal and still be able to provide myself and my dependents with the necessities of life.' An affidavit with identical language was filed by one member of the firm of lawyers representing petitioner. The affidavit also stated that the firm's interest in all fees from this litigation had been assigned to affiant. No affidavit of poverty were filed by the other members of the firm. An affidavit was filed for the firm, however, stating a belief that the claims were meritorious, that appeal costs had been estimated at about $4,000, and that the total liquid assets of the firm did not exceed $2,000. One of the twelve claimants could not be located and one refused to sign an affidavit of poverty. 6 The district judge for the second time denied the motion to permit appeal without security for costs. His grounds seem to have been these. Two of the claimants had signed no affidavit of poverty; unless all signed, there could be no in forma pauperis appeal. The affidavits of petitioner, the ten claimants, and the attorneys were held insufficient in that they failed to show the precise financial condition of affiants, 'whether they were or were not without property.' The judge was not sure just what affiants would have to show as to property, but felt that each should prove a complete inability to pay at least a portion of the costs. All interested in the recovery, he thought, including the lawyers, 'have at least got to chip in to the extent of their ability to pay; and whatever they have, they have got to put in the pot for the purpose of taking the appeal.' The judge was 'inclined to believe but not sure' that before Mrs. Adkins could be permitted to appeal in forma pauperis she must mortgage her home and 'chip in' what she received on the mortgage loan. He construed all the affidavits as showing no more than that it would constitute a hardship to pay or give security for the payment of $4,000 to make the record. This statement as to 'hardship' he thought did not meet the statutory requirement for an affidavit of inability to pay or secure costs due to 'poverty.' Furthermore, the judge thought petitioner had designated more for the record than was needed to decide the dismissal question raised by the appeal. He therefore believed that a $4,000 record was 'wholly unnecessary.' Since the judge believed he was without power directly to limit the contents of the appellate record, he felt 'persuaded to be more technical and more strict' on the type of in forma pauperis affidavits he required. 7 The Court of Appeals thereafter denied a second motion of petitioner to accept its appeal in forma pauperis. Petitioner then applied to this Court for certiorari to review the actions of the Court of Appeals and of the District Court in denying petitioner leave to appeal in forma pauperis. Petitioner further asked the court for leave to proceed here without giving security for costs. We set the motion down for argument. 68 S.Ct. 1340. The matter has now been submitted on briefs and oral argument. The affidavits of poverty filed to proceed here in forma pauperis are the same as the affidavits filed in the two courts below. 8 If these affidavits are thought to be insufficient to support her motion, the petitioner urges that we give directions concerning additional requirements. While for our purposes the affidavits would have been more acceptable had they merely followed the language of the statute, our rules have provided no precise requirements. But the only questions presented here relate to the sufficiency of these affidavits in the two courts below. And to reach these questions, which are important, we must either accept the affidavits as sufficient or delay final consideration of the case. We accept the affidavits, grant the petition for certiorari, and the case having been fully argued, we proceed to pass on the questions presented so far as necessary. See Steffler v. United States, 319 U.S. 38, 63 S.Ct. 948, 87 L.Ed. 488. 9 First. We do not think the court was without power to protect the public from having to pay heavy costs incident to the inclusion of 'wholly unnecessary' matters in an in forma pauperis appeal. Sections 1 and 4 of the statutes provide that a court may exercise a limited judicial discretion in the grant or denial of the right and this Court has so held. Kinney v. Plymouth Rock Squab Co., 236 U.S. 43, 45, 35 S.Ct. 236, 237, 238, 59 L.Ed. 457. Rule 75(m) of our present Rules of Civil Procedure, 28 U.S.C.A., reads as follows: 10 'APPEALS IN FORMA PAUPERIS. Upon leave to proceed in forma pauperis, the district court may by order specify some different and more economical manner by which the record on appeal may be prepared and settled, to the end that the appellant may be enabled to present his case to the appellate court.' (329 U.S. 870.) 11 We know of few more appropriate occasions for use of a court's discretion than one in which a litigant, asking that the public pay costs of his litigation, either carelessly or wilfully and stubbornly endeavors to saddle the public with wholly uncalled-for expense. So here, the court ws not required to grant the petitioner's motion if she wrongfully persisted in including in the appeal record masses of matter plainly irrelevant to the issues raised on appeal. See Estabrook v. King, 8 Cir., 119 F.2d 607, 610. And, of course, under Rule 75(m) the court may save the costs of printing by providing for a typewritten record. If exercise of discretion by a district court should result in an unfair and incomplete record to a litigant's injury, the court's error could be remedied. Its action would be subject to review by the appellate court. Moreover, if in obedience to court order a party should agree to a record inadequate for appellate court purposes, that court would have power, upon motion or sua sponte, to require addition of material necessary to enable the court fairly to decide the appeal questions presented.4 12 Second. The statute allowing in forma pauperis appeals provides language appropriate for incorporation in an affidavit. One who makes this affidavit exposes himself 'to the pains of perjury in a case of bad faith'. Pothier v. Rodman, 261 U.S. 307, 309, 43 S.Ct. 374, 375, 67 L.Ed. 670. This constitutes a sanction important in protection of the public against a false or fraudulent invocation of the statute's benefits. Furthermore, the statute provides other sanctions to protect against false affidavits. Section 4 authorizes a court to dismiss actions brought on affidavit of poverty 'if it be made to appear that the allegation of poverty is untrue'. And § 5 provides another safeguard against loss by the Government due to false affidavits in that a court is permitted, in its discretion, to render judgment for costs 'at the conclusion of the suit as in other cases'. Consequently, where the affidavits are written in the language of the statute it would seem that they should ordinarily be accepted, for trial purposes, particularly where unquestioned and where the judge does not perceive a flagrant misrepresentation. 13 Here, the affidavits were not couched in the language of the statute. They went outside that language. Estimating that the costs would be $4,000, each affidavit stated that the affiant could not pay or secure $4,000. In other words, the affidavits here tied inability to pay to a fixed cost of $4,000. Under these circumstances, we think the court was justified in looking further to see if the cost really should have been $4,000 and if not, the judge was right in requiring affidavits made with an appreciation by affiants of the lesser amount of expense to which they might be subjected by the appeal. 14 Third. We cannot agree with the court below that one must be absolutely destitute to enjoy the benefit of the statute. We think an affidavit is sufficient which states that one cannot because of his poverty 'pay or give security for the costs * * * and still be able to provide' himself and dependents 'with the necessities of life.' To say that no persons are entitled to the statute's benefits until they have sworn to contribute to payment of costs, the last dollar they have or can get, and thus make themselves and their dependents wholly destitute, would be to construe the statute in a way that would throw its beneficiaries into the category of public charges. The public would not be profited if relieved of paying costs of a particular litigation only to have imposed on it the expense of supporting the person thereby made an object of public support. Nor does the result seem more desirable if the effect of this statutory interpretation is to force a litigant to abandon what may be a meritorious claim in order to spare himself complete destitution. We think a construction of the statute achieving such consequences is an inadmissible one. See cases collected in 6 A.L.R. 1281—1287 for a discussion as to whether a showing of complete destitution should be made under this and similar statutes. 15 Fourth. We do not think that this petitioner can be denied a right of appeal under the statute merely because other claimants will neither give security for costs nor sign an affidavit of poverty. This case illustrates that such a restrictive interpretation of this statute might wholly deprive one of several litigants of a right of appeal, even though he had a meritorious case and even though his poverty made it impossible for him to pay or give security for costs. Such a deprivation would frustrate the basic purpose of the statute. This does not mean that one of several claimants financially able but unwilling to pay his proportionate part of the costs, could demand the benefits of an appeal perfected by another claimant under the in forma pauperis statute. But it does mean in this case that the petitioner, upon making the required affidavit of poverty, was entitled to appellate review of the issues the district court decided against her without regard to whether other claimants filed an affidavit of poverty, or paid or secured their fair part of the costs. 16 Fifth. Petitioner's appeal under the statute was denied in part because her attorneys, thought by the District Court to have been employed on a contingent fee basis, had not shown to the court's satisfaction that they were unable on account of poverty to pay or give security for costs. We think the statute imposes no such burden on a lawyer who is to share in the recovery through contract by reason of his legal services. We are aware that some district and circuit courts of appeal have so construed the Act,5 and that some have even adopted rules which impose this requirement on lawyers.6 Other district and circuit courts of appeal have declined to interpret the statute as imposing such a burden on lawyers who represent litigants too poor to pay or secure the costs.7 17 Many states, apparently including Oklahoma where this case was tried,8 make it illegal for lawyers to sign a bond to secure costs for their clients in any civil or criminal action. It would have been an innovation had Congress in this statute expressly permitted lawyers trying cases in federal courts to contract with their clients to pay or secure costs in their clients' cases. But it would have been a surprising legislative innovation for Congress to command that lawyers pay or secure such costs. That Congress did not do this seems to be strongly indicated by the basic statute itself. 18 Section 1 of that statute is intended to guarantee that no citizen shall be denied an opportunity to commence, prosecute, or defend an action, civil or criminal, 'in any court of the United States' solely because his poverty makes it impossible for him to pay or secure the costs. Not content with this safeguard for the poor in federal courts, Congress in § 4 of the Act provided that 'the court may request any attorney of the court to represent such poor person, if it deems the cause worthy of a trial, * * *.' Certainly a lawyer appointed under § 4 could not be required to pay the costs of an appeal. Nor could such an appointed lawyer have a burden of this kind cast upon him if Congress had required payment of a fee for appointed counsel in an amount fixed as reasonable by the court, a requirement that some state laws have provided.9 Yet, such a 'reasonable fee' fixed by a court would be a 'contingent fee' should we accept respondent's argument in this case. For respondent contends that because the Fair Labor Standards Act authorizes a court to fix a reasonable fee for attorneys prosecuting overtime claims for employees, this petitioner's lawyers are on a contingent fee basis. They therefore according to respondent have a financial interest in the recovery. Consequently, respondent argues, petitioner must abandon her appeal and her claim unless these lawyers pay costs, secure them, or make affidavits of poverty. 19 No proof is needed that imposition of such onerous burdens on employees' lawyers would put serious obstacles in the way of employees obtaining the kind of legal representation Congress intended to provide for them in the Fair Labor Standards Act. And since § 4 of the in forma pauperis statute was plainly intended to assure legal representation to the poor, it is also obvious that the purpose of that Act could be frustrated in part by construing the statute as imposing a guarantee of appeal costs on all lawyers employed to represent the poor on a contingent basis. For if a person is too poor to pay the costs of a suit, sometimes very small in amount, how can it be imagined that he could possibly pay a fair fee except from the recovery he obtains?10 20 The statute here under consideration is not susceptible of a construction that would impose more burdens on lawyers employed by litigants unable to pay fees except on a contingent basis, than the burdens imposed on lawyers for those litigants who are able to employ counsel by the year or by payment of straight noncontingent fees. Section 3 of the statute specifically states that litigants who make affidavits of poverty shall be entitled to the same court processes, have the same right to the attendance of witnesses, and the same remedies as are provided by law in other cases. And as pointed out, § 4 of the statute makes it abundantly clear that poor litigants shall have the same opportunity to be represented by counsel as litigants in more fortunate financial circumstances. The statutory construction urged by respondent here would result in restricting the opportunities of the poor litigant in getting a lawyer who would follow his case through the appellate courts. For as was said by the District Court in Clark v. United States, D.C., 57 F.2d 214, 216: '* * * The same poverty that compels a litigant to avail himself of this beneficent statute makes it impossible for him to hire counsel. He can procure counsel only by agreeing that out of the proceeds of his case, if there are proceeds, counsel shall be compensated. * * * In practical effect he (a poor litigant) is denied counsel if his counsel must either himself guarantee the costs or file an affidavit that he also is penniless. The statute was intended for the benefit of those too poor to pay or give security for costs, and it was not intended that they should be compelled to employ only paupers to represent them.' 21 It was error to deny petitioner's motion for appeal under the statute on the ground that her lawyers had not made satisfactory affidavits of poverty. The statute requires no affidavit at all from them as a condition of appeal. 22 What we have said makes it unnecessary for us to pass on the contention of respondent that an agreement for a contingent fee payable out of an employee's recovery to prosecute claims under the Fair Labor Standards Act is invalid. 23 The orders denying appeal in forma pauperis are vacated and the cause is remanded to the District Court for further proceedings not inconsistent with this opinion. 24 It is so ordered. 25 Vacated and remanded. 1 27 Stat. 252, as amended, 36 Stat. 866, 42 Stat. 666, 28 U.S.C. § 832, 28 U.S.C.A. § 832. The substance of §§ 1 to 5 of the original statute as amended has now been incorporated in §§ (a) to (e) of 28 U.S.C. § 1915, 28 U.S.C.A. § 1915(a to e). 2 Section 16(b) of the Fair Labor Standards Act, 52 Stat. 1069, 29 U.S.C. § 216(b), 29 U.S.C.A. § 216(b), authorized employees' suits by agents. Here the agent was acting 'for a consideration contingent upon recovery.' An amendment of this section, the Portal-to-Portal Act, 61 Stat. 84, 29 U.S.C.Supp. I, §§ 251—252, 29 U.S.C.A. §§ 251, 252, limited the circumstances under which such representative actions could be maintained. 3 Executive Order No. 9240, 7 Fed.Reg. 7159 (1942), as amended, 7 Fed.Reg. 7419 (1942). 4 We do not mean to indicate that the issues sought to be raised by this petitioner on her appeal could have been properly presented to the Court of Appeals with nothing other than the very limited record the trial court apparently thought would be adequate. The case was dismissed because the District Court thought it had been deprived of jurisdiction by the Portal-to-Portal Act, supra. This Act purports to deprive federal courts of jurisdiction to enforce payment of overtime wages based on any activity except one compensable by either '(1) an express provision of a written or nonwritten contract * * * or (2) a custom or practice in effect, at the time of such activity,' at the place of employment, and not inconsistent with a written or nonwritten contract governing such employment. Petitioner had contended that examination by the court of the entire record including evidence already taken by a special master would show that employees' claims for compensation were supported by express contracts or by custom. He contended that the Portal-to-Portal Act was therefore inapplicable under the facts of this case and that consequently the dismissal under that Act was erroneous. Petitioner's application to amend her complaint to conform to the evidence was denied by the court. Cf. Maty v. Grasselli Chemical Co., 303 U.S. 197, 200, 201, 58 S.Ct. 507, 509, 82 L.Ed. 745; Hoiness v. United States, 335 U.S. 297, 69 S.Ct. 70. It would appear that the petitioner was entitled to have a record that was not so limited as to deprive the Court of Appeals of an opportunity to review these issues she raised. 5 United States ex rel. Randolph v. Ross, 6 Cir., 298 F. 64, 33 A.L.R. 728; Bolt v. Reynolds Metal Co., D.C., 42 F.Supp. 58; Esquibel v. Atchison, T. & S.F.R. Co., D.C., 206 F. 863; Feil v. Wabash R. Co., C.C., 119 F. 490; Phillips v. Louisville & N.R. Co., C.C., 153 F. 795; The Bella, D.C., 91 F. 540, 543; Boyle v. Great Northern R. Co., C.C., 63 F. 539; Silvas v. Arizona Copper Co., D.C., 213 F. 504, 507, 508. 6 Rule 26(1), Rules of United States Court of Appeals for the Third Circuit; Rule 18(2), Rules of United States Court of Appeals for the Sixth Circuit; Chetkovich v. United States, 9 Cir., 47 F.2d 894, but see Deadrich v. United States, 9 Cir., 67 F.2d 318. 7 Quittner v. Motion Picture Producers and Distributors of America, 2 Cir., 70 F.2d 331; United States ex rel. Payne v. Call, 5 Cir., 287 F. 520; Jacobs v. North Louisiana & Gulf R. Co., D.C., 69 F.Supp. 5; Clark v. United States, D.C., 57 F.2d 214; Evans v. Stivers Lumber Co., D.C., 2 F.R.D. 548. 8 See Okla.Stat. tit. 5, § 11 (1941). See also Watkins v. Sedberry, 261 U.S. 571, 576, 43 S.Ct. 411, 412, 67 L.Ed. 802; Peck v. Heurich, 167 U.S. 624, 630, 17 S.Ct. 927, 929, 42 L.Ed. 302. But see, Radin, Contingent Fees in California, 28 Calif.L.Rev. 587, 589, 598 (1940). 9 Board of Com'rs of Clay County v. McGregor, 171 Ind. 634, 87 N.E. 1, 17 Ann.Cas. 333; County of Dane v. Smith, 13 Wis. 585, 80 Am.Dec. 754; Ryce v. Mitchell County, 65 Iowa 447, 21 N.W. 771; State v. Hudson, 55 R.I. 141, 143, 179 A. 130, 131, 100 A.L.R. 313. 10 See Radin, Contingent Fees in California, supra at p. 589; United States ex rel. Payne v. Call, 5 Cir., 287 F. 520, 522; Clark v. United States, D.C., 57 F.2d 214, 216.
12
335 U.S. 377 69 S.Ct. 140 93 L.Ed. 76 VERMILYA-BROWN CO., Inc., et al.v.CONNELL et al. No. 22. Argued Oct. 15, 1948. Decided Dec. 6, 1948. Rehearing Denied March 7, 1949. See 336 U.S. 928, 69 S.Ct. 652. Mr. Charles Fahy, of Washington, D.C., for petitioner. Mr. Solt. Firstenberg, of New York City, for respondents. Mr. Justice REED delivered the opinion of the Court. 1 This case brings before us for review the applicability of the Fair Labor Standards Act of 1938, 52 Stat. 1060, 29 U.S.C.A. § 201 et seq., to employees allegedly engaged in commerce or the production of goods for commerce on a leasehold of the United States, located on the Crown Colony of Bermuda. 2 The leasehold, a military base, was obtained by the United States through a lease executed by the British Government. This lease was the result of negotiations adequately summarized for consideration by the letters of The Marquess of Lothian, the British Ambassador to the United States, of date September 2, 1940; the reply of Mr. Cordell Hull, then our Secretary of State, of the same date; and the Agreement of March 27, 1941, between the two nations to further effectuate the declarations of the Ambassador in his letter.1 3 The Fair Labor Standards Act covers commerce 'among the several States or from any State to any place outside thereof.' State means 'any State of the United States or the District of Columbia or any Territory or possession of the United States.' § 3(b) and (c) of the Act. 4 Certain employees of contractors who had contracts for work for the United States on the Bermuda base brought this suit under § 16(b) of the Act for recovery of unpaid overtime compensation and damages, claimed to be due them for the employer's violation of § 7, requiring overtime compensation. We do not enter into any consideration of the employees' right to recover if the Fair Labor Standards Act is applicable to employment on the Bermuda base, for the complaint was dismissed on defendant's motion for summary judgment on the ground that the applicability depended upon the 'sovereign jurisdiction of the United States,' that the executive and legislative branches of the Government had indicated that such leased reas were not under our sovereign jurisdiction and that this was a political question outside of judicial power. Connell v. Vermilya-Brown Co., D.C., 73 F.Supp. 860. The United States Court of Appeals for the Second Circuit, holding that the Act applied to the Bermuda base, reversed this judgment and remanded the case to the District Court for further proceedings on the merits. 164 F.2d 924. Our affirmance of this judgment approves that disposition of the appeal. 5 On account of the obvious importance of the case from the standpoint of administration, in view of the number of leased areas occupied by the United States, we granted certiorari. 333 U.S. 859, 68 S.Ct. 742. 6 (1) We shall consider first our power to explore the problem as to whether the Fair Labor Standards Act covers this leased area. Or, to phrase it differently, is this a political question beyond the competence of courts to decide? Cf. Coleman v. Miller, 307 U.S. 433, 450, 59 S.Ct. 972, 980, 83 L.Ed. 1385, 122 A.L.R. 695; Colegrove v. Green, 328 U.S. 549, 552, 66 S.Ct. 1198, 1199, 90 L.Ed. 1432. There is nothing that indicates to us that this Court should refuse to decide a controversy between litigants because the geographical coverage of this statute is involved. Recognizing that the determination of sovereignty over an area is for the legislative and executive departments, Jones v. United States, 137 U.S. 202, 11 S.Ct. 80, 34 L.Ed. 691, does not debar courts from examining the status resulting from prior action. De Lima v. Bidwell, 182 U.S. 1, 21 S.Ct. 743, 45 L.Ed. 1041; Hooven & Allison Co. v. Evatt, 324 U.S. 652, 65 S.Ct. 870, 89 L.Ed. 1252. We have no occasion for this opinion to differ from the view as to sovereignty expressed 'for the Secretary of State' by The Legal Adviser of the Department in his letter of January 30, 1948, to the Attorney General in relation to further legal steps in the present controversy after the judgment of the Court of Appeals. It was there stated: 7 'The arrangements under which the leased bases were acquired from Great Britain did not and were not intended to transfer sovereignty over the leased areas from Great Britain to the United States.' 8 Nothing in this opinion is intended to intimate that we have any different view from that expressed for the Secretary of State. In the light of the statement of the Department of State, we predicate our views on the issue presented upon the postulate that the leased area is under the sovereignty of Great Britain and that it is not territory of the United States in a political sense, that is, a part of its national domain. 9 (2) We have no doubt that Congress has power in certain situations, to regulate the actions of our citizens outside the territorial jurisdiction of the United States whether or not the act punished occurred within the territory of a foreign nation. This was established as to crimes directly affecting the Government in United States v. Bowman, 260 U.S. 94, 43 S.Ct. 39, 67 L.Ed. 149. This Court there pointed out, 260 U.S. at page 102, 43 S.Ct. at page 42, that clearly such legislation concerning our citizens could not offend the dignity or right of sovereignty of another nation. See Blackmer v. United States, 284 U.S. 421, 437, 52 S.Ct. 252, 254, 76 L.Ed. 375; Skiriotes v. State of Florida, 313 U.S. 69, 73, 78, 61 S.Ct. 924, 927, 929, 85 L.Ed. 1193. A fortiori civil controls may apply, we think, to liabilities created by statutory regulation of labor contracts, even if aliens may be involved, where the incidents regulated occur on areas under the control, though not within the territorial jurisdiction or sovereignty of the nation enacting the legislation.2 This is implicitly conceded by all parties. This power is placed specifically in Congress by virtue of the authorization for 'needful Rules and Regulations respecting the Territory or other Property belonging to the United States'. Constitution, Art. IV, § 3, cl. 2.3 It does not depend upon sovereignt in the political or any sense over the territory. So the Administrator of the Wage-Hour Division has issued a statement of general policy or interpretation that directs all officers and agencies of his division to apply this Act to the Canal Zone, admittedly territory over which we do not have sovereignty. C.F.R., 1947 Supp., tit. 29, pp. 4392—93. 10 (3) In this view of the relationship of our government to a leased area, the terms of this particular lease become important. Reference, note 1, supra, has been made to the United States Statutes where the title documents are readily available. It is unnecessary to print them here in full. In the margin are extracts that indicate their meaning as to the control intended to be granted.4 Under this agreement we have no doubt that the United States is authorized by the lessor to provide for maximum hours and minimum wages for employers and employees within the area, and the question of whether the Fair Labor Standards Act applies is one of statutory construction, not legislative power. 11 (4) At the time of the enactment of the Act, June 25, 1938, the United States had no leased base in Bermuda. This country did have a lease from the Republic of Cuba of an area at Guantanamo Bay for a coaling or naval station 'for the time required for the purposes of coaling and naval stations.' The United States was granted by the Cuban lease substantially the same rights as it has in the Bermuda lease.5 The time limits of the grant were redefined on June 9, 1934, as extending until agreement for abrogation or unilateral abandonment by the United States. A similar arrangement existed in regard to the Panama Canal Zone.6 Further, in the Philippine Independence Acts of January 17, 1933, and March 24, 1934, provisions existed looking toward the retention of military and other bases in the Philippine Islands. 47 Stat. 761, §§ 5 and 10; 48 Stat. 456, §§ 5 and 10, 48 U.S.C.A. §§ 1232, 1235, 1240.7 A Convention between the governments of Nicaragua and the United States of America, proclaimed June 24, 1916, 39 Stat. 1661, gave the United States for 99 years 'sovereign authority' over certain islands in the Caribbean Sea.8 None of these international arrangements were discussed in reports or the debates concerning the scope of the Fair Labor Standards Act. After the passage of the Fair Labor Standards Act and during World War II, a number of bases for military operations were leased by the United States not only on territory of the British Commonwealth of Nations but on that of other sovereignties also. The provisions of these leases paralleled in many respects the Bermuda lease.9 12 Neither this lack of specific reference in the legislative history to leased areas, however, nor the fact that the particular Bermuda base was acquired after the passage of the Act seems to us decisive of its coverage. 'The reach of the act is not sustained or opposed by the fact that it is sought to bring new situations under its terms.'10 The Sherman Act of 1890, 15 U.S.C.A. §§ 1—7, 15 note, a date when we had no insular possessions, was held by its use of the word 'Territory' in its § 3 to be applicable in Puerto Rico, a dependency acquired by the Treaty of Paris in 1898, 30 Stat. 1754.11 The answer as to the scope of the Wage-Hour Act lies in the purpose of Congress in defining its reach. 13 (5) The point of statutory construction for our determination is as to whether the word 'possession,' used by Congress to bound the geographical coverage of the Fair Labor Standards Act, fixes the limits of the Act's scope so as to include the Bermuda base. The word 'possession' is not a word of art, descriptive of a recognized geographical or governmental entity. What was said of 'territories' in the Shell Co. case, 302 U.S. 253, at page 258, 58 S.Ct. at page 169, is aplicable: 14 'Words generally have different shades of meaning, and are to be construed if reasonably possible to effectuate the intent of the lawmakers; and this meaning in particular instances is to be arried at not only by a consideration of the words themselves, but by considering, as well, the context, the purposes of the law, and the circumstances under which the words were employed.' 15 The word 'possession' has been employed in a number of statutes both before and since the Fair Labor Standards Act to describe the areas to which various congressional statutes apply.12 We do not find that these examples sufficiently outline the meaning of the word to furnish a definition that would include or exclude this base. While the general purpose of the Congress in the enactment of the Fair Labor Standards Act is clear13 no such definite indication of the purpose to include or exclude leased areas, such as the Bermuda base, in the word 'possession' appears. We cannot even say, 'We see what you are driving at, but you have not said it, and therefore we shall go on as before.'14 Under such circumstances, our duty as a Court is to construe the word 'possession' as our judgment instructs us the lawmakers, within constitutional limits, would have done had they acted at the time of the legislation with the present situation in mind. 16 The word 'possession' in the Act includes far off islands whose economy differs markedly from our own. Thus the employees of Puerto Rico, Guam, the guano islands, Samoa and the Virgin Islands have the protection of the Act. See C.F.R.,1947 Supp., 4393. Since drastic change in local economy was not a deterrent in these instances, there is no reason for saying that the wage-hour provisions of the Act were not intended to bring these minimum changes into the labor market of the bases.15 Since its passage of the Act, Congress has extended the coverage of the Longshoremen's and Harborworkers' Compensation Act to the bases acquired since January 1, 1940, and to Guantanomo Bay.16 When one reads the comprehensive definition of the reach of the Fair Labor Standards Act, it is difficult to formulate a boundary to its coverage short of areas over which the power of Congress extends, by our sovereignty or by voluntary grant of the authority by the sovereign lessor to legislate upon maximum hours and minimum wages. Under the terms of the lease, we feel sure that the house of assembly of Bermuda would not also undertake legislation similar to our Fair Labor Standards Act to control labor relations on the base. Since citizens of this country would be numerous among employees on the bases, the natural legislative impulse would be to give these employees the same protection that was given those similarly employed on the islands of the Pacific. 17 Under subdivisions 2 and 3, supra, we have pointed out that the power rests in Congress under our Constitution and the provisions of the lease to regulate labor relations on the base. We have also pointed out that it is a matter of statutory interpretation as to whether or not statutes are effective beyond the limits of national sovereignty. It depends upon the purpose of the statute. Where as here the purpose is to regulate labor relations in an area vital to our national life, it seems reasonable to interpret its provisions to have force where the nation has sole power, rather than to limit the coverage to sovereignty. Such an interpretation is consonant with the Administrator's inclusion of the Panama Canal Zone within the meaning of 'possession.' 18 We think these facts indicate an intention on the part of Congress in its use of the word 'possession' to have the Act apply to employer-employee relationship on foreign territory under lease for bases. Such a construction seems to us to carry out the remedial enactment in accord with the purpose of Congress. 19 Affirmed. 20 Mr. Justice JACKSON, dissenting. 21 The serious question in this case is not as to the meaning of the Fair Labor Standards Act. It means just what it says when it provides that it shall apply in any Territory or possession of the United States and I would apply it to every foot of soil that, up to the time of this decision, has been regarded as our possession. 22 The real issue here, and it is a novel one, is whether this Court will construe the lease under which the United States occupies a military buse in Bermuda as adding it to our possessions. The labor for which overtime nder the Act is sought was performed for a government contractor on this military base. The base did not exist when the Act was passed and it does not either expressly or impliedly purport to cover work in that area, unless the word 'possession' shall be construed to include the leased lands. Whether it is appropriate or permissible to hold as matter of law that our tenure there constitutes the leasehold area a possession obviously turns on a reading of the lease from Great Britain. 23 The Court of Appeals read the lease to give 'sweeping powers' to the United States and declared that 'the areas are subject to fully as complete control by the United States as obtains in other areas long known as 'possessions' of the United States.' It names as comparable possessions Alaska, Hawaii, Puerto Rico, Guam, Samoan Islands, Virgin Islands and the Canal Zone. This Court seems to approve that premise because it affirms, citing some if not all of the same examples; but it also says, '* * * it is difficult to formulate a boundary to its (the Act's) coverage short of areas over which the power of Congress extends * * * to legislate upon maximum hours and minimum wages.'1 24 Thus application of the Act to the leased area is put on two grounds: first, that the area is a possession of the United States; and second, since the Act applies to those 'engaged in commerce or in the production of goods for commerce,'2 it operates wherever Congress has power to act with respect to commerce. Presumably the Court will not shrink from applying the converse of the latter proposition; that the Act does not apply where this country or its nationals are not engaged in commerce. 25 Bermuda and like bases are not, in my opinion, our possessions on a juridical and geopolitical footing with the possessions enumerated. I also believe that there is not and under the lease there can not be in the leased area any 'commerce' subject to the Act. 26 To consider the bases as possessions in that sense is incompatible with the spirit of the negotiations and with the letter of the lease by which the bases were acquired. It enlarges the responsibilities which the United States was willing to accept and the privileges which Great Britain was willing to concede. This will appear from the history of the transaction whose meaning we interpret. 27 When organized resistance in the Low Countries and in France went down and the German Wehrmacht stood poised on Europe's Atlantic seaboard, it was suspected, as it since has been proved, that the design for conquest embraced seizure of Atlantic islands as a pathway for future operations against the United States.3 Disasters on land and sea had brought threat of invasion of the British Isles nearer to reality than at any time since the Spanish Armada. Consequently, Great Britain could divert no forces to the defense of her island possessions in our hemisphere, which after all were strategic spots to assail our commerce and stepping stones to our gateways.4 Great Britain, however, desperately in need of destroyers to defend her shores, intimated a readiness to put the United States in a position to defend these islands and the Americas as a quid pro quo for overaged American destroyers.5 28 Among those who saw in the development of air warfare a necessity for moving our air defense outposts seaward from the cities which dot our own shores, an influential and respected group favored asking England to cede her island possessions in this hemisphere to us as an outright transfer of sovereignty. If this cession had been asked and granted, the Court would now rightly hold the bases to be our 'possessions.' But it was President Roosevelt himself who determined for this country that it was the part of wisdom neither to seek nor to accept sovereignty or supreme authority over any part of these islands. He decided that it was in our self-interest to limit the responsibilities of the United States strictly to establishment, maintenance and operation of military, naval and air installations. His reasons have been partially disclosed6 and one of them, apparent to anyone even casually travelled in those islands, was the great disparity of social, economic and labor conditions between the islands and our Continent. Also he knew full well the different customs and institutions prevailing there, particularly the relations between the white, colored and native races, and the difficulty of assimilating them into the American pattern—a prospect that would arouse emotional tensions in this country as well as in the Islands and which indeed caused some anxiety even in Westminster.7 Thus it was settled American policy, grounded, as I think, on the highest wisdom, that, whatever technical form the transaction should take, we should acquire no such responsibilities as would require us to import to those islands our laws, institutions and social conditions beyond the necessities of controlling a military base and its garrison, dependents and incidental personnel. 29 Knowledge of that policy and purpose gives a measure of the novel and dubious grounds for the Court's present determination to put these bases upon the egislative and juridical footing of 'Territories and possessions.' It is a first step in the direction of the very imprudence that was sought to be avoided by the limited tenure devised for the bases. 30 But if American interests neither require nor admit of the assumption that the bases have become our possessions, the bounds of the grant as understood and expressed by Great Britain deny it with even more compelling force. The confined character of the granted privileges and their incompatibility with either sovereignty or proprietorship on our part appear from the letter of the Marquess of Lothian to Secretary Hull of September 2, 1940, which committed the United Kingdom to grant to the United States 'the lease for immediate establishment and use of Naval and Air bases and facilities for entrance thereto and the operation and protection thereof,' on the Great Bay of Bermuda.8 All of the specific provisions of the formal lease were subsidiary to and within this general measure of the rights yielded. It comprehended all that it was intended to bestow and all that we intended to take. Its dimensions were well defined by Mr. Stimson as 'the right to fortify and defend.'9 31 Details of the formal lease do but emphasize the common purpose of Great Britain to so confine the concession and that of President Roosevelt to so circumscribe our responsibilities. The leasehold right of the United States, in war time or emergency, to conduct military operations on land, water or in the air, which was the heart of the matter for us, is without bounds or restrictions except for a pledge of good neighborliness and friendly cooperation in their exercise. 32 The leasehold terms, however, are well chosen, carefully to deny every commercial and political right to the United States except as they are incidental and appurtenant to this primary military usufruct. American nationals cannot go there for any purpose other than governmental except in conformity to Bermudian laws. Its immigration laws are relaxed only to admit 'any member of the United States forces posted to a leased area' and 'any person (not being a national of a Power at war with His Majesty the King) employed by, or under, a contract with the Government of the United States in connection with the construction, maintenance, operation or defense of the Bases.' Even so, the lessee must submit to measures to identify such persons and to establish their status. In what formerly recognized possession of the United States mentioned by the Court is American citizens' privilege of ingress and egress, of transit and of residence, so limited? 33 Private trade and commerce by our citizens likewise are wholly in control of the Colony and is no more dependent upon out laws than in any other part of the United Kingdom or any foreign country. Bermudian customs duties are waived only on material for construction and maintenance of our bases, for consumption by our garrisons and supporting personnel, and on their household goods; and we undertake to prevent abuse of this customs privilege and to prevent resale of such imports. This is not greater than the immunity allowed by every foreign country to our diplomatic corps and staffs, and the power reserved by Britain over imports and customs is wholly inconsistent with the concept that these are our possessions. 34 The lease also expressly and unconditionally provides that no business can be established in the leased area and that no person shall habitually render any professional services except for the Government and its personnel. No wireless or submarine cable may be operated except for military purposes. Are such stifling restraints by another state consistent with the idea of our possession? 35 Payment of local income and property taxes are only waived as against those in the area when they are members of our a med forces, employees engaged in our works or contractors with our Government. In short, no actual possession of the United States used by the Court as a standard of reference is so insulated from the United States in fiscal, social, economic, commercial and political affairs. In none is the commerce power of Congress so stripped of subject matter for regulation or our permissible range of activity so circumscribed. 36 Possessions such as Puerto Rico, Guam, the guano islands, Samoa and the Virgin Islands, which the Court mentions as standards for the treatment of Bermuda, are, in vital respects, as different from it as night from day. Not one of them is subject to even a frivolous claim adverse to our complete ownership. They belong to us or they belong to no one. They are ceded territory over which United States sovereignty is as complete and as unquestioned as over the District of Columbia and they are subject to no dual control or divided allegiance. They are incorporated into our economy, freely trading in our markets, and 'protected' by our tariff walls. They are integrated with our social and, in some degree at least, with our political life as well; some of them being authorized to send delegates to our Congress. 37 On the other hand, however, Bermuda never has ceased in its entirety to be a Crown Colony of Great Britain. Social, industrial and labor conditions prevailing at the Island bases are such that both nations made every effort to insulate them from the damaging effects of our limited occupation for military purposes. It seems to me unsound policy as well as capricious statutory interpretation for the Court blindly to mingle them by imposing statutory policies that were not shaped with their existence or peculiarities in mind. It may be that, in some matters, the same policies suited to our legitimate possessions will also be considered adaptable to the bases. But it is not necessarily or presumptively so, and where the bases are to be brought into our scheme of things, it should be deliberately and consciously done by the Congress, in particular matters and with particular regard to local conditions,10 and perhaps after consultation with the United Kingdom or Colonial authorities. We should not by the process of judicial interpretation impose upon the bases not only the policies of the Act before us but those of many Acts not involved here and as to which we are even less informed.11 38 Neither should we embark upon a course of making the same naked words mean one thing in one Act and something else in another. It cannot be pretended that such an interpretation as the Court announces is in response to any demonstrable intention of Congress on the subject, for when this Act was passed the Bermuda base was not in being nor was it within the contemplation of even the more foresighted. 39 It should be enough to dispose of this matter to point out that the United States has no supreme authority or sovereign function in Bermuda, where every commercial activity is subject to control by another sovereign which is our political superior in the island. We have no commercial rights in Bermuda in the sense of private enterprise such as Congress by this Act sought to regulate. The United States cannot in good faith conduct or permit its nationals to engage in industry, manufacture or trade there. It cannot authorize them to conduct commerce there or to produce goods for commerce, which are the conditions which this Act itself makes necessary to bring the Labor Standards Act into play. To do so would be a flagrant breach of good faith with the United Kingdom and an overreaching of the people of Bermuda. Small wonder that the Department of State feels constrained to inform us that it 'regards as unfortunate' the conclusion of the court below, which is now affirmed, and adds a warning that any holding that the bases are 'possessions' of the United States in a political sense 'would not in the Department's view be calculated to improve our relations with that Government.'12 40 The Canal Zone has been cited as a possession with which Bermuda is comparable. But the Isthmian Canal Convention of 1903, which ceded the Canal Zone to the United States, provides in Art. III that the United States is to have 'all the rights, power and authority within the zone * * * which the United States would possess and exercise if it were the sovereign * * * to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.'13 Our State Department has firmly maintained that this treaty confers upon the United States complete power of commerce.14 To such an extent, indeed, are we sovereign in the Canal Zone that Panama has been granted special commercial rights only by express and formal concession,15 and this Court has reviewed the history of the acquisition and oncluded that the title of the United States is cimplete and perfect. Wilson v. Shaw, 204 U.S. 24, at pages 32, 33, 27 S.Ct. 233, 234, 235, 51 L.Ed. 351. 41 But the Panama Canal history may well be explanatory of a paragraph of the Bermudian lease from Great Britain, upon which the court below and respondent heavily rely and which this Court cites as one of the significant provisions. This clause provides that the 'leased area is not a part of the territory of the United States for the purpose of coastwise shipping laws so as to exclude British vessels from trade between the United States and the leased area.' From this provision it is sought to draw the conclusion that for all other purposes the area is part of the territory of the United States. The remaining provisions of the identical paragraph are sufficient to negative any idea that the territory becomes a United States possession.16 But coastwise shipping privileges had been the subject of friction between the United States and Great Britain over the Panama Canal and the plain purport of the article is to say that we do not want to repeat that experience. The Panama Canal Act of 1912, 37 Stat. 560, 562, exempted American coastwise shipping from tolls, which the British Government represented to be a violation of the Hay-Pauncefote Treaty of 1901, 32 Stat. 1903, and which it considered a corollary of the Clayton-Bulwer Treaty of 1850, 9 Stat. 995. President Wilson recommended that Congress repeal the exemption favoring American coastwise shipping as against British shipping17 and the action was taken only after a bitter and extensive debate.18 I think that the clause, instead of being read to create a possession of the leased bases would, in the light of our tendency to favor our shipping, be more accurately read to say 'even for the purpose of coastwise shipping, the leased area shall not be considered a possession.' 42 Guantanamo Naval Base, also referred to, is a leased base in Cuba upon which we have agreed that 'no person, partnership or corporation shall be permitted to establish or maintain a commercial, industrial or other enterprise.' But Guantanomo has been ruled by the Attorney General not to be a possession;19 it has not been listed by the State Department as among our 'non-self-governing territories,'20 and the Administrator of the very Act before us has not listed it among our possessions.21 Its treatment confirms our view that neither is Bermuda a possession. 43 Among responsible agencies of the United States, this Court alone insists that the Bermuda bases are possessions. The Department of Justice files a brief urging the Court against this position; the Department of State warns of its dangers and harmful effects upon our foreign relations; the Wage-Hour Administrator ruled administratively against coverage in Bermuda.22 Congress has shown that it has not regarded the leased areas as 'possessions.'23 44 Heretofore it has been thought that the Court should follow rather than overrule the Executive department in matters of this kind.24 45 What I have said does not reflect the slightest doubt about the power of Congress to make government contractors, doing work in Bermuda or anywhere else in the world, whether in our own or in foreign possessions, pay time-and-a-half for overtime or to enforce almost any labor policy upon them.25 The power of Congress, by appropriate legislation, to govern such a relationship is not impaired if we hold that the place where the contract is performed is not our 'possession.' The holding that it is a possession is not essential to enable Congress to act but serves only the purpose of expanding the coverage of this Act to the bases without specific action by Congress. We need not resort to such an unwarranted and disturbing interpretation of our relations with Bermuda and the United Kingdom in order to preserve the full power of Congress to extend all proper protection to the wages and hours of all personnel at the base, because they are and can be there only by virtue of government assignment or government contracts. 46 In summary: Congress made the Act applicable in our 'possessions.' There is no indication or reason to believe that, had Congress considered the matter, it would have regarded our tenure in the Bermuda base as creating a 'possession,' or would have applied an Act regulating private employment to an area where no such private enterprise could exist. There is no indication of a purpose to apply the Act to an exclusively military operation; indeed the Act indicates the contrary by exempting government employees from its operation.26 47 It would not concern the United Kingdom, or the Colony of Bermuda, if the United States should require its contractors to pay overtime, upon any assumptions which do not imply a possession adverse to theirs. But I do think it will cause understandable anxiety if this Court does it by holding, as matter of law, that the leased areas are possessions of the United States, like those we govern to the exclusion of all others. Such a decision by this Court initiates a philosophy of annexation and establishes a psychological accretion to our possessions at the expense of our lessors, not unlikely to be received in more critical quarters abroad as confirmation of the suspicion that commitments made by our Executive are lightly repudiated by another branch of our Government. It should be the scrupulous concern of every branch of our Government not to overreach any commitment or limitation to which any branch has agreed.27 48 I would reverse the judgment below and direct dismissal of the complaint.28 49 I am authorized to state that The CHIEF JUSTICE, Mr. Justice FRANKFURTER and Mr. Justice BURTON join in this opinion. 1 55 Stat. 1560, 1572, 1576, 1590. Those documents are published in Department of State publication No. 1726, Executive Agreement Series 235. 2 No due process question arises from this extension of legislation over such controlled areas such as was considered to bar state action concerning contracts made and to be performed beyond the boundaries of a state. Cf. Home Ins. Co. v. Dick, 281 U.S. 397, 407, 50 S.Ct. 338, 341, 74 L.Ed. 926, 74 A.L.R. 701, with Alaska Packers Ass'n. v. Comm'n, 294 U.S. 532, 541, 55 S.Ct. 518, 521, 79 L.Ed. 1044. 3 Cf. Ashwander v. T.V.A., 297 U.S. 288, 330 et seq., 56 S.Ct. 466, 475, 80 L.Ed. 688. 4 55 Stat. 1560: Article I, '(1) The United States shall have all the rights, power and authority within the Leased Areas which are necessary for the establishment, use, operation and defence thereof, or appropriate for their control, * * *.' Article XI, '(4) It is understood that a Leased Area is not a part of the territory of the United States for the purpose of coastwise shipping laws so as to exclude British vessels from trade between the United States and the Leased Areas.' P. 1565. Article XIII, '(1) The immigration laws of the Territory shall not operate or apply so as to prevent admission into the Territory, for the purposes of this Agreement, of any member of the United States Forces posted to a Leased Area or any person (not being a national of a Power at war with His Majesty the King) employed by, or under a contract with, the Government of the United States in connection with the construction, maintenance, operation or defence of the Bases in the Territory; but suitable arrangements will be made by the United States to enable such persons to be readily identified and their status to be established.' P. 1565. Article XIV, '(1) No import, excise, consumption or other tax, duty or impost shall be charged on— '(c) goods consigned to the United States Authorities for the use of institutions under Government control known as Post Exchanges, Ships' Service Stores, Commissary Stores or Service Clubs, or for sale thereat to members of the United States forces, or civilian employees of the United States being nationals of the United States and employed in connection with the Bases, or members of their families resident with them and not engaged in any business or occupation in the Territory;' P. 1566. Article XXIX, 'During the continuance of any Lease, no laws of the Territory which would derogate from or prejudice any of the rights conferred on the United States by the Lease or by this Agreement shall be applicable within the Leased Area, save with the concurrence of the United States.' P. 1570. There are also articles arranging for postal facilities and tax exemptions. 5 1 Malloy, Treaties, Conventions, International Acts, Protocols and Agreements, S. Doc. 357, 61st Cong., 2d Sess., 359: 'While on the one hand the United States recognizes the continuance of the ultimate sovereignty of the Republic of Cuba over the above described areas of land and water, on the other hand the Republic of Cuba consents that during the period of the occupation by the United States of said areas under the terms of this agreement the United States shall exercise complete jurisdiction and control over and within said areas with the right to acquire (under conditions to be hereafter agreed upon by the two Governments) for the public purposes of the United States any land or other property therein by purchase or by exercise of eminent domain with full compensation to the owners thereof.' Id., 361. See Joint Resolution No. 24, April 20, 1898, on the recognition of the independence of Cuba, 30 Stat. 738; the Act of March 2, 1901, in fulfillment thereof, 31 Stat. 898, Art. VII; Treaty with Cuba proclaimed June 9, 1934, 48 Stat. 1682, 1683, Art. III. 6 Isthmian Canal Convention, 33 Stat. 2234: 'The United States of America and the Republic of Panama being desirous to insure the construction of a ship canal across the Isthmus of Panama to connect the Atlantic and Pacific oceans, and the Congress of the United States of America having passed an act approved June 28, 1902, in furtherance of that object, by which the President of the United States is authorized to acquire within a reasonable time the control of the necessary territory of the Republic of Colombia, and the sovereignty of such territory being actually vested in the Republic of Panama, the high contracting parties have resolved for that purpose to conclude a convention and have accordingly appointed as their plenipotentiaries,—' Id., 2235: 'Article III. 'The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority.' 7 Through the Joint Resolution of June 29, 1944, 58 Stat. 625, these provisions were effectuated in leases for 99 years by an agreement of March 14, 1947, 61 Stat. —-, Treaties and International Acts No. 1611. The rights of control over the areas obtained by the United States from the Republic of the Philippines are quite similar to those obtained over the Bermuda base. The power of control over leased areas obtained by the United States through the above leases is not greater than that ordinarily exercised by sovereign lessees of foreign territory. See 34 American Journal of International Law 703; Lawrence, Principles of International Law (6th ed., 1915) 175; H. Doc. No. 1, 56th Cong., 2d Sess., 386; Oppenheim's International Law (6th ed. by Lauterpacht, 1947) 412—14. Oppenheim contains numerous illustrations of leases by an owner-state to a foreign power. His views upon the leases of the bases herein referred to correspond to that of our Department of State and to the postulate as to sovereignty stated in this opinion. 8 55 Stat. 1560, 1572; Executive Agreement Series 235, Department of State (GPO 1942), pp. 14, 15. 9 E.g., 55 Stat. 1245, Executive Agreement Series 204 (Greenland); 56 Stat. 1621, Executive Agreement Series 275 (Liberia). 10 Browder v. United States, 312 U.S. 335, 339, 61 S.Ct. 599, 602, 86 L.Ed. 862; Barr v. United States, 324 U.S. 83, 90, 65 S.Ct. 522, 525, 89 L.Ed. 765. 11 People of Puerto Rico v. Shell Co., 302 U.S. 253, 257, 58 S.Ct. 167, 169, 82 L.Ed. 235. 12 Federal Employers' Liability Act, 35 Stat. 65, § 2, 45 U.S.C. § 52, 45 U.S.C.A. § 52 (1908) ('Every common carrier by railroad in the Territories, the District of Columbia, the Panama Canal Zone, or other possessions of the United States * * *'); Neutrality Act, 40 Stat. 231, § 1, 18 U.S.C. § 39 (1917) ('The term 'United States' * * * includes the Canal Zone, and all terr tory and waters, continental or insular, subject to the jurisdiction of the United States.'); Bank Conservation Act, 48 Stat. 2, § 202, 12 U.S.C. § 202, 12 U.S.C.A. § 202 (1933) ('* * * the term 'State' means any State, Territory, or possession of the United States, and the Canal Zone.'); Federal Communication Act, 48 Stat. 1064, 1065, § 3(g), as amended, 47 U.S.C. § 153(g), 47 U.S.C.A. § 153(g) (1934) ("United States' means the several States and Territories, the District of Columbia, and the possessions of the United States, but does not include the Canal Zone.'); Food, Drug, & Cosmetic Act, 52 Stat. 1040, § 201(a), 21 U.S.C. § 321(a), 21 U.S.C.A. § 321(a) (1938) ('The term 'Territory' means and Territory or possession of the United States, including the District of Columbia and excluding the Canal Zone.'); Firearms Act, 52 Stat. 1250, § 1(2), as amended, 15 U.S.C. § 901(2), 15 U.S.C.A. § 901(2) (1938) ('The term 'interstate or foreign commerce' means commerce between and State, Territory or possession (not including the Canal Zone), or the District of Columbia, and any place outside thereof; * * *'); Investment Company Act, 54 Stat. 795, § 2(a)(37), as amended, 15 U.S.C. § 80a—2(a)(37), 15 U.S.C.A. § 80a—2(a)(37) (1940) ("State' means any State of the United States, the District of Columbia, Alaska, Hawaii, Puerto Rico, the Canal Zone, the Virgin Islands, or any other possession of the United States.'); Nationality Act, 54 Stat. 1137, § 101(e), 8 U.S.C. § 501(e), 8 U.S.C.A. § 501(e) (1940) ('The term 'outlying possessions' means all territory * * * over which the United States exercises rights of sovereignty, except the Canal Zone.'); War Damage Corporation Act, 56 Stat. 174, 176, § 2, 15 U.S.C. § 606b—2(a), 15 U.S.C.A. § 606b—2 (1942) ('Such protection shall be applicable only (1) to such property situated in the United States (including the several States and the District of Columbia), the Philippine Islands, the Canal Zone, the Territories and possessions of the United States, and in such other places as may be determined by the President to be under the dominion and control of the United States * * *.'). The War Damage Corporation Act and the Defense Base Act, 56 Stat. 1035, 42 U.S.C. § 1651, 42 U.S.C.A. § 1651 (1942), infra, note 16, use terms different from 'possession' to describe these leased areas. When these acts were passed, however, the problems posed by the bases were specifically considered by Congress. Hearings on H.R. 6382, House of Representatives, 77th Cong., 2d Sess., p. 27; 88 Cong.Rec.1851. Thus they afford no touchstone as to the meaning of the Fair Labor Standards Act, where such problems were not specifically considered. 13 United States v. Darby, 312 U.S. 100, 115, 61 S.Ct. 451, 457, 85 L.Ed. 609, 132 A.L.R. 1430: 'The motive and purpose of the present regulation are plainly to make effective the Congressional conception of public policy that interstate commerce should not be made the instrument of competition in the distribution of goods produced under substandard labor conditions, which competition is injurious to the commerce and to the states from and to which the commerce flows.' Substandard conditions included excessive hours of labor. Overnight Motor Co. v. Missel, 316 U.S. 572, 577, 62 S.Ct. 1216, 1219, 86 L.Ed. 1682. 14 Johnson v. United States, 163 F. 30, 32, 18 L.R.A.,N.S., 1194. 15 When Congress dealt with coverage in the National Labor Relations Act, enacted July 5, 1935, 49 Stat. 449, 450, 29 U.S.C.A. § 151 et seq., it used a narrower definition of commerce, one restricted to States and Territories. That has been held to cover Puerto Rico but we are not advised of any application to the bases. Cf. National Labor Relation Board v. Gonzales Padin Co., 1 Cir., 161 F.2d 353. 16 Defense Base Act, 56 Stat. 1035, 42 U.S.C. § 1651, 42 U.S.C.A. § 1651 (1942). This act extends the coverage of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C.A. § 901 et seq., to 'any employee engaged in any employment— '(1) at any military, air, or naval base acquired after January 1, 1940, by the United States from any foreign government; or '(2) upon any lands occupied or used by the United States for military or naval purposes in any Territory or possession outside the continental United States (including Alaska; the Philippine Islands; the United States Naval Operating Base, Guantanamo Bay, Cuba; and the Canal Zone); * * *.' This extension was necessary because of the prior limited language of the Act which covered injuries 'occurring upon the navigable waters of the United States', the term 'United States' being defined to mean 'the several States and Territories and the District of Columbia, including the territorial waters thereof.' 44 Stat. 1424, 33 U.S.C. §§ 902, 903, 33 U.S.C.A. §§ 902, 903. It will be noted that Guantanamo Bay and the Canal Zone were included in the lists as 'possessions.' 1 This is the more striking because it is said concerning an Act which we have held does not, even in continental United States, exercise or purport to exercise the full scope of the commerce power. See, e.g., McLeod v. Threlkeld, 319 U.S. 491, 493, 63 S.Ct. 1248, 1249, 87 L.Ed. 1538; Kirshbaum Co. v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638. 2 Section 6 of the Act requires every employer 'as defined therein) to pay the prescribed rates to each employee who is 'engaged in commerce or in the production of goods for commerce'; and § 7 forbids overtime employment, except at prescribed rates, of any employee who is 'engaged in commerce or in the production of goods for commerce'. 29 U.S.C. §§ 206, 207, 29 U.S.C.A. §§ 206, 207. 3 On October 29, 1940, Major (General Staff) Freiherr von Falkenstein, from the Fuehrer's headquarters, wrote a secret 'resume of the military questions current here.' The 5th item thereof reads: 'The Fuehrer is at present occupied with the question of the occupation of the Atlantic Islands with a view to the prosecution of war against America at a later date. Deliberations on this subject are being embarked upon here. Essential conditions are at the present: 'a. No other operational commitment, 'b. Portuguese neutrality, 'c. Support of France and Spain. 'A brief assessment of the possibility of seizing and holding air bases and of the question of supply is needed from the GAF.' 3 Nazi Conspiracy and Aggression (GPO 1946), p. 289; 3 Trial of Major War Criminals (GPO 1947), 389, document No. 376—PS received in evidence Dec. 10, 1945; see Nazi Conspiracy and Aggression: Opinion and Judgment (GPO 1947), p. 45. 4 'I understand that in the view of the American technical authorities modern conditions of war, especially air war, require forestalling action, in this case especially in order to prevent the acquisition by Hitler of jumping-off grounds from which it would be possible, bound by bound, to come to close quarters with the American Continent.' Mr. Churchill to House of Commons, July 9, 1941. Churchill, 'The Unrelenting Struggle,' pp. 175, 176. 5 Stimson, 'On Active Service,' Vol. II, pp. 356—358. 6 Hull, 'Memoirs,' p. 834; Stimson, 'On Active Service, Vol. II, pp. 356—358. The former points out of the President that 'He also knew the penurious condition of the native populations of most of the Islands, and consequently did not want to assume the burden of administering those populations. Therefore he had changed, during my absence from Washington, from his original idea of outright purchase of the bases to that of ninety-nine-year leases. I had originally favored outright cession, but was willing to agree to leases instead.' P. 834. 7 See Parliamentary Debate, Commons, Vol. 370, p. 255, et seq., and Vol. 376, p. 567, et seq. 8 55 Stat. 1560, 1572; Executive Agreement Series 235, Department of State (GPO 1942), pp. 14, 15. 9 Stimson, 'On Active Service,' Vol. II, p. 356. 10 The following statutes use language expressly covering the leased bases or language which seems to imply that the statute will reach as far as there is power to make it reach: I. Statutes which explicitly cover the leased bases: 55 Stat. 622, as amended, 42 U.S.C. § 1651(a)(1), 42 U.S.C.A. § 1651(a)(1). II. Statutes employing the phrase 'places subject to the jurisdiction of the United States' or similarly sweeping language: 38 Stat. 270, as amended, 12 U.S.C. § 466, 12 U.S.C.A. § 466; 58 Stat. 624, as amended, 10 U.S.C.Supp. I, § 1213, 10 U.S.C.A. § 1213; 56 Stat. 176, 15 U.S.C. § 606b—2(a), 15 U.S.C.A. § 606b 2(a); 61 Stat. 511, 16 U.S.C. § 776a(c), 16 U.S.C.A. § 776a(c); 40 Stat. 231, 18 U.S.C. § 39; 35 Stat. 1136, 18 U.S.C. § 387; 35 Stat. 1138, as amended, 18 U.S.C. § 396; 54 Stat. 1134, as amended, 18 U.S.C. § 396a; 49 Stat. 494, 18 U.S.C. § 396b; 35 Stat. 1148, 18 U.S.C. § 511; 40 Stat. 559, as amended, 22 U.S.C. § 226, 22 U.S.C.A. § 226; 42 Stat. 361, 22 U.S.C. § 409; 52 Stat. 631, as amended, 22 U.S.C. § 611(m), 22 U.S.C.A. § 611(m); 58 Stat. 643, 22 U.S.C. § 701, 22 U.S.C.A. § 701; 32 Stat. 172, as amended, 46 U.S.C. § 95, 46 U.S.C.A. § 95; Rev.Stat. § 4438a, as amended, 46 U.S.C. § 224a(6), 46 U.S.C.A. § 224a(6); 35 Stat. 1140, 46 U.S.C. § 1351, 46 U.S.C.A. § 1351; 40 Stat. 217, 219, as amended, 50 U.S.C. §§ 31, 37; 54 Stat. 1179, 50 U.S.C.App. § 512, 50 U.S.C.A.Appendix, § 512; 56 Stat. 177, as amended, 50 U.S.C.App. § 633(4), (6), 50 U.S.C.A.Appendix, § 633(4, 6); 56 Stat. 185, 50 U.S.C.App. § 643a, 50 U.S.C.A.Append x, § 643a; 58 Stat. 624, 50 U.S.C.App. § 777, 50 U.S.C.A.Appendix, § 777; 56 Stat. 390, 50 U.S.C.App. § 781, 50 U.S.C.A.Appendix, § 781; 60 Stat. 211, 50 U.S.C.App. § 1828(c), 50 U.S.C.A.Appendix, § 1828. 11 The following tabulation of statutes whose coverage provisions are so similar to those being construed as to either be governed by today's decision or to require most sophisticated distinctions shows in what is network of legislation the Court is entangling the bases: I. Statutes employing the term 'possessions,' (a) in the phrase 'States, Territories, and Possessions' or the like: 43 Stat. 1070, as amended, 2 U.S.C. § 241(i); 42 Stat. 998, 7 U.S.C. § 3, 7 U.S.C.A. § 3; 42 Stat. 159, 7 U.S.C. § 182(6), 7 U.S.C.A. § 182(6); 49 Stat. 731, 7 U.S.C. § 511(i), 7 U.S.C.A. § 511(i); 30 Stat. 544, as amended, 11 U.S.C. § 1(10), 11 U.S.C.A. § 1(10); 48 Stat. 2, 12 U.S.C. § 202, 12 U.S.C.A. § 202; 39 Stat. 601, as amended, 61 Stat. 786, 14 U.S.C.Supp. 1, § 29, 14 U.S.C.A. § 29; 55 Stat. 11, 12, as amended, 14 U.S.C.Supp. I, §§ 302, 307, 14 U.S.C.A. §§ 302, 307; 48 Stat. 882, as amended, 15 U.S.C. § 78c(a)(16), 15 U.S.C.A. § 78c(a)(16); 54 Stat. 790, 15 U.S.C. § 80a—2(a)(37), 15 U.S.C.A. § 80a—2(a)(37); 44 Stat. 1406, 15 U.S.C. § 402(c), 15 U.S.C.A. § 402(c); 44 Stat. 1423, 15 U.S.C. § 431, 15 U.S.C.A. § 431; 47 Stat. 8, as amended, 61 Stat. 202, 15 U.S.C.Supp. 1, § 607, 15 U.S.C.A. § 607; 61 Stat. 515, 15 U.S.C.Supp. 1, § 619, 15 U.S.C.A. § 619; 52 Stat. 1250, as amended, 15 U.S.C. § 901(2), 15 U.S.C.A. § 901(2); 56 Stat. 1087, 18 U.S.C. § 420g(2); 42 Stat. 1486, 21 U.S.C. § 61(b), 21 U.S.C.A. § 61(b); 52 Stat. 1041, 21 U.S.C. § 321(b), 21 U.S.C.A. § 321(b); Int.Rev.Code, §§ 22(b)(4), 251, 252, 1621(a)(8) (B), 813(b), 26 U.S.C.A. §§ 22(b)(4), 251, 252, 1621(a)(8)(B), 813(b); 49 Stat. 1928, 27 U.S.C. § 222(a); Title 28 U.S.C. § 411(a); 61 Stat. 150, 29 U.S.C.Supp. 1, § 161(2), 29 U.S.C.A. § 161(2); 61 Stat. 85, 90, 29 U.S.C.Supp. 1, §§ 252(d), 262(e), 29 U.S.C.A. §§ 252(d), 262(e); 29 U.S.C.App. § 203.7, 29 U.S.C.A.Appendix, § 203.7; 55 Stat. 179, 30 U.S.C. § 4l, 30 U.S.C.A. § 4l; 54 Stat. 1086, 31 U.S.C. § 123, 31 U.S.C.A. § 123; Rev.Stat. § 3646, as amended, 31 U.S.C. § 528(c), 31 U.S.C.A. § 528(c); 61 Stat. 787, 33 U.S.C.Supp. 1, §§ 883a, 883b, 33 U.S.C.A. §§ 883a, 883b; 44 Stat. 900, as amended, 39 U.S.C. § 654(c), 39 U.S.C.A. § 654(c); 49 Stat. 2038, 41 U.S.C. § 39, 41 U.S.C.A. § 39; 58 Stat. 682, as amended, 42 U.S.C. § 201(f), 42 U.S.C.A. § 201(f); 49 Stat. 624, as amended, 42 U.S.C. § 405(d), 42 U.S.C.A. § 405(d); 50 Stat. 888, 42 U.S.C. § 1402, 42 U.S.C.A. § 1402; 60 Stat. 774, 42 U.S.C. § 1818, 42 U.S.C.A. § 1818; 35 Stat. 65, 45 U.S.C. § 52, 45 U.S.C.A. § 52; 52 Stat. 1107, as amended, 45 U.S.C. § 362, 45 U.S.C.A. § 362; 45 Stat. 1492, as amended, 46 U.S.C. § 85, 46 U.S.C.A. § 85; 49 Stat. 888, 46 U.S.C. § 88, 46 U.S.C.A. § 88; Rev.Stat. § 4472, as amended, 46 U.S.C. § 170, 46 U.S.C.A. § 170; Rev.Stat. § 4370, 46 U.S.C. § 316(a), 46 U.S.C.A. § 316(a); 41 Stat. 996, as amended, 46 U.S.C. § 813, 46 U.S.C.A. § 813; 39 Stat. 735, 46 U.S.C. §§ 819, 823, 826, 829, 46 U.S.C.A. §§ 819, 823, 826, 829; 40 Stat. 901, as amended, 46 U.S.C. § 835(a, d), 46 U.S.C.A. § 835(a, d); 41 Stat. 998, 46 U.S.C. §§ 880, 882, 883, 46 U.S.C.A. §§ 880, 882, 883; 41 Stat. 1003, 46 U.S.C. § 951, 46 U.S.C.A. § 951; 49 Stat. 2016, 46 U.S.C. § 1244(a, b), 46 U.S.C.A. § 1244(a, b); 49 Stat. 1212, 46 U.S.C. § 1312, 46 U.S.C.A. § 1312; 48 Stat. 1065, as amended, 47 U.S.C. § 153(a, g), 47 U.S.C.A. § 153(e, g); 48 Stat. 1084, 47 U.S.C. § 308(c), 47 U.S.C.A. § 308(c); 48 Stat. 1087, 47 U.S.C. § 314, 47 U.S.C.A. § 314; 44 Stat. 568, 572, 573, 49 U.S.C. §§ 171, 176(c), 179, 49 U.S.C.A. §§ 171, 176(c), 179; 52 Stat. 977, 984, 998, 49 U.S.C. §§ 401(3), (21)(b), (29, 30), 425, 486, 49 U.S.C.A. §§ 401(3), (21)(b), (29, 30), 425, 486; 40 Stat. 415, as amended, 50 U.S.C.App. § 5, 50 U.S.C.A.Appendix, § 5; 60 Stat. 50, as amended, 50 U.S.C.App. § 32(a)(2)(B), 50 U.S.C.A.Appendix, § 32(a)(2)(B); 54 Stat. 890, as amended, 50 U.S.C.App. § 308, 50 U.S.C A.Appendix, § 308; 61 Stat. 31, 32, 50 U.S.C.App.Supp. 1, §§ 324, 326(a)(2, 3), 50 U.S.C.A.Appendix, §§ 324, 326(a)(2, 3); 54 Stat. 859, as amended, 50 U.S.C.A.Appendix, § 403(b)(A), 50 U.S.C.A.Appendix, § 403(b)(A); 56 Stat. 777, 50 U.S.C.App. § 574, 50 U.S.C.A.Appendix, § 574; 59 Stat. 542, 50 U.S.C.App. § 639a, 50 U.S.C.A.Appendix, § 639a; 56 Stat. 182, as amended, 50 U.S.C.App. § 640, 50 U.S.C.A.Appendix, § 640; 55 Stat. 206, 50 U.S.C.App. § 702, 50 U.S.C.A.Appendix, § 702; 56 Stat. 461—62, 50 U.S.C.App. §§ 791, 792, 793, 801, 50 U.S.C.A.Appendix, §§ 791, 792, 793, 801; 56 Stat. 1041, 50 U.S.C.App. § 846, 50 U.S.C.A.Appendix, § 846; 56 Stat. 23, as amended, 50 U.S.C.App. § 901, 50 U.S.C.A.Appendix, § 901; 56 Stat. 245, as amended, 50 U.S.C.App. § 1191(i), 50 U.S.C.A.Appendix, § 1191(i); 57 Stat. 162, as amended, 50 U.S.C.App. § 1472(a) (A), 50 U.S.C.A.Appendix, § 1472(a)(A); (b) qualified, usually in a similar phrase, by the word 'island' or 'insular'; 54 Stat. 1137, 1139, 8 U.S.C. §§ 501(e), 604, 8 U.S.C.A. §§ 501(e), 604; 59 Stat. 526, as amended, 12 U.S.C.Supp. 1, § 635, 12 U.S.C.A. § 635; 38 Stat. 730, 15 U.S.C. § 12, 15 U.S.C.A. § 12; 48 Stat. 74, as amended, 15 U.S.C. § 77b(6), 15 U.S.C.A. § 77b(6); 61 Stat. 726, 16 U.S.C.Supp. 1, § 758a, 16 U.S.C.A. § 758a; 56 Stat. 1046, 21 U.S.C. § 188d, 21 U.S.C.A. § 188d; 56 Stat. 1063, 22 U.S.C. § 672(b), 22 U.S.C.A. § 672(b); Int.Rev.Code §§ 2563, 2602, 2733(g), 26 U.S.C.A. §§ 2563, 2602, 2733(g); 49 Stat. 2011, as amended, 46 U.S.C. § 1204, 46 U.S.C.A. § 1204; 40 Stat. 388, 50 U.S.C. § 137, 50 U.S.C.A. § 137; 53 Stat. 812, 50 U.S.C. § 98f, 50 U.S.C.A. § 98f. II. Statutes listed under heading I above, the application of which to the leased bases might cause conflict with Bermudian law: 42 Stat. 998, as amended, 7 U.S.C. § 3, 7 U.S.C.A. § 3 (Commodity Exchange Act); 42 Stat. 159, 7 U.S.C. § 182(6), 7 U.S.C.A. § 182(6) (Packers and Stockyards Act, 1921); 49 Stat. 731, 7 U.S.C. § 511(i) (The Tobacco Inspection Act); 54 Stat. 1139, 8 U.S.C. § 604, 8 U.S.C.A. § 604 (Nationality Act of 1940); 59 Stat. 526, as amended, 12 U.S.C.Supp. 1, § 635, 12 U.S.C.A. § 635 (Export-Import Bank Act of 1945); 55 Stat. 11, 12, as amended, 14 U.S.C.Supp. 1, §§ 302, 307, 14 U.S.C.A. §§ 302, 307 (Coast Guard Reserve Act); 38 Stat. 730, 15 U.S.C. § 12, 15 U.S.C.A. § 12 (Clayton Act); 42 Stat. 1486, 21 U.S.C. § 61(b), 21 U.S.C.A. § 61(b) (Filled Milk Act); 56 Stat. 1063, 22 U.S.C. § 672(b), 22 U.S.C.A. § 672(b) (Settlement of Mexican Claims Act); Int.Rev.Code §§ 22(b)(4), 813(b), 26 U.S.C.A. §§ 22(b)(4), 813(b); 29 U.S.C.App. § 203.7, 29 U.S.C.A. Appendix, § 203.7 (Rules and Regulations implementing the National Labor Relations Act as amended by the Labor Management Relations Act); 49 Stat. 624, as amended, 42 U.S.C. § 405(b), 42 U.S.C.A. § 405(b) (Subpoena provision of the Federal Old-Age and Survivors Insurance Benefits Act); 50 Stat. 888, 42 U.S.C. § 1402, 42 U.S.C.A. § 1402 (Low Rent Housing Act); 60 Stat. 774, 42 U.S.C. § 1818, 42 U.S.C.A. § 1818 (Atomic Energy Act); 35 Stat. 65, 45 U.S.C. § 52, 45 U.S.C.A. § 52 (Federal Employers' Liability Act); 52 Stat. 1107, as amended, 45 U.S.C. § 362, 45 U.S.C.A. § 362 (Railroad Unemp. Ins. Act); Rev.Stat. § 4370, as amended, 46 U.S.C. § 316(a), 46 U.S.C.A. § 316(a) (Act for the Regulation of Vessels in Domestic Commerce); 41 Stat. 999, 46 U.S.C. § 883, 46 U.S.C.A. § 883 (Merchant Marine Act, 1920); 49 Stat. 2017, 46 U.S.C. § 1244(a), 46 U.S.C.A. § 1244(a) (Merchant Marine Act, 1936); 49 Stat. 1212, 46 U.S.C. § 1312, 46 U.S.C.A. § 1312 (Carriage of Goods by Sea Act); 48 Stat. 1065, 1084, 1087, as amended, 47 U.S.C. §§ 153(e), (g), 308(c), 314, 47 U.S.C.A. §§ 153(e, g), 308(c), 314 (Communications Act of 1934); 44 Stat. 568, 572, 573, as amended, 49 U.S.C. §§ 171, 176(c), 179(b), 49 U.S.C.A. §§ 171, 176(c), 179(b) (Air Commerce Act of 1926); 52 Stat. 977, 49 U.S.C. § 401(3), (21)(b), (29), (30), 49 U.S.C.A. §§ 401(3), (21)(b), (29, 30) (Civil Aeronautics Act); 52 Stat. 998, 49 U.S.C. § 486, 49 U.S.C.A. § 486 (same); 56 Stat. 182, 50 U.S.C. A p. § 640, 50 U.S.C.A. Appendix, § 640 (Amendment of Nationality Act of 1940); 55 Stat. 206, 50 U.S.C. App. § 702, 50 U.S.C.A. Appendix ,s 702 (Importation Restriction Act); 56 Stat. 23, as amended, 50 U.S.C. App. § 901, 50 U.S.C.A. Appendix, § 901 (Emergency Price Control Act of 1942). 12 The State Department's Legal Adviser, in a letter to the Attorney General dated January 30, 1948, wrote, in part, as follows: '* * * The Department regards as unfortunate the conclusion of the Court (of Appeals) that the U.S. exercises as complete control in the leased areas as in other areas long known as 'possessions' of the U.S., and its specific reference in this connection to the Philippine Islands, Swains Island, Samoa, Guam and the guano islands, over all of which the U.S. exercises sovereignty, except the Philippines over which sovereignty was exercised until they were given their independence on July 4, 1946, and except the guano islands, over which, in general, the U.S. exercises exclusive jurisdiction and no other nation claims sovereignty. 'Any holding that the bases obtained from the Government of Great Britain on 99 year leases are 'possessions' of the United States in a political sense would not in the Department's view be calculated to improve our relations with that Government. Moreover, such a holding might very well be detrimental to our relations with other foreign countries in which military bases are now held or in which they might in the future be sought. * * *' 13 33 Stat. 2234, 2235. 14 Secretary Hughes to the Panamanian Minister, Oct. 15, 1923, 2 Hackworth, Digest of International Law, pp. 801—805. 15 Joint Statement of President Roosevelt and President Arias, Oct. 17, 1933, id., 806 et seq.; General Treaty and Supplementary Conventions of March 2, 1936, ratified July 26, 1939, 53 Stat. 1807. 16 The other subparagraphs provide that the United States must conform to the local system of lights and other navigation aids, and report in advance to local authorities any such devices established or changed; that the United States is exempt from local pilotage laws; that British commercial vessels may use the leased areas on the same basis as American commercial vessels; and that commercial United States aircraft cannot operate from the bases for other than military purposes except by agreement with the United Kingdom. 17 President Wilson, in a message delivered in person to the Congress (51 Cong. Rec. 4313) said '* * * Whatever may be our differences of opinion concerning this much debated measure, its meaning is not debated outside the United States. Everywhere else the language of the treaty (with Great Britain) is given but one interpretation, and that interpretation precludes the exemption I am asking you to repeal. * * *' '* * * We consented to the treaty (with Great Britain); its language we accepted, if we did not originate it; and we are too big, too powerful, too self-respecting a nation to interpret with too strained or refined a reading the words of our own promises just because we have power enough to give us leave to read them as we please. The large thing to do is the only thing we can afford to do, a voluntary withdrawal from a position everywhere questioned and misunderstood. * * *' '* * * We ought to reverse our action without raising the question whether we were right or wrong, and so once more deserve our reputation for generosity and for the redemption of every obligation without quibble or hesitation.' 'I ask this of you in support of the oreign policy of the administration. I shall not know how to deal with other matters of even greater delicacy and nearer consequence if you do not grant it to me in ungrudging measure.' 18 After hearings, the House Committee recommended passage. House Report No. 362, 63d Cong., 2d Sess. Three separate minority reports, reflecting the views of four Committee members, were filed. Id. The Senate Committee heard testimony covering more than one thousand pages. Hearings on H.R. 14385, Senate Committee on Interoceanic Canals, 63d Cong., 2d Sess. The issue was so explosive that the measure was reported back without recommendation. S. Rep. No. 469, 63d Cong., 2d Sess. The measure was debated for five days in the House, 51 Cong.Rec., Pt. 6, 5554 5602; 5605—5640; 5677—5767; 5797—5897; 5922—6089, and more than a month in the Senate, 51 Cong.Rec., Pt. 8, 7660—7667; 7723—7727; 8115—8172; 8211—8229; 8277—8284; 51 Cong.Rec., pt. 9, 8335—8340; 8428—8446; 8492—8507; 8548—8560; 8638—8642; 8693—8707; 8730—8741; 8803—8824; 8367; 8875—8888; 8941—8956; 9003—9031; 9209—9031; 9209 9214; 9215—9243; 9291—9297; 51 Cong.Rec., Pt. 10, 9355—9365; 9435 9436; 9509—9526; 9626—9631; 9713—9722; 9723—9745; 9784—9788; 9916 9918; 9977—10008; 10041—10087; 10127—10174; 10185—10210; 10211 10248. See also Extension of Remarks at 51 Cong. Rec., Pt. 17, pp. 252, 253; 253—255; 258—263; 266—270; 279, 280; 280; 280, 281; 281, 282; 282—290; 290—292; 292—294; 295, 296; 296—298; 298; 298, 299; 299—303; 306, 307; 307—309; 309—315; 316—319; 319—324; 324—330; 331—333; 333, 334; 334, 335; 335; 335—339; 339, 340; 352, 353; 353 356; 370—372; 418—428; 539—543; 610—617; 644, 645; 645, 646; 646, 647; 650. The repealer was passed as the Act of June 15, 1914, c. 106, 38 Stat. 385. See annotations in 48 U.S.C.A. §§ 1315, 1317. 19 35 Op. Atty. Gen. 536, 540, 541. 20 See United Nations, Non-Self-Governing Territories, Summaries of Information Transmitted to the Secretary General during 1946 (UN, 1947) p. 101. 21 Wage & Hour Manual (1942 ed.) 30; 12 F.R. 4583, 4584; 29 C.F.R. 1947 Supp., § 776.1. 22 See note 21. See also Administrator's Letter dated May 22, 1942, stating that the Act does not apply to bases in the 'British West Indies' and Deputy Administrator's Letter dated September 24, 1943, with specific reference to the leased area on Trinidad. 23 (a) In 1941 Congress sought to extend to the leased bases the provisions of the Longshoremen's and Harbor Workers' Compensation Act which covered death or disability from an injury occurring upon the navigable waters of the United States. The 'United States' was therefore defined to mean 'the several States and Territories and the District of Columbia, including the territorial waters thereof.' 44 Stat. 1424, 33 U.S.C. § 902, 33 U.S.C.A. § 902. The amendment, c. 357, 55 Stat. 622, 42 U.S.C.A. § 1651 et seq., made the Act applicable to injuries or death of covered employees at any military, air or naval base acquired after January 1, 1940, by the United States from any foreign government or any lands occupied or used by the United States for military or naval purposes in any Territory or possession outside the continental United States, including Alaska, Guantanamo, and the Philippine Islands. This Act was amended in 1942, c. 668, 56 Stat. 1028, 1035, and, as amended, lists separately (1) bases acquired from foreign governments after January 1, 1940, and (2) lands used for military or naval purposes and any Territory or possession, including Alaska, the Philippines, Guantanamo, and the Canal Zone. It is clear that in neither 1941 and 1942 did the Congress consider that the term 'possession' alone would have extended coverage to the bases. (b) The Act of March 27, 1942, c. 198, 56 Stat. 174, designed to extend War Damage protection provides that such protection shall be applicable only (1) to property situated in the United States (including the several States and the District of Columbia), the Philippine Islands, the Canal Zone, the territories and possessions of the United States, and in such other places as may be determined by the President to be under the dominion and control of the United States. The terms of this Act, and its legislative history, indicate that the final clause was added to cover areas such as these bases. If the Congress had considered areas of this kind to be 'possessions' such a clause would scarcely have been necessary. 24 More than 100 years ago, Mr. Chief Justice Marshall, speaking for a unanimous Court in Foster v. Neilson, 2 Pet. 253, 307, 309, 7 L.Ed. 415, said: '* * * In a controversy between two nations concerning national boundary, it is scarcely possible that the courts of either should refuse to abide by the measures adopted by its own government. * * * The judiciary is not that department of the government to which the assertion of its interests against foreign powers is confided; and its duty commonly is to decide upon individual rights, according to those principles which the political departments of the nation have established. If the course of the nation has been a plain one, its courts would hesitate to pronounce it erroneous. * * * After these acts of sovereign power over the territory in dispute, asserting the American construction of the treaty by which the government claims it, to maintain the opposite construction in its own courts would certainly be an anomaly in the history and practice of nations. If those departments which are entrusted with the foreign intercourse of the nation, which assert and maintain its interests against foreign powers, have unequivocally asserted its right of dominion over a country of which it is in possession, and which it claims under a treaty; if the legislature has acted on the construction thus asserted, it is not in its own courts that this construction is to be denied. * * *' In an earlier case, The Amiable Isabella, 6 Wheat. 1, 71, 5 L.Ed. 191, Mr. Justice Story had said: '* * * In the first place, this Court does not possess any treaty-making power. That power belongs by the constitution to another department of the Government; and to alter, amend, or add to any treaty, by inserting any clause, whether small or great, important or trivial, would be on our part an usurpation of power, and not an exercise of a judicial function. * * *' If, as Mr. Chief Justice Marshall stated, this Court should not, to deny rights asserted by the Executive, place a different interpretation on an agreement with another nation, a fortiori, it should not do so in order to assert rights which not only are not asserted by our Executive or by the Congress, but are denied by them and by the other sovereign involved. And, to add, to the agreement under which we occupy the leased areas, that as a matter of law the bases have become our possessions, is certainly more than a trivial change in that agreement, in direct contravention of the caution by Mr. Justice Story. 25 See, e.g., the statutes mentioned in note 23. 26 Section 3(d) of the Act provides that the term 'employer' shall not include the United States. 29 U.S.C. § 203(d), 29 U.S.C.A. § 203(d). 27 See President Wilson's message quoted note 17; and see note 24. 28 Since the District Court entered summary judgment before trial based on a ruling that the leased area is not a possession of the United States, I assume that this Court's affirmance of the reversal of that ruling leaves open on remand all other questions relevant to respondents' right of recovery, such as whether or not they were engaged in commerce or in the production of goods for commerce, as well as any defenses which may be available to petitioner.
67
335 U.S. 410 69 S.Ct. 170 93 L.Ed. 100 UPSHAWv.UNITED STATES. No. 98. Argued Nov. 12, 1948. Decided Dec. 13, 1948. Mr. Joel D. Blackwell, of Washington, D.C., for petitioner. Mr. Robert S. Erdahl, of Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 The petitioner was convicted of grand larceny in the United States District Court for the District of Columbia and sentenced to serve sixteen months to four years in prison. Pre-trial confessions of guilt without which petitioner could not have been convicted1 were admitted in evidence against his objection that they had been illegally obtained. The confessions had been made during a 30-hour period while petitioner was held a prisoner after the police had arrested him on suspicion and without a warrant. 2 Petitioner's objection to the admissibility of the confessions rested on Rule 5(a) of the Federal Rules of Criminal Procedure, 18 U.S.C.A., and our holding in McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819. Rule 5(a) provides that 'An officer making an arrest * * * shall take the arrested person without unnecessary delay before the nearest available' committing magistrate and when the arrested person appears before the magistrate 'a complaint shall be filed forthwith.' Petitioner contended that the officers had violated this rule in detaining him as they did without taking him before a committing magistrate. In the McNabb case we held that confessions had been improperly admitted where they were the plain result of holding and interrogating persons without carrying them 'forthwith' before a committing magistrate as the law commands. 3 In this case the District Court thought that the NcNabb ruling did not apply because the detention of petitioner 'was not unreasonable under the circumstances as a matter of law.' Consequently, that court held the confessions admissible. On appeal to the United States Court of Appeals for the District of Columbia, the United States attorney and his assistants detailed the circumstances of petitioner's arrest and detention and confessed error. They concluded from these detailed circumstances that the 'delay' in carrying petitioner before a committing magistrate 'was unreasonable and the urpose of it, as stated by the officers themselves, was only to furnish an opportunity for further interrogation.' Under these circumstances, the district attorney thought that the NcNabb rule made the confessions inadmissible without regard to whether they were 'voluntary' in the legal sense. The delay in taking petitioner before a judicial officer was thought, in the words of the district attorney, to have been 'for purposes inimical to the letter and spirit of the rule requiring prompt arraignment.' 4 The Court of Appeals rejected this confession of error, one judge dissenting. App.D.C., 168 F.2d 167. It read the McNabb case as explained in United States v. Mitchell, 322 U.S. 65, 64 S.Ct. 896, 88 L.Ed. 1140, as holding that 'A confession voluntarily given is admissible in evidence' while conversely 'a confession involuntarily made is inadmissible.' 168 F.2d 167. That court thought the McNabb case did no more than extend the meaning of 'involuntary' confessions to proscribe confessions induced by psychological coercion as well as those brought about by physical brutality. Finding no psychological coercion in the facts of this case, the court concluded that the confessions were not the 'fruit of the illegal detention.' The court also laid stress on the fact that the petitioner's detention unlike McNabb's, 'was not aggravated by continuous questioning for many hours by numerous officers.' 5 We hold that this case falls squarely within the McNabb ruling and is not taken out of it by what was decided in the Mitchell case. In the McNabb case (318 U.S. 332, 63 S.Ct. 614), we held that the plain purpose of the requirement that prisoners should promptly be taken before committing magistrates was to check resort by officers to 'secret interrogation of persons accused of crime.' We then pointed out the circumstances under which petitioners were interrogated and confessed. This was done to show that the record left no doubt that the McNabbs were not promptly taken before a judicial officer as the law required, but instead were held for secret questioning, and 'that the questioning of petitioners took place while they were in the custody of the arresting officers and before any commitment was made.' The NcNabb confessions were thus held inadmissible because the McNabbs were questioned while held in 'plain disregard of the duty enjoined by Congress upon Federal officers' promptly to take them before a judicial officer. In the McNabb case there were confessions 'induced by illegal detention,' United States v. Mitchell, supra, 322 U.S. at page 70, 64 S.Ct. at page 698, 88 L.Ed. 1140, a fact which this Court found did not exist in the Mitchell case. 6 In the Mitchell case although the defendant was illegally held eight days, the court accepted the record as showing that Mitchell promptly and spontaneously admitted his guilt within a few minutes after his arrival at the police station. Mitchell's confessions therefore were found to have been made before any illegal detention had occurred. This Court then stated in the Mitchell opinion that 'the illegality of Mitchell's detention does not retroactively change the circumstances under which he made the disclosures.' Thus the holding in the Mitchell case was only that Mitchell's subsequent illegal detention did not render inadmissible his prior confessions. They were held not to involve 'use by the Government of the fruits of wrongdoing by its officers.' The Mitchell case, 332 U.S. at page 68, 64 S.Ct. at page 898, however, reaffirms the McNabb rule that a confession is inadmissible if made during illegal detention due to failure promptly to carry a prisoner before a committing magistrate, whether or not the 'confession is the result of torture, physical or psychological * * *.' In this case we are left in no doubt as to why this petitioner was not brought promptly before a committing magistrate. The arresting officer himself stated that petitioner was not carried before a magistrate on Friday or Saturday mo ning after his arrest on Friday at 2 a.m., because the officer thought there was 'not a sufficient case' for the court to hold him, adding that even 'if the police court did hold him we would lose custody of him and I no longer would be able to question him.' Thus the arresting officer in effect conceded that the confessions here were 'the fruits of wrongdoing' by the police officers. He conceded more: He admitted that petitioner was illegally detained for at least thirty hours for the very purpose of securing these challenged confessions. He thereby refutes any possibility of an argument that after arrest he was carried before a magistrate 'without unnecessary delay.' 7 The argument was made to the trial court that this method of arresting, holding, and questioning people on mere suspicion, was in accordance with the 'usual police procedure of questioning a suspect * * *.' However usual this practice, it is in violation of law, and confessions thus obtained are inadmissible under the McNabb rule. We adhere to that rule.2 8 Reversed. 9 Mr. Justice REED, with whom The CHIEF JUSTICE, Mr. Justice JACKSON and Mr. Justice BURTON join, dissenting. 10 When not inconsistent with a statute, or the Constitution, there is no doubt of the power of this Court to institute, on its own initiative, reforms in the federal practice as to the admissibility of evidence in criminal trials in federal courts.1 This power of reform, which existed at the time, March 1, 1943, McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819, was decided, is not, I believe, restricted by the language of Rule 26 of the Federal Rules of Criminal Procedure, effective March 21, 1946. Federal Rule of Criminal Procedure No. 59; 91 Cong.Rec. 12545. The admissibility of evidence, like the competency of witnesses, is 'governed by common law principles as interpreted and applied by the federal courts in the light of reason and experience.' Wolfle v. United States, 291 U.S. 7, 12, 54 S.Ct. 279, 78 L.Ed. 617.2 While judicial innovations explicitly expanding or contracting admissibility of evidence are rare, there have been sufficient occasions to establish by precedent and legislative acceptance that the power exists. McNabb v. United States, supra, 318 U.S. at page 341, 63 S.Ct. at page 613, 87 L.Ed. 819.3 11 Such power should be used to change the established rules of evidence, however, only when 'fundamentally altered conditions,' note 2, supra, call for such a change in the interests of justice. Otherwise the bad results from a change of well-established rules are quite likely to outweigh the good. The lack of any necessity for changing the rules of evidence to protect an accused led me to dissent in the McNabb case, a murder case where an assumed failure to commit the prisoner apparently was relied upon as a partial basis for denying admissibility to certain confessions. 12 My objection to this Court's action of today in what seems to me an extension of the scope of nonadmissibility of confessions in the federal courts is not to its power so to act but to the advisability of such an additional step. Unless Congress or a majority of this Court modifies the McNabb rule, I feel bound to follow my understanding of its meaning in similar cases that may arise, but that duty does not impose upon me the obligation to accept this ruling as to Upshaw which seems to me to compound certain unfortunate results of the McNabb decision by extending it to circumstances beyond the scope of the McNabb ruling. This attitude leads me (I) to analyze the McNabb case and its offspring, (II) to point out why I think the present decision goes beyond the holding in McNabb and (III) to point out why McNabb should not be extended. 13 The judicial approach to the problem, of course, must be in a spirit of cooperation with the police officials in the administration of justice. They are directly charged with the responsibility for the maintenance of law and order and are under the same obligation as the judicial arm to discharge their duties in a manner consistent with the Constitution and statutes. The prevention and punishment of crime is a difficult and dangerous task, for the most part performed by security and prosecuting personnel in a spirit of public service to the community. Only by the maintenance of order may the rights of the criminal and the law abiding elements of the population be protected. As has been pointed out by this Court in the McNabb and Mitchell cases, United States v. Mitchell, 322 U.S. 65, 64 S.Ct. 896, 88 L.Ed. 1140, there is no constitutional problem involved in deciding whether a voluntary confession given by a prisoner prior to commitment by a magistrate should be admitted in evidence. A prisoner's constitutional rights against self-incrimination or to due process are protected by the rule that no involuntary confession may be admitted. McNabb v. United States, supra, 318 U.S. at pages 339, 340, 63 S.Ct. at page 612, 87 L.Ed. 819 and cases cited; Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302; Malinski v. New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029; Ashcraft v. Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L.Ed. 1192. I. 14 Our first inquiry, then, is as to the legal doctrine behind the McNabb decision. 15 A. Were the McNabb confessions barred as a punishment or penalty against the police officers because they were thought to have disobeyed the command of a statute? 16 B. Were they barred because unlawful imprisonment is so apt to be followed by an involuntary confession as to justify the exclusion of all confessions received before judicial commitment after a prisoner is kept in custody more than a reasonable time without being taken before a committing m gistrate? 17 C. Were they barred because the particular circumstances under which the confessions were made were so likely to produce involuntary confessions as to justify exclusion? 18 A. As the McNabb decision was a sudden departure from the former federal rule as to the admissibility of confessions4 initiated by the Court, without the benefit of brief or argument and without knowledge of the actual facts as to commitment,5 it can hardly be expected that it could have the desirable explicitness of a trite rule of evidence. Consequently confusion immediately arose as to its meaning. The dissent interpreted the opinion as a direction to exclude the confessions 'because in addition to questioning the petitioners, the arresting officers failed promptly to take them before a committing magistrate.' It concluded: 'The officers of the Alcohol Tax Unit should not be disciplined by overturning this conviction.' McNabb v. United States, supra, 318 U.S. at page 349, 63 S.Ct. at page 617. Some courts thought that any confession obtained before committment was inadmissible. United States v. Hoffman, 2 Cir., 137 F.2d 416, 421; Mitchell v. United States, 78 U.S.App.D.C. 171, 138 F.2d 426, 427. Others have understood the case to determine admissibility of confessions by a coercion test.6 Varying impressions as to the rule that the McNabt case announced appear in the cases.7 The Special Committee on the Bill of Rights of the American Bar Association under date of May 15, 1944, advised Subcommittee No. 2 of the Committee on the Judiciary of the House of Representatives that before the McNabb case 'there was no effective penalty in operation. * * * 19 'Then came the McNabb case which did impose a drastic penalty. The seven majority Justices held that unlawful detention shut out the confession. The decision made the speedy production statutes really mean something. The police were no longer left free to enforce the law by disobeying the law.' P. v. 20 Five members of the Special Committee, apparently under the Chairmanship of Professor Zechariah Chafee, Jr., also submitted a Memorandum which said, 'The McNabb rule excluding confessions obtained during unlawful detention is an effective penalty for violation of the Acts of Congress.' P. 19. It added: 21 'Congress should be very reluctant to take away the only effective penalty now existing for violation of the fundamental right to have the continuance of custody determined by a magistrate and not by the uncontrolled will of the police, however able and devoted they may be.' P. 25.8 22 Notwithstanding that some did gain the impression from the McNabb case that it was intended as a discipline of police officers for the violation of the commitment statutes, a reading of McNabb as later explained by United States v. Mitchell, supra, negatives such a conclusion. 23 It is true that there are phrases in the McNabb opinion that condemn the assumed failure to take the accused promptly before a magistrate.9 Further Benjamin's confession was barred even though it was given within 'five or six hours' of questioning, and without the slightest suggestion of force, after his voluntary surrender because he had heard the officers were looking for him. Perhaps the strongest indication that the McNabb decision may have been intended as a penalty for police misconduct occurs in another case decided the same day as McNabb, Anderson v. United States, 318 U.S. 350, 63 S.Ct. 599, 87 L.Ed. 829. There a man was arrested Sunday night and confessed after two hours' questioning on Monday morning. Nevertheless his confession was held inadmissible under authority of McNabb. 318 U.S. at page 355, 63 S.Ct. at page 601. 24 However, United States v. Mitchell, supra, made it clear that the purpose of McNabb was not to enforce a penalty for police misconduct.10 In the Mitchell case a suspect was arrested and taken to the police station. He confessed within a few minutes of his arrival. He was illegally detained for eight days before being taken before a committing magistrate. 'The police explanation of this illegality is that Mitchell was kept in such custody without protest through a desire to aid the police in clearing up thirty housebreakings * * *.' This Court then pronounced this statement as to the exclusion of the confessions as evidence. 'These, we have seen, were not elicited through illegality. Their admission, therefore, would not be use by the Government of the fruits of wrongdoing by its officers. Being relevant, they could be excluded only as a punitive measure against unrelated wrongdoing by the police. Our duty in shaping rules of evidence relates to the propriety of admitting evidence. This power is not to be used as an indirect mode of disciplining misconduct.' 322 U.S. at pages 70, 71, 64 S.Ct. at page 898, 88 L.Ed. 1140. The Mitchell explanation of McNabb seems correct. It is not the function of courts to provide penalties and sanctions for acts forbidden by statutes where neither statutes nor the common law nor equity procedure have established them. 25 For the above reasons, I reach the conclusion that the McNabb case was not intended as a penalty or sanction for violation of the commitment statute. 26 B. The Court bases its decision of today on the theory that 'a confession is inadmissible if made during illegal detention due to failure promptly to carry a prisoner before a committing magistrate, whether or not the 'confession is the result of torture, physicar or psychological. * * *" The Court holds that this was the McNabb rule and adheres to it. I do not think this was the McNabb rule and I do think the rule as now stated is an unwarranted extension of the rule taught by the McNabb case. My reasons follow. 27 There is no legal theory expressed in McNabb that supports the idea that every confession after unnecessary delay and before commitment is inadmissible. There are a few isolated sentences that do lend credence to such an explanation of the legal theory behind the case, but when read in context, I think it is clear that they do not expound such a rule.11 The physical conditions of the restraint are emphasized, 318 U.S. at pages 335, 338, and 344, 345, 63 S.Ct. at pages 610, 611 and 614, 615, 87 L.Ed. 819. Attention is called to the examination, when stripped, of one man. 318 U.S. at page 337, 63 S.Ct. at page 611.12 The Mitchell case, supra, 322 U.S. at page 67, 64 S.Ct. at page 897, 88 L.Ed. 1140, removes all my doubts as to the true McNabb rule. It says: 'Inexcusable detention for the purpose of illegally extracting evidence from an accused, and the successful extraction of such inculpatory statements by continuous questioning for many hours under psychological pressure, were the decisive features in the McNabb case which led us to rule that a conviction on such evidence could not stand.'13 28 During detention in violation of the federal commitment statute is the likelihood that police officials will use coercion for the extraction of an involuntary confession so strong as to justify the exclusion by this Court of all confessions to the police obtained after their failure to conform to the requirement of prompt production of the accused before a magistrate? I think not. It must be admitted that a prompt hearing gives an accused an opportunity to obtain a lawyer;14 to secure from him advice as to maintaining an absolute silence to all questions, no matter how apparently innocuous; to gain complete freedom from police interrogation in all bailable offenses;15 and that these privileges are more valuable to the illiterate and inexperienced than to the educated and well-briefed accused. Proper protection of the ignorant is of course desirable, but the rule now announced forces exclusion of all confessions given during illegal restraint. It will shift the inquiry to the legality of the arrest and restraint, rather than to whether the confession was voluntary. Such exclusion becomes automatic on proof of detention in violation of the commitment statute, followed by a confession to police officials before commitment. It is now made analogous to the exclusion of evidence obtained in violation of the Bill of Rights through unreasonable search and seizure or through compulsion or by denial of due process. I do not think this is the doctrine of the McNabb case or that it should now be made an explicit rule of federal law. 29 The rule as to the inadmissibility of evidence in federal courts obtained in violation of the Bill of Rights, Fourth and Fifth Amendments is, it seems to me, inapplicable as an analogy to a situation such as existed in the McNabb case and here.16 By assumption of this Court, in the McNabb case the McNabb confessions were obtained without 'disregard of liberties deemed fundamental by the Constitution,' McNabb v. United States, supra, 318 U.S. at page 339, 63 S.Ct. at page 612, i.e., without violation of the Bill of Rights. I take it the same assumption applies as to Upshaw. Under this assumption, the McNabb confessions would have been admissible if the Court had not believed there was a failure to follow the statute on commitments. Confessions, of course, are also inadmissible when coerced in violation of constitutional due process under the Fourteenth Amendment. Malinski v. New York, 324 U.S. 401, 404, 65 S.Ct. 781, 783, 89 L.Ed. 1029; Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302. When other evidence is the direct result of an unconstitutional act such as a violation of the Fourth Amendment, this Court has said, in federal cases, that to permit its use would impair the protection of this major guarantee of a free country.17 When, as in the McNabb case, there are confessions after failure to observe statutory directions not shown to have coerced the confessions the rule as to evidence extracted in defiance of the Constitution does not apply.18 30 This Court by decision has excluded evidence obtained by unreasonable search and seizure under the Fourth Amendment or by coercion to a degree that violates the Fifth or the Fourteenth Amendments because the admission of such evidence would imperil the efficacy of those constitutional rights. If confessions obtained during unlawful detention are not excluded by the fact of unlawful detention alone, the constitutionally guaranteed rights of the accused are nevertheless protected by the rule that no involuntary confession is admissible. It is therefore unnecessary for constitutional reasons to extend this protection to evidence obtained through violation of a statute or a rule of criminal procedure by those to whom the confession is made. In criminal trials, the method of obtaining evidence has never been a reason for barring its use except where constitutional rights were violated.19 The prohibition of wiretapping in § 605 of the Federal Communications Act, 47 U.S.C.A. § 605, is not the basis for the exclusion in prosecutions of evidence so obtained. The exclusion of such evidence is based on an explicit direction of the section that information so obtained should not be divulged.20 Congress could, of course, pass such a statute to prohibit the use of a confession as evidence, if obtained during an unlawful detention. The rule of the Olmstead case, 277 U.S. 438, 466, 48 S.Ct. 564, 568, 72 L.Ed. 944, 66 A.L.R. 376, derived from the common law that he admissibility of evidence is not affected by conduct of investigators where there is no violation of a constitutional guaranty stands unimpaired. 31 If this judicial rule of exclusion of all confessions secured after illegal detention is adhered to, it must mean that this Court thinks illegal detention is so likely to result in 'third degree' that it should be outlawed per se. There is a reference to 'third degree' in McNabb, 318 U.S. at page 344, 63 S.Ct. at page 614, 87 L.Ed. 819, but, as indicated above, page 12 (69 S.Ct. 177), no reliance upon the detention as coercive in the due process sense.21 If illegal detention, per se, is believed sufficiently likely to produce a coerced confession as to justify exclusion of such confessions as evidence, it does not require this extension of the McNabb rule to make such evidence inadmissible. A court never knows whether a confession is or is not voluntary. It bars confessions on uncontroverted proof of facts which as a matter of law are deemed so coercive as to be likely to produce an involuntary confession. Chambers v. Florida, 309 U.S. 227, 238, 239, 60 S.Ct. 472, 478, 84 L.Ed. 716; Malinski v. New York, 324 U.S. 401, 404, 65 S.Ct. 781, 783, 89 L.Ed. 1029. If illegal detention alone wwere deemed that coercive, the confessions would be barred as a matter of due process in both state and federal courts.22 So here if illegal detention alone is the decisive factor, the rule of exclusion surely will apply to both state and federal trials as violative of the Due Process Clause. But the McNabb rule does not apply to trials in state courts.23 It is because illegal detention was not thought to be per se coercive that it was necessary to create the McNabb rule of exclusion. 32 For the foregoing reasons, I conclude that detention alone, even for the purpose of obtaining information, should not be sufficient to justify the exclusion of confession to police officers obtained after unnecessary delay and before commitment. 33 C. This brings me to a statement of the true rule of the McNabb case, as I understand it. This rule is that purposeful, unlawful detention illegally to extract evidence and the successful extraction of confessions under psychological pressure, other than mere detention for limited periods, makes confessions so obtained inadmissible. This statement is a paraphrase of the Mitchell interpretation referred to in the preceding subdivision. It means that pressure short of coercion but beyond mere detention makes confessions inadmissible. Obviously there is a wide range of discretion as to how much psychological pressure is necessary. If any material amount is sufficient, the rule differs little from one denying admissibility if obtained during illegal restraint. If almost coercion is required, the rule will differ little from that excluding an involuntary confession. Under this interpretation of McNabb, I suppose, as in coerced confessions, it should be left to a jury to decide whether there was enough evidence of pressure where the admitted facts do not show improper pressure as a matter of law. II. 34 The Court now says that illegal detention alone is sufficient to bar from evidence a confession to the police during that unlawful detention. As I think this is an improper extension of the McNabb rule, I proceed to state the application of the McNabb rule, as I understand it, to Upshaw's situation. Perhaps Upshaw's arrest without a warrant was also without reasonable cause on the part of the arresting officer to believe he had committed a felony. This unlawful arrest is not relied upon in the opinion. So far as the admissibility of the confession is concerned, it makes no difference that it may have been obtained as the result of an illegal arrest or an unlawful detention. I think there was less psychological pressure upon Upshaw than there was upon the McNabbs. That precedent, therefore, if the true McNabb rule is properly stated in Part I, subdivision C, above, does not require me to declare Upshaw's confession inadmissible. In the McNabbs' case, the facts of their illegal detention that caused this Court's action appear from the opinion as set out below.24 As for Upshaw the facts are detailed in the footFootnote 24--Continued. 35 had never gone beyond Jasper, and his schooling stopped at the third grade. Barney was placed in a separate room in the Federal Building where he was questioned for a short period. The officers then took him to the scene of the killing, brought him back to the Federal Building, questioned him further for about an hour, and finally removed him to the county jail three blocks away. 36 'In the meantime, direction of the investigation had been assumed by H. B. Taylor, district supervisor of the Alcohol Tax Unit, with headquarters at Louisville, Kentucky. Taylor was the Government's chief witness on the central issue of the admissibility of the statements made by the McNabbs. Arriving in Chattanooga early Thursday morning, he spent the day in study of the case before beginning his interrogation of the prisoners. Freeman, Raymond, and Emuil, who had been taken to the county jail about five o'clock Thursday afternoon, were brought back to the Federal Building early that evening. According to Taylor, his questioning of them began at nine o'clock. Other officers set the hour earlier. 37 'Throughout the questioning, most of which was done by Taylor, at least six officers were present. At no time during its course was a lawyer or any relative or friend of the defendants present. Taylor began by telling 'each of them before they were questioned that we were Government officers, what we were investigating, and advised them that they did not have to make a statement, that they need not fear force, and that any statement made by them would be used against them, and that they need not answer any questions asked unless they desired to do so.' 38 'The men were questioned singly and together. As described by one of the officers, 'They would be brought in, be questioned possibly at various times, some of them half an hour, or maybe an hour, or maybe two hours.' Taylor testified that the questioning continued until one o'clock in the morning, when the defendants were taken back to the county jail. 39 'The questioning was resumed Friday morning, probably sometime between nine and ten o'clock. 'They were brought down from the jail several times, how many I don't know. They were questioned one at a time, as we would finish one he would be sent back and we would try to reconcile the facts they told, connect up the statements they made, and then we would get two of them together. I think at one time we probably had all five together trying to reconcile their statements. * * * When I knew the truth I told the defendants Footnote 24--Continued 40 what I knew. I never called them damned liars, but I did say they were lying to me. * * * It would be impossible to tell all the motions I made with my hands during the two days of questioning, however, I didn't threaten anyone. None of the officers were prejudiced towards these defendants nor bitter toward them. We were only trying to find out who killed our fellow officer.' 41 'Benjamin McNabb, the third of the petitioners, came to the office of the Alcohol Tax Unit about eight or nine o'clock Friday morning and voluntarily surrendered. Benjamin was twenty years old, had never been arrested before, had lived in the McNabb Settlement all his life, and had not got beyond the fourth grade in school. He told the officers that he had heard that they were looking for him but that he was entirely innocent of any connection with the crime. The officers made him take his clothes off for a few minutes because, so he testified, 'they wanted to look at me. This scared me pretty much.' He was not taken before a United States Commissioner or a judge. Instead, the officers questioned him for about five or six hours. When finally in the afternoon he was confronted with the statement that the others accused him of having fired both shots, Benjamin said, 'If they are going to accuse me of that, I will tell the whole truth; you may get your pencil and paper and write it down.' He then confessed that he had fired the first shot, but denied that he had also fired the second. 42 'Because there were 'certain discrepancies in their stories, and we were anxious to straighten them out', the defendants were brought to the Federal Building from the jail between nine and ten o'clock Friday night. They were again questioned, sometimes separately, sometimes together. Taylor testified that 'We had Freeman McNabb on the night of the second (Friday) for about three and one-half hours. I don't remember the time but I remember him particularly because he certainly was hard to get anything out of. He would admit he lied before, and then tell it all over again. I knew some of the things about the whole truth and it took about three and one-half hours before he would say it was the truth, and I finally got him to tell a story which he said was true and which certainly fit better with the physical facts and circumstances than any other story he had told. It took me three and one-half hours to get a story that was satisfactory or that I believed was nearer the truth than when we started.' 43 'The questioning of the defendants continued until about two o'clock Saturday morning, when the officers finally 'got all the disnote.25 The time between confession and commitment is not significant. United States v. Mitchell, supra. The indications of press re on the McNabbs that lead me to conclude that the Court should hold Upshaw's confession admissible under my understanding of the McNabb rule before this present holding are the lack of experience of the mcNabbs, the 'breaking' of Benjamin by confrontation of charges of his guilt by his relatives and confederates, the greater number of officers questioning them, and the longer time the McNabb group was interrogated.26 III. 44 I do not agree that we should now extend the McNabb rule by saying that every confession obtained by police after unnecessary delay in arraignment for committment and before magisterial commitment must be barred from the trial. Those most concerned with a proper administration of the criminal law are against any extension. 45 (1) The departure of the McNabb and Anderson cases from well-established methods for protection against coercion has been condemned by the House of Representatives and not acted upon by the Senate.27 46 (2) Officer charged with enforcement of the criminal law have objected for the reason that fear of the application of its drastic penalties deterred officers from questioning during reasonable delays in commitment.28 47 (3) State courts under similar laws and conditions have refused to follow the McNabb example.29 48 (4) Law Review comment generally condemns the rule.30 49 In the Federal Rules of Criminal Procedure, Preliminary Draft, submitted May 3, 1943, to this Court, there was included a § 5(b) which purported to codify the McNabb rule.31 In response to widespread opposition to such a codification,32 this section of Rule 5 was omitted from the final draft. These rules were drawn by a representative committee of the bench and bar with wide participation beyond the membership by interested parties from both groups. They were transmitted on December 26, 1944, by this Court to the Attorney General to be reported to Congress, more than a year after the McNabb case and after the hearings on the House bill to nullify the McNabb rule. Neither this Court nor the Congress restored the rejected proposal. 50 Instead of and extension of the McNabb rule, I feel that it should be left, as I think it originally was, a rule that barred a confession extracted under psychological pressure of the degree used in the McNabb case. 51 Such condemnation of even the restricted McNabb rule by those immediately responsible for the enactment and administration of our criminal laws should make this Court, so far removed from the actualities of crime prevention, hesitate long before pushing farther by judicial legislation its conception of the proprieties in criminal investigation. It takes this step in the belief that thereby it strengthens criminal administration by protecting a prisoner. A prisoner should have protection but it is well to remember that law and order is an essential prerequisite to the protection of the security of all. Today's decision puts another weapon in the hand of the criminal world. Apparently the Court intends to make the rule of commitment 'without unnecessary delay'33 an iron rule without flexibility to meet the emergencies of conspiracies, search for confederates, or examining into the ramifications of criminality. The Court does this by failing to distinguish between necessary and unnecessary delay in commitment. It uses words like 'forthwith' and 'promptly' and thus destroys the leeway given by the Rule to police investigations. All, I think, without any need for such action since every coerced confession has been inadmissible for generations. The position stated in this dissent does not envisage a surrender to evils in the handling of criminals. If there is a prevalent abuse of the right to question prisoners, the sounder remedy lies in police discipline, in statutory punishment of offending officials, in vigorous judicial protection against unconstitutional pressures for confessions, and in legislative enactments for inquiries into circumstances surrounding crimes by methods that protect both the public and suspects—for example, an inquiry before a magistrate with sealed evidence. 52 I would affirm this conviction in reliance upon the verdict of the properly instructed jury that this was a voluntary confession. 1 After the evidence was all in, the trial judge stated that without the confessions there was 'nothing left in the case.' The trial judge instructed the jury to acquit if they found that the petitioner had not confessed 'voluntarily but because he was beaten.' On this issue of physical violence the jury found against the petitioner, and therefore this issue is not involved in this case. 2 Our holding is not placed on constitutional grounds. Since the McNabb rule bars admission of confessions we need not and do not consider whether their admission was a violation of any of the provisions of the Fifth Amendment. 1 54 Stat. 688, 18 U.S.C. § 687, 18 U.S.C.A. § 687 (now § 3771). Rules of Criminal Procedure for the District Courts of the United States, together with Notes to the Rules, 79th Cong., 2d Sess., S. Doc. No. 175. No change was made in the law by P.L. 772, 62 Stat. 683, 80th Cong., effective September 1, 1948, § 20. 18 U.S.C. § 595, 18 U.S.C.A. § 595, is not in effect but has been superseded by Rule 5(a) of the Rules of Criminal Procedure for the District Courts of the United States: '5 (a) Appearance before the Commissioner. An officer making an arrest under a warrant issued upon a complaint or any person making an arrest without a warrant shall take the arrested person without unnecessary delay before the nearest available commissioner or before any other nearby officer enpowered to commit persons charged with offenses against the laws of the United States. When a person arrested without a warrant is brought before a commissioner or other officer, a complaint shall be filed forthwith.' 2 Funk v. United States, 290 U.S. 371, 383, 54 S.Ct. 212, 216, 78 L.Ed. 369, 93 A.L.R. 1136: 'The final question to which we are thus brought is not that of the power of the federal courts to amend or repeal any given rule or principle of the common law, for they neither have nor claim that power, but it is the question of the power of these courts, in the complete absence of congressional legislation on the subject, to declare and effectua e, upon common-law principles, what is the present rule upon a given subject in the light of fundamentally altered conditions, without regard to what has previously been declared and practiced.' 3 Of the cases cited, only United States v. Wood, 14 Pet. 430, 10 L.Ed. 527, and Funk v. United States, 290 U.S. 371, 54 S.Ct. 212, 78 L.Ed. 369, 93 A.L.R. 1136, involve a change by this Court of a rule of evidence which had become firmly entrenched in our federal jurisprudence. The other cases involve a choice between conflicting rules or the establishment of a rule where none had theretofore existed. 4 318 U.S. at pages 338, 339, 63 S.Ct. at page 612, 87 L.Ed. 819: 'Relying upon the guarantees of the Fifth Amendment that no person 'shall be compelled in any Criminal Case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law', the petitioners contend that the Constitution itself forbade the use of this evidence against them. The Government counters by urging that the Constitution proscribes only 'involuntary' confessions, and that judged by appropriate criteria of 'voluntariness' the petitioners' admissions were voluntary and hence admissible.' 'The Court was establishing what it thought were 'civilized standards of procedure and evidence.' 318 U.S. at page 340, 63 S.Ct. at page 613. 5 As no question was raised by the defendants in the McNabb case because of prolonged police detention before commitment, the record did not show when they were committed. Dissent McNabb v. United States, 318 U.S. at page 349, 63 S.Ct. at page 617. The Court assumed that detention without commitment lasted for Freeman and Raymond McNabb from between one and two o'clock Thursday morning, when they were arrested twelve miles from Chattanooga, until the completion of the questioning about two o'clock Saturday morning; forty-eight hours later. One cannot tell from the opinion when Freeman and Raymond confessed or to what. A third McNabb, Benjamin, was not taken into custody until between eight and nine o'clock Friday morning. He confessed after five or six hours. The Court assumed that he had not been committed prior to confession. McNabb v. United States, supra, 318 U.S. at pages 334, 338, 63 S.Ct. at pages 610, 611. So far as the ruling in the McNabb case is concerned, the Court's understanding of the facts, as stated in the opinion, is the basis for the decision. Apparently Freeman and Raymond were by 10:30 a.m. of the morning of their arrest committed for operating an illicit still, another crime than, though connected with, the murder for which they were convicted. Benjamin was committed for murder within four hours of his surrender. Petition for Rehearing, pp. 3—5. See new trial, McNabb v. United States, 6 Cir., 142 F.2d 904. This commitment for a different crime was a sufficient compliance with the commitment statute to justify the admission of the conf ssions in the second McNabb trial, in the view of the Circuit Court of Appeals for the Sixth Circuit. 6 Brinegar v. United States, 10 Cir., 165 F.2d 512, 515; Ruhl v. United States, 10 Cir., 148 F.2d 173, 175; Paddy v. United States, 9 Cir., 143 F.2d 847, 852; United States v. Grote, 2 Cir., 140 F.2d 413, 414, 415; United States v. Klee, D.C., 50 F.Supp. 679. 7 The following statements have been made concerning McNabb: 'The court then held the confessions obtained by third degree methods were inadmissible * * *.' State v. Behler, 65 Idaho 464, 146 P.2d 338, 340. 'The courts are not concerned with the practices of the police except in so far as they may be asked to use evidence thereby obtained against the will of the accused.' People v. Fox, Cal.App., 148 P.2d 424, 431. '* * * the new doctrine of constitutional rights under the due process clause announced by the Supreme Court of the United States in McNabb v. United States, 318 U.S. 332, 63 S.Ct. 608, 87 L.Ed. 819 * * *.' Thompson v. Harris, 107 Utah 99, 152 P.2d 91, 97. To the same effect are Cavazos v. State, 146 Tex.Cr.R. 144, 172 S.W.2d 348, 351; People v. Goldblatt, 383 Ill. 176, 49 N.E.2d 36, 41; Royse, J., dissenting, in Scoopmire v. Taflinger, 114 Ind.App. 419, 52 N.E.2d 728, 733. 8 See also the statement of Hon. Francis Biddle, Attorney General, Hearings before Subcommittee No. 2 of the Committee of the Judiciary, House of Representatives, 78th Cong., 1st Sess., on H.R. 3690, p. 27. 9 E.g.: 'For in their treatment of the petitioners the arresting officers assumed functions which Congress has explicitly denied them. They subjected the accused to the pressures of a procedure which is wholly incompatible with the vital but very restricted duties of the investigating and arresting officers of the Government and which tends to undermine the integrity of the criminal proceeding.' 318 U.S. at pages 341, 342, 63 S.Ct. at page 613, 87 L.Ed. 819. 'A democratic society, in which respect for the dignity of all men is central, naturally guards against the misuse of the law enforcement process. * * * Experience has therefore counseled that safeguards must be provided against the dangers of the overzealous as well as the despotic.' 318 U.S. at page 343, 63 S.Ct. at page 614. 10 See The McNabb Rule Transformed, 47 Col. L. Rev. 1214. 11 Cf: 'For in their treatment of the petitioners the arresting officers assumed functions which Congress has explicitly denied them.' 318 U.S. at pages 341, 342, 63 S.Ct. at page 613. 'Plainly, a conviction resting on evidence secured through such a flagrant disregard of the procedure which Congress has commanded cannot be allowed to stand without making the courts themselves accomplices in wilful disobedience of law.' 318 U.S. at page 345, 63 S.Ct. at page 615. 'And the effective administration of criminal justice hardly requires disregard of fair procedures imposed by law.' 318 U.S. at page 347, 63 S.Ct. at page 616. On the other hand, there are repeated expressions such as 'the evidence elicited * * * in the circumstances disclosed here,' 318 U.S. at page 341, 63 S.Ct. at page 613, 'evidence secured under the circumstances revealed here,' 318 U.S. at page 347, 63 S.Ct. at page 616, which point the other way. 12 Apparently such an examination is considered effective coercion. See Malinski v. New York, 324 U.S. 401, 65 S.Ct. 781, 89 L.Ed. 1029. 13 See also the statement in Haley v. Ohio, 332 U.S. 596, 606, 68 S.Ct. 302, 307: 'Legislation throughout the country refects a similar belief that detention for purposes of eliciting confessions through secret, persistent, long-continued interrogation violates sentiments deeply embedded in the feelings of our people. See McNabb v. United States, 318 U.S. 332, 342, 343, 63 S.Ct. 608, 613, 614, 87 L.Ed. 819.' In discussing the effect of the Mitchell case, a note in 38 Journal of Criminal Law and Criminology 136, says at p. 137 'There the Court phrased the rule of the McNabb case to stand for the proposition that the illegal detention of an accused person will invalidate his confession only when the detention itself acts as an inducement in the procuring of the confession.' 14 Rules of Criminal Procedure No. 5(b) and 44. 15 18 U.S.C. §§ 3041, 3141, 18 U.S.C.A. §§ 3041, 3141; Rules of Criminal Procedure No. 46(a)(1). 16 Fourth Amendment: 'The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.' Fifth Amendment: 'No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any Criminal Case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.' See Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, L.R.A. 1915B, 834, Ann.Cas. 1915C, 1177; Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746; Silverthorne Lumber Co. v. United States, 251 U.S. 385, 40 S.Ct. 182, 64 L.Ed. 319, 24 A.L.R. 1426; Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647; Harris v. United States, 331 U.S. 145, 150, 67 S.Ct. 1098, 1101, 91 L.Ed. 1399. 17 Weeks v. United States, 232 U.S. 383, 393, 34 S.Ct. 341, 344, 58 L.Ed. 652, L.R.A. 1915B, 834, Ann.Cas. 1915C, 1177: 'If letters and private documents can thus be seized and held and used in evidence against a citizen accused of an offense, the protection of the 4th Amendment, declaring his right to be secure against such searches and seizures, is of no value, and, so far as those thus placed are concerned, might as well be stricken from the Constitution. The efforts of the courts and their officials to bring the guilty to punishment, praiseworthy as they are, are not to be aided by the sacrifice of those great principles established by years of endeavor and suffering which have resulted in their embodiment in the fundamental law of the land.' 18 Compare the statement of Chief Justice Taft: 'Nor can we, without the sanction of congressional enactment, subscribe to the suggestion that the courts have a discretion to exclude evidence, the admission of which is not unconstitutional, because unethically secured. This would be at variance with the common-law doctrine generally supported by authority. There is no case that sustains, nor any recognized text-book that gives color to, such a view. Our general experience shows that much evidence has always been receivable, although not obtained by conformity to the highest ethics. The history of criminal trials shows numerous cases of prosecutions of oathbound conspiracies for murder, robbery, and other crimes, where officers of the law have disguised themselves and joined the organizations, taken the oaths, and given themselves every appearance of active members engaged in the promotion of crime for the purpose of securing evidence. Evidence secured by such means has always been received. 'A standard which would forbid the reception of evidence, if obtained by other than nice ethical conduct by government officials, would make society suffer and give criminals greater immunity than has been known heretofore. In the absence of controlling legislation by Congress, those who realize the difficulties in bringing offenders to justice may well deem it wise that the exclusion of evidence should be confined to cases where rights under the Constitution would be violated by admitting it.' Olmstead v. United States, 277 U.S. 438, 468, 48 S.Ct. 564, 569, 72 L.Ed. 944, 66 A.L.R. 376. 19 E.g., Proceedings Against Bishop Atterbury, 16 How. St. Tr. 323, 495, 629—30 (1723); Sylvester Thornton's Case, 1 Lewin C.C. 49 (1824); Rex v. Derrington, 2 C. & P. 419 (1826); Reg. v. Granatelli, 7 State Tr. N.S. 979, 987 (1849); Hart v. United States, 1942, 76 U.S.App.D.C. 193, 130 F.2d 456. 'It is necessary in this connection to distinguish between evidence illegally procured and evidence procured by unconstitutional search and seizure.' Hart v. United States, supra, 130 F.2d at page 459. The English exception to this rule for confessions obtained by police questioning was rejected by this Court, after careful consideration, in Bram v. United States, 168 U.S. 532, 556, 558, 18 S.Ct. 183, 192, 42 L.Ed. 568. 20 Nardone v. United States, 302 U.S. 379, 382, 58 S.Ct. 275, 276, 82 L.Ed. 314; Goldstein v. United States, 316 U.S. 114, 118, 62 S.Ct. 1000, 1002, 86 L.Ed. 1312. 21 Others have viewed the exclusion of confessions in the McNabb case as based on their extraction by near third degree measures. Hearings before Subcommittee No. 2 of the Committee on the Judiciary, House of Representatives, 78th Cong., 1st Sess., on H.R. 3690, p. 92: 'The MeNabb decision does not even prevent the use of the man's own confession against him. What it does do is prevent the use against him of a confession obtained by third degree means or by means akin to third degree in the form of the secret detention and failure to bring him promptly to the committing officer.' 22 Cf. Haley v. Ohio, 332 U.S. 596, 599, 68 S.Ct. 302, 303, where this Court said in stronger language than it had ever used before, 'If the undisputed evidence suggests that force or coercion was used to exact the confession, we will not permit the judgment of conviction to stand even though without the confession there might have been sufficient evidence for submission to the jury.' 23 Townsend v. Burke, 334 U.S. 736, 738, 68 S.Ct. 1252, 1254. 24 318 U.S. at pages 334, 338, 63 S.Ct. at page 610, 87 L.Ed. 819: 'Immediately upon arrest, Freeman, Raymond, and Emuil were taken directly to the Federal Building at Chattanooga. They were not brought before a United States Commissioner or a judge. Instead, they were placed in a detention room (where there was nothing they could sit or lie down on, except the floor), and kept there for about fourteen hours, from three o'clock Thursday morning until five o'clock that afternoon. They were given some sandwiches. They were not permitted to see relatives and friends who attempted to visit them. They had no lawyer. There is no evidence that they requested the assistance of counsel, or that they were told that they were entitled to such assistance. 'Barney McNabb, who had been arrested early Thursday morning by the local police, was handed over to the federal authorities about nine or ten o'clock that morning. He was twenty-eight years old; like the other McNabbs he had spent his entire life in the Settlement, crepancies straightened out.' Benjamin did not change his story that he had fired only the first shot. Freeman and Raymond admitted that they were present when the shooting occurred, but denied Benjamin's charge that they had urged him to shoot. Barney and Emuil, who were acquitted at the direction of the trial court, made no incriminating admissions.' (Footnotes omitted.) In appraising the severity of the McNabb pressure for confessions in comparison with that exerted in the Upshaw detention, it should also be borne in mind that in the Anderson case, 318 U.S. at page 355, 63 S.Ct. at page 601, 87 L.Ed. 829, a confession was excluded that resulted from two hours' questioning. I have no explanation for this exclusion. If it was intended to make two hours' questioning a bar to a confession, the later Mitchell case is inconsistent with such a conclusion. See the quotation preceding note 13, supra. The opinion does not rely upon it and it seems to me obviously within permissible limits unless we are to use the penalty theory. See page 8, (69 S.Ct. 175), supra. 25 Upshaw, a Negro man able to read and write who had completed one year of high school, was arrested at his room by Detectives Furr and Culpepper on a charge of larceny of a wrist watch at about 2 a.m., Friday, June 6. He was taken to No. 10 precinct and questioned for about 30 minutes. Furr testified that petitioner was under the influence of alcohol at the time. Upshaw denied this. He was coughing sporadically at the time of his arres and subsequently until his commitment. At approximately 10 a.m., June 6, he was questioned again by Furr, at which time he denied guilt. Culpepper questioned him through the bars in the cell block at 11 a.m. and again at 5:30 p.m. on June 6. Furr questioned him again for approximately 30 minutes at 7:30 p.m. on the same day. At 9 a.m., June 7, Upshaw confessed, and at 9:30 a.m. he signed a statement which he identified as his statement at 2 p.m., June 7. Thus some 31 hours intervened between the arrest and the confession. At 9 p.m. that night Upshaw was taken to the home of the complaining witness where he repeated his confession to her. The petitioner was taken before a magistrate for commitment on Monday, June 9. The officers testified that they had not had him committed sooner because they did not have a sufficient case against him to cause the Police Court to hold him and because they wanted to continue their investigation. 26 See 47 Col. L. Rev. 1214, 1217, The McNabb Rule Transformed. 27 93 Cong.Rec. 1392; H.R. Rep. No. 29, 80th Cong., 1st Sess. 28 International Association of Chiefs of Police, Hearings, supra, 43; National Sheriffs Association Hearings, supra, 26; Attorney General of the United States, H.R. Rep. No. 29, supra. 29 Fry v. State, 78 Okl.Cr. 299, 147 P.2d 803, 810, 811; State v. Folkes, 174 Or. 568, 150 P.2d 17, 25; State v. Smith, 158 Kan. 645, 149 P.2d 600, 604; People v. Malinski, 292 N.Y. 360, 55 N.E.2d 353, 357, 365; State v. Collett, Ohio App., 58 N.E.2d 417, 426, 427; State v. Nagel, N.D., 28 N.W.2d 665, 679; State v. Ellis, 354 Mo. 998, 193 S.W.2d 31, 34; Finley v. State, 153 Fla. 394, 14 So.2d 844; State v. Browning, 206 Ark. 791, 178 S.W.2d 77, 78—80; Russell v. State, 196 Ga. 275, 26 S.E.2d 528, 534. 30 Inbau, The Confession Dilemma in the United States Supreme Court, 43 Ill.L.Rev. 442; 42 Mich.L.Rev. 679; 56 Harv.L.Rev. 1008; 47 Col.L.Rev. 1214. See Memorandum on the Detention of Arrested Persons, supra, p. VI, which advocates maintenance of McNabb rule until a better system for dealing with confessions to police can be devised. 31 '5 (b) Exclusion of Statement Secured in Violation of Rule. No statement made by a defendant in response to interrogation by an officer or agent of the government shall be admissible in evidence against him if the interrogation occurs while the defendant is held in custody in violation of this rule.' 32 Holtzoff, Institute on Federal Criminal Rules, 29 ABAJ 603. 33 Rule 5(a), Rules of Criminal Procedure. The language of the Rule was adopted to allow desirable flexibility in the time of commitment. See Notes to Rules of Criminal Procedure, as prepared under the direction of the Advisory Committee; Hearings, supra, pp. 36, 39. In Memorandum on the Detention of Arrested Persons, supra, it is stated at p. 30 wih reference to the phrase 'within a reasonable time': 'This phrase would have the advantage of saving confessions where the delay in committal was beief and reasonably explained; here the existing tendency of lower courts to apply the McNabb rule regidly is pretty harsh on the government.'
01
335 U.S. 451 69 S.Ct. 191 93 L.Ed. 153 McDONALD et al.v.UNITED STATES. No. 36. Argued Oct, 13, 1948. Decided Dec. 13, 1948. Messrs. John Lewis Smith, Jr. and Charles . Ford, both of Washington, D.C., for petitioner. Mr. Frederick Bernays Wiener, of Washington, D.C., for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Petitioners were convicted in the District Court on evidence obtained by a search made without a warrant. The Court of Appeals affirmed on a divided vote. 166 F.2d 957. We brought the case here on certiorari because of doubts whether that result squared with Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367 and Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229. 2 Petitioners were tried without a jury in the District Court for the District of Columbia on an indictment in four counts, charging offenses of carrying on a lottery known as the numbers game in violation of 22 D.C.Code, §§ 1501, 1502, 1504 (1940). They were found guilty on all counts. 3 Petitioner McDonald, who had previously been arrested for numbers operations, had been under police observation for several months prior to the arrest. During this period and while he was maintaining a home in the District of Columbia, he rented a room in the residence of a Mrs. Terry, who maintained a rooming house in the District. His comings and goings at this address were under surveillance by the police for about two months. They had observed him enter the rooming house during the hours in which operations at the headquarters of the numbers game are customarily carried on. 4 On the day of the arrest three police officers surrounded the house. This was midafternoon. They did not have a warrant for arrest nor a search warrant. While outside the house, one of the officers thought that he heard an adding machine. These machines are frequently used in the numbers operation. Believing that the numbers game was in process, the officers sought admission to the house. 5 One of them opened a window leading into the landlady's room and climbed through. He identified himself to her and admitted the other officers to the house. 6 After searching the rooms on the ground floor, they proceeded to the second floor. The door of an end bedroom was closed. But one of the officers stood on a chair and looked through the transom. He observed both petitioners in the room, as well as numbers slips, money piled on the table, and adding machines. He yelled to McDonald to open the door and McDonald did so. Both petitioners were arrested, and the officers seized the machines, a suitcase of papers, and money. Whether these machines and papers should have been suppressed as evidence and returned to petitioner McDonald is the major question presented. 7 The Fourth Amendment to the Constitution provides: 'The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.' This guarantee of protection against unreasonable searches and seizures extends to the innocent and guilty alike. It marks the right of privacy as one of the unique values of our civilization and, with few exceptions, stays the hands of the police unless they have a search warrant issued by a magistrate on probable cause supported by oath or affirmation. And the law provides as a sanction against the flouting of this constitutional safeguard the suppression of evidence secured as a result of the violation, when it is tendered in a federal court. Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177. 8 The prosecution seeks to build the lawfulness of the search on the lawfulness of the arrest and so justify the search and seizure without a warrant. See Agnello v. United States, 269 U.S. 20, 30, 46 S.Ct. 4, 5, 70 L.Ed. 145, 51 A.L.R. 409; Harris v. United States, 331 U.S. 145, 150, 151, 67 S.Ct. 1098, 1101, 91 L.Ed. 1399. The reasoning runs as follows: Al hough it was an invasion of privacy for the officers to enter Mrs. Terry's room, that was a trespass which violated her rights under the Fourth Amendment, not McDonald's. Therefore so far as he was concerned, the officers were lawfully within the hallway, as much so as if Mrs. Terry had admitted them. Looking over the transom was not a search, for the eye cannot commit the trespass condemned by the Fourth Amendment. Since the officers observed McDonald in the act of committing an offense, they were under a duty then and there to arrest him. See 4 D.C.Code, §§ 140, 143 (1940). The arrest being valid the search incident thereto was lawful. 9 We do not stop to examine that syllogism for flaws. Assuming its correctness, we reject the result. 10 This is not a case where the officers, passing by on the street, hear a shot and a cry for help and demand entrance in the name of the law. They had been following McDonald and keeping him under surveillance for two months at this rooming house. The prosecution now tells us that the police had no probable cause for obtaining a warrant until, shortly before the arrest, they heard the sound of the adding machine coming from the rooming house. And there is vague and general testimony in the record that on previous occasions the officers had sought search warrants but had been denied them. But those statements alone do not lay the proper foundation for dispensing with a search warrant. 11 Where, as here, officers are not responding to an emergency, there must be compelling reasons to justify the absence of a search warrant. A search without a warrant demands exceptional circumstances, as we held in Johnson v. United States, supra. We will not assume that where a defendant has been under surveillance for months, no search warrant could have been obtained. What showing these officers made when they applied on the earlier occasions, the dates of these applications, and all the circumstances bearing upon the necessity to make this search without a warrant are absent from this record. We cannot allow the constitutional barrier that protects the privacy of the individual to be hurdled so easily. Moreover, when we move to the scene of the crime, the reason for the absence of a search warrant is even less obvious. When the officers heard the adding machine and, at the latest, when they saw what was transpiring in the room, they certainly had adequate grounds for seeking a search warrant. 12 Here, as in Johnson v. United States and Trupiano v. United States, the defendant was not fleeing or seeking to escape. Officers were there to apprehend petitioners in case they tried to leave. Nor was the property in the process of destruction nor as likely to be destroyed as the opium paraphernalia in the Johnson case. Petitioners were busily engaged in their lottery venture. No reason, except inconvenience of the officers and delay in preparing papers and getting before a magistrate, appears for the failure to seek a search warrant. But those reasons are no justification for by-passing the constitutional requirement, as we held in Johnson v. United States, supra, 333 U.S. at page 15, 68 S.Ct. at page 369. 13 We are not dealing with formalities. The presence of a search warrant serves a high function. Absent some grave emergency, the Fourth Amendment has interposed a magistrate between the citizen and the police. This was done not to shield criminals nor to make the home a safe haven for illegal activities. It was done so that an objective mind might weigh the need to invade that privacy in order to enforce the law. The right of privacy was deemed too precious to entrust to the discretion of those whose job is the detection of crime and the arrest of criminals. Power is a heady thing; and history shows that the police acting on their own cannot be trusted. And so the Constitution requires a magistrate to pass on the desires of the police before they violate the privacy of the home. We cannot be true to that constitutional requirement a d excuse the absence of a search warrant without a showing by those who seek exemption from the constitutional mandate that the exigencies of the situation made that course imperative. 14 It follows from what we have said that McDonald's motion for suppression of the evidence and the return of the property to him should have been granted. Weeks v. United States, supra; Go-Bart Importing Co. v. United States, 282 U.S. 344, 358, 51 S.Ct. 153, 158, 75 L.Ed. 374. It was, however, denied and the unlawfully seized evidence was used not only against McDonald but against Washington as well, the two being tried jointly. Apart from this evidence there seems to have been little or none against Washington. Even though we assume, without deciding, that Washington, who was a guest of McDonald, had no right of privacy that was broken when the officers searched McDonald's room without a warrant, we think that the denial of McDonald's motion was error that was prejudicial to Washington as well. In this case, unlike Agnello v. United States, supra, 269 U.S. at page 35, 46 S.Ct. at page 7, 70 L.Ed. 145, 51 A.L.R. 409, the unlawfully seized materials were the basis of evidence used against the codefendant. If the property had been returned to McDonald, it would not have been available for use at the trial. We can only speculate as to whether other evidence which might have been used against Washington would have been equally probative. 15 Reversed. 16 Mr. Justice BLACK concurs in the result. 17 Mr. Justrice RUTLEDGE concurs in the result, and in the opinion insofar as it relates to the petitioner McDonald. With respect to the petitioner Washington he is of the view that the evidence, having been illegally obtained, was inadmissible. Cf. Malinski v. People of State of New York, 324 U.S. 401, opinion dissenting in part page 420, at pages 430—432, 65 S.Ct. 781, 790, at pages 795, 796, 89 L.Ed. 1029. 18 Mr. Justice JACKSON, concurring. 19 I agree with the result and with the opinion of the Court. But it rejects the search which two courts below have sustained without saying wherein it was wrong. It may be helpful to lower courts and to the police themselves to state what appears to some of us as the reason this search is bad. 20 The police for several weeks had this defendant, McDonald, under surveillance. The United States Commissioner was approached about a search warrant but, for reasons which do not appear, declined to issue it. The only additional information which led the officers to take the law into their own hands and make this search without a warrant was that they heard an adding machine or a typewriter—the witness was not sure which—operating on the premises. Certainly the sound of an adding machine or typewriter, standing alone, is no indication of crime and it could become significant only when weighed in connection with other evidence. A magistrate might either have issued or refused a warrant if request had been made. 21 However, the officer in charge of the investigation took the matter into his own hands. He neither had nor sought a search warrant or warrant of arrest; he did not then have knowledge of a crime sufficient, even in his own opinion, to justify arrest, and he did not even know that the suspect, McDonald, was in the rooming house at the time. Nevertheless, he forced open the window of the landlady's bedroom and climbed in. He apparently was in plain clothes but showed his badge to the frightened woman, brushed her aside and then unlocked doors and admitted two other officers. They then went to the hall outside the room rented and occupied by defendant. The officer in charge climbed on a chair and looked through a transom. Seeing the defendant McDonald engaged in activity which he considered to be part of the lottery procedure, he arrested him and searched the quarters. The Government argued, and the court below held, that since the forced entry into the building was through the landlady's window, in a room in which the defendant as a tenant has no rights, no objection to this mode of entry or to the search that followed was available to him. 22 Doubtless a tenant's quarters in a rooming or apartment house are legally as well as practically exposed to lawful approach by a good many persons without his consent or control. Had the police been admitted as guests of another tenant or had the approaches been thrown open by an obliging landlady or doorman, they would have been legally in the hallways. Like any other stranger, they could then spy or eavesdrop on others without being trespassers. If they peeped through the keyhole or climbed on a chair or on one another's shoulders to look through the transom, I should see no grounds on which the defendant could complain. If in this manner they, or any private citizen, saw a crime in the course of commission, and arrest would be permissible. 23 But it seems to me that each tenant of a building, while he has no right to exclude from the common hallways those who enter lawfully, does have a personal and constitutionally protected interest in the integrity and security of the entire building against unlawful breaking and entry. Here the police gained access to their peeking post by means that were not merely unauthorized but by means that were forbidden by law and denounced as criminal. In prying up the porch window and climbing into the landlady's bedroom, they were guilty of breaking and entering—a felony in law and a crime far more serious than the one they were engaged in suppressing. Having forced an entry without either a search warrant or an arrest warrant to justify it, the felonious character of their entry, it seems to me, followed every step of their journey inside the house and tainted its fruits with illegality. Cf. Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, L.R.A. 1915B, 834, Ann.Cas.1915C, 1177; Taylor v. United States, 286 U.S. 1, 52 S.Ct. 466, 76 L.Ed. 951; Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367. 24 Even if one were to conclude that urgent circumstances might justify a forced entry without a warrant, no such emergency was present in this case. Thi method of law enforcement displays a shocking lack of all sense of proportion. Whether there is reasonable necessity for a search without waiting to obtain a warrant certainly depends somewhat upon the gravity of the offense thought to be in progress as well as the hazards of the method of attempting to reach it. In this case the police had been over two months watching the defendant McDonald. His criminal operation, while a shabby swindle that the police are quite right in suppressing, was not one which endangered life or limb or the peace and good order of the community even if it continued another day or two; neither was the racket one the defendant was likely to abandon. Conduct of the numbers racket is not a solitary vice, practiced in secrecy and discoverable only by crashing into dwelling houses. The real difficulty is that it is so little condemned by otherwise law-abiding people that it flourishes widely and involves multitudes of people. It is to me a shocking proposition that private homes, even quarters in a tenement, may be indiscriminately invaded at the discretion of any suspicious police officer engaged in following up offenses that involve no violence or threats of it. While I should be human enough to apply the letter of the law with some indulgence to officers acting to deal with threats or crimes of violence which endanger life or security, it is notable that few of the searches found by this Court to be unlawful dealt with that category or crime. Almost without exception, the overzeal was in suppressing acts not malum in se but only malum prohibitum.1 While the enterprise of parting fools from their money by the 'numbers' lottery is one that ought to be suppressed, I do not think its suppression is more important to society than the security of the people against unreasonable searches and seizures. When an officer undertakes to act § his own magistrate, he ought to be in a position to justify it by pointing to some real immediate and serious consequences if he postponed action to get a warrant. 25 I am the less reluctant to reach this conclusion because the method of enforcing the law exemplified by this search is one which not only violates legal rights of defendant but is certain to involve the police in grave troubles if continued. That it did not do so on this occasion was due to luck more than to foresight. Many home-owners in this crime-beset city doubtless are armed. When a woman sees a strange man, in plain clothes, prying up her bedroom window and climbing in, her natural impulse would be to shoot. A plea of justifiable homicide might result awkwardly for enforcement officers. But an officer seeing a gun being drawn on him might shoot first. Under the circumstances of this case, I should not want the task of convincing a jury that it was not murder. I have no reluctance in condemning as unconstitutional a method of law enforcement so reckless and so fraught with danger and discredit to the law enforcement agencies themselves. 26 As to defendant Washington: He was a guest on the premises. He could have no immunity from spying and listening by those rightfully in the house. But even a guest may expect the shelter of the rooftree he is under against criminal intrusion. I should reverse as to both defendants. 27 Mr. Justice FRANKFURTER, having joined in the Court's opinion, also concurs in this opinion. 28 Mr. Justice BURTON, with whom The CHIEF JUSTICE and Mr. Justice REED join, dissenting. 29 In our opinion the judgment should have been affirmed. This is a case of a lawful arrest followed by a seizure of the instruments of the crime which then were in plain sight. There was no search. There is, therefore, no issue as to the need for a search warrant. In regard to the arrest, the only issue is as to the need for a warrant of arrest to make it lawful. For the reasons stated below, we believe the arrest for the crime committed in the presence of the officers was clearly lawful without the issuance of a formal warrant for it. At the time of the raid, there were sufficient grounds to justify the police in suspecting that the unlawful lottery, which later proved to be in operation, was in progress within the building which had been under surveillance. A 'numbers game,' such as was there conducted, is a form of lottery generally regarded as detrimental to the communities where it flourishes. It is highly profitable to its principals at the expense of its players. Yet it is so simple in operation that its headquarters are readily movable. Accordingly, it requires substantial police effort to stop such unlawful operations at their source. It is difficult to locate the principals and it is still more difficult to secure proof suffi ient to convict them unless they are arrested in the midst of one of the comparatively brief periodical sessions when the essential computations for the operation of the lottery are being made. Such sessions are held when the operators determine the day's winners and arrange for the distribution among those winners of their respective shares of the cash which has been collected through a network of writers, collectors and runners. 30 Under the circumstances, a prompt entry by the police was justified when they reasonably suspected that the crime of operating a numbers lottery was being committed at that moment. The petitioners, as tenants or occupants of a room, had no right to object to the presence of officers in the hall of the rooming house. The actual observance by the police of the commission of the suspected crime thereupon justified their immediate arrest of those engaged in it without securing a warrant for such arrest. 31 This case is primarily an instance where the police succeeded in surprising the petitioners in the midst of the unlawful operations which the police suspected were being carried on periodically by McDonald as a principal operator and by others at the place in question. It is generally not a violation of any constitutional privilege of the accused for a police officer to arrest such accused without a warrant of arrest if the arrest is made at the very moment when the accused is engaged in a violation of law in the presence of the officer. It is generally not a violation of any constitutional privilege of such accused for the arresting officer thereupon to seize at least the articles then in plain sight and which have been seen by the officer to have been used in the commission of the crime for which the accused is being arrested. We see no adequate reason for a distinction in favor of the accused here. In this case there was no search for the seized property because its presence was obvious. Also, there was no seizure of anything other than the articles which the arresting officer saw in use in some material connection with the crime which the accused committed in the officer's presence. It, therefore, was not a violation of the constitutional rights of the accused to permit such seized articles to be presented in evidence in securing their convictions of the crimes which they were charged with committing in the presence of the arresting officer. 1 For example, the instant case involves a statute forbidding lotteries in the District of Columbia; Trupiano v. United States, 334 U.S. 699, 68 S.Ct. 1229, liquor control and revenue statutes; Johnson v. United States, 333 U.S. 10, 68 S.Ct. 367, narcotic control and revenue statutes; Nathanson v. United States, 290 U.S. 41, 54 S.Ct. 11, 78 L.Ed. 159, liquor control and tariff statute. Other cases involving liquor control or taxing statutes, or both, are numerous; see e.g., Taylor v. United States, 286 U.S. 1, 52 S.Ct. 466, 76 L.Ed. 951; United States v. Lefkowitz, 285 U.S 452, 52 S.Ct. 420, 76 L.Ed. 877, 82 A.L.R. 775; Go-Bart Importing Co. v. United States, 282 U.S. 344, 51 S.Ct. 153, 75 L.Ed. 374; Gambino v. United States, 275 U.S. 310, 48 S.Ct. 137, 72 L.Ed. 293, 52 A.L.R. 1381; Amos v. United States, 255 U.S. 313, 41 S.Ct. 266, 65 L.Ed. 654. Agnello v. United States, 369 U.S 20, 46 S.Ct. 4, 70 L.Ed. 145, 5 A.L.R. 409, involved cocaine control and taxing statutes; and Weeks v. United States, 232 U.S. 383, 34 S.Ct. 341, 58 L.Ed. 652, L.R.A.1915B, 834, Ann.Cas.1915C, 1177, involved a statute forbidding use of the mails to distribute lottery tickets.
01
335 U.S. 437 69 S.Ct. 184 93 L.Ed. 127 UVEGESv.COMMONWEALTH OF PENNSYLVANIA. No. 75. Argued Nov. 16, 17, 1948. Decided Dec. 13, 1948. Mr. Albert A. Fiok, of Pittsburgh, Pa., for petitioner. Mr. William S. Rahauser, of Pittsburgh, Pa., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 Petitioner is held by the Commonwealth of Pennsylvania in the Western State Penitentiary on sentences totalling a minimum of twenty and a maximum of forty years pronounced pursuant to his pleas of guilty to four indictments charging burglary. We granted certiorari, 334 U.S. 836, 68 S.Ct. 1489, to review a denial by the Supreme Court of Pennsylvania of his petition to appeal from a judgment of the Superior Court which affirmed a dismissal of a petition for habeas corpus in the Court of Common Pleas of Allegheny County. Petitioner claimed in the state courts, and now claims here, that he was denied counsel in the proceedings leading to his convictions in violation of his right to counsel under the due process of l w clause of the Fourteenth Amendment. 2 From the pleadings and decisions of the Pennsylvania courts, certified to us as the record in the Supreme Court of Pennsylvania, and without reliance upon any additional allegations in the petition for certiorari, the facts and allegations as to denial of constitutional rights may be summarized as follows: On October 27, 1938, petitioner Uveges, a youth seventeen years of age, was faced with four district attorney's indictments charging four separate burglaries. Upon his plea of guilty to these indictments, Uveges was sentenced in the Court of Common Pleas of Allegheny County to from five to ten years on each indictment, the sentences to run consecutively. In his petition to the same court for a writ of habeas corpus in 1946, petitioner alleged that he was not informed of his right to counsel nor was counsel offered him at any time during the period between arrest and conviction. He also alleged that 'frightened by threats of dire consequences if he dared to stand trial, relator pleaded guilty under the direction of an assistant district attorney, with the understanding that a sentence to Huntington Reformatory would be imposed.' We disregard this last allegation because it was not presented to the Supreme Court of Pennsylvania in the petition for allowance of appeal. A rule to show cause why the writ should not issue was granted. The answer denied that petitioner was entitled to counsel but did not deny the allegation of threats by the assistant district attorney. The Court of Common Pleas, without a hearing, entered an order dismissing the petition and denying the writ. The Superior Court of Pennsylvania affirmed, 161 Pa.Super. 58, 53 A.2d 894, noting that Uveges had been arrested once before for burglary and confined in a reformatory for ten months. The state Supreme Court, on September 29, 1947, denied a petition for allowance of appeal which repeated the allegations of youth and denial of the right to counsel. 53 A.2d 894. We think this record adequately raised the federal constitutional question as to denial of counsel. Pennsylvania makes no contrary contention.1 We granted the motion to proceed in forma pauperis and the petition for a writ of certiorari, 334 U.S. 836, 68 S.Ct. 1489 in order to examine the important constitutional question presented by petitioner's claim of right to counsel.2 3 Since our understanding is that in Pennsylvania habeas corpus is available to an accused whose constitutional right to counsel has been denied,3 a d since respondent does not suggest that the state bars a remedy by habeas corpus in the circumstances of this case because no appeal was taken from the original conviction, we proceed to the merits of this controversy. 4 Some members of the Court think that where serious offenses are charged, failure of a court to offer counsel in state criminal trials deprives an accused of rights under the Fourteenth Amendment. They are convinced that the services of counsel to protect the accused are guaranted by the Constitution in every such instance. See Bute v. People of Illinois, 333 U.S. 640, dissent, 677—679, 68 S.Ct. 763, 782, 783. Only when the accused refuses counsel with an understanding of his rights can the court dispense with counsel.4 Others of us think that when a crime subject to capital punishment is not involved, each case depends on its own facts. See Betts v. Brady, 316 U.S. 455, 462, 62 S.Ct. 1252, 1256, 86 L.Ed. 1595. Where the gravity of the crime and other factors—such as the age and education of the defendant,5 the conduct of the court or the prosecuting officials,6 and the complicated nature of the offense charged and the possible defenses thereto7—render criminal proceedings without counsel so apt to result in injustice as to be fundamentally unfair, the latter group held that the accused must have legal assistance under the Amendment whether he pleads guilty or elects to stand trial, whether he requests counsel or not. Only a waiver of counsel, understandingly made, justifies trial without counsel. 5 The philosophy behind both of these views is that the due process clause of the Fourteenth Amendment or the Fifth Amendment requires counsel for all persons charged with serious crimes, when necessary for their adequate defense, in order that such persons may be advised how to conduct their trial. The application of the rule varies as indicated in the preceding paragraph. 6 Under either view of the requirements of due process, the facts in this case required the presence of counsel at petitioner's trial. He should not have been permitted to plead guilty without an offer of the advice of counsel in his situation. If the circumstances alleged in his petition are true, the accused was entitled to an adviser to help him handle his problems. Petitioner was young and inexperienced in the intricacies of criminal procedure when he pleaded guilty to crimes which carried a maximum sentence of eighty years.8 There is an undenied allegation that he was never advised of his right to counsel. The record shows no attempt on the part of the court to make him understand the consequences of his plea. Whatever our decision might have been if the trial court had informed him of his rights and conscientiously had undertaken to perform the functions ordinarily entrusted to counsel, we conclude that the opportunity to have counsel in this case was a necessary element of a fair hearing. 7 Reversed. 8 Mr. Justice FRANKFURTER, with whom Mr. Justice JACKSON and Mr. Justice BURTON concur, dissenting. 9 Exercise of this Court's jurisdiction is peculiarly for this Court's own determination, and is neither to be conceded nor withheld by counsel's admission. In fact, however, Pennsylvania does not admit that the adjudication by the Supreme Court of Pennsylvania is revewable here. It urges that 'under such facts as are properly before this Court' petitioner's claim must fail. The circumstances under which this Court is reversing the Supreme Court of Pennsylvania show such disregard for the distribution of judicial power between this Court and the highest courts of the States, that I am constrained to dissent. 10 As the caption announces, this case was brought here by a writ of certiorari directed to the Supreme Court of Pennsylvania. We issued the writ solely on the basis of allegations in the petition for certiorari. In sum, these were the allegations: (1) petitioner was held for two weeks without being able to consult friends or relatives; (2) because of his youth, his ignorance and the complexity of the charges against him, petitioner was incapable of meeting them intelligently without assistance of counsel; (3) his request for legal aid to determine his plea was met with a threat of a severe sentence if the Commonwealth were put to the expense of a trial; (4) he was promised by the District Attorney a short sentence at a reformatory for a plea of guilty; (5) he was not informed of the consequences of a plea of guilty, was unaware of its effect, and intended to plead guilty only to one of several indictments. 11 On these allegations, without more, we granted the petition for certiorari on June 7, 1948. The record before the Supreme Court of Pennsylvania, on the basis of which that Court denied the petition for an appeal to review the order of the Superior Court affirming the refusal of the Court of Common Pleas of Allegheny County to issue a writ of habeas corpus, was not before us when we granted certiorari. Not until September 8, 1948, was that record sent here by the Supreme Court of Pennsylvania; it was lodged here on September 20, 1948. It now appears that the allegations on which this Court issued its writ to the Pennsylvania Supreme Court were not before that Court in the paper it requires to be filed to determine whether under Pennsylvania law an appeal should be entertained. More particularly, the five allegations summarized above had not been before the Supreme Court of Pennsylvania when it denied an appeal. Apart from two claims involving matters of local procedure, the only ground on which appeal was sought from the Pennsylvania Superior Court was the bare claim that petitioner was denied assistance of counsel, unsupported by those considerations of unfairness which under our rulings, make such denial a denial of the due process guaranteed by the Fourteenth Amendment. 12 Having granted a review of the action of the Pennsylvania Supreme Court on the basis of allegations not before that Court, this Court now holds that the Supreme Court of Pennsylvania has flouted the Constitution of the United States. It does so despite the fact that at the bar of this Court the representative of Pennsylvania unreservedly admitted that the writ of habeas corpus would not have been dismissed by the courts of Pennsylvania if the allegations that were made here had been made there. We are reviewing what the Pennsylvania Supreme Court did. The only matter before that court was a petition for an allowance of an appeal from the order of the Superior Court of Pennsylvania. The only matter properly before us is disallowance of that appeal. If the Supreme Court of Pennsylvania was, as a matter of State law, authorized to disallow the appeal because the claim was not formulated with adequate particularity, a federal question is wanting and our writ, being without proper foundation, should e dismissed. The fact that on adequate allegations in a new proceeding before an appropriate Pennsylvania court the claim may be successfully sustained, gives this Court no warrant for assuming that the proper allegations were before the Pennsylvania Supreme Court so as to transmute its denial of an appeal into the denial of a properly presented federal claim. 13 This Court now makes such an assumption. If we are to decide a case, however grave the issue, only on what appears according to the record, there is no basis for finding that the Supreme Court had before it anything but the petition for allowance of an appeal. This is so even if we assume, although nothing in the record affords us the right to do so,1 that the records in the lower courts of Pennsylvania were filed in its Supreme Court before it disallowed an appeal. Appellants often do not raise all that they urged in a lower court, and they sometimes raise an issue for the first time in the appellate court. In any event, the petition here was to review the adjudication of the Supreme Court of Pennsylvania and our writ ran to that court. This is not a case where our writ turns out to be formally misdirected due to the fact that the record to be sent up was lodged, according to local procedure, in one court rather than another. In such a case what is reviewed here, despite the misdirection, is the same record that was before the State court which is to be reviewed. The writ runs to the other court only to get the record here. This case presents quite a different situation. We cannot review the judgment of the Court of Common Pleas of Allegheny County, or that of the Superior Court of Pennsylvania, because neither is a final judgment under Pennsylvania law if either involved a federal constitutional issue. For our purpose of 'finality,' such an issue must go to the Supreme Court of Pennsylvania because that court has obligatory jurisdiction to review it. Pa.Stat.Ann., tit. 17, § 190; Commonwealth v. Caulfield, 211 Pa. 644, 61 A. 243; see Commonwealth v. Gardner, 297 Pa. 498, 500, 147 A. 527. In bringing here for review the action of that Court we must be governed by what was before that Court and cannot rely on what was not before it. 14 Unless we are to ass me that the Supreme Court of Pennsylvania flagrantly violated its duty under Pennsylvania law to grant an appeal where a violation of a right secured by the Constitution of the United States is properly raised, we must attribute to that court a non-constitutional ground in denying an appeal if it may reasonably be so attributed. If that Court had said explicitly that it requires a more particularized statement for the claim that the petitioner did not plead guilty with full understanding of what he was doing and that the failure to assign him counsel in no wise handicapped him in pleading to the indictments, this Court hardly would find that the Constitution of the United States precludes such a State requirement of particularity in an effort to set aside a sentence eight years after it was imposed. If such a determination by the Supreme Court of Pennsylvania explicity made would not raise a federal question, it does not raise a federal question if on the record we have a right to infer that such was the implicit ruling of the Pennsylvania Court. That Court may dispose of cases summarily as does this Court. The record here plainly calls for the inference that the claims now made were not adequately presented in the paper upon which the Supreme Court of Pennsylvania acted. A comparison between the statements which the Supreme Court of Pennsylvania had before it when it denied the appeal, and the allegations made in the petition before this Court, on the basis of which we issued the writ of certiorari, affords compelling reason for attributing the disallowance of the appeal by the Pennsylvania Supreme Court to its finding that a claim of lack of due process raised after eight years was made without sufficient particularity to call for a trial on the merits. A tabular view of the claims made in the four courts before which they were pressed clearly establishes not only that what was before the Supreme Court of Pennsylvania was very different from what was urged here, but also different from what was urged before the lower Pennsylvania courts.* A finding that a State court disregarded the Constitution of the United States should not be like a game of blindman's buff. 15 Since the action of the State court may fairly be sustained on the State ground of failure adequately to present the constitutional claim sought to be raised, we must so interpret it. Klinger v. State of Missouri, 13 Wall. 257, 263, 20 L.Ed. 635; Lynch v. People of New York ex rel. Pierson, 293 U.S. 52, 54, 55 S.Ct. 16, 17, 79 L.Ed. 191; Southwestern Bell Telephone Co. v. State of Oklahoma, 303 U.S. 206, 212, 58 S.Ct. 528, 530, 82 L.Ed. 751. Our reviewing power is of course not to be withheld by excogitating some fanciful or recondite doctrine of local law for a State court decision. Here the State ground is fairly obvious. To reject it is to reach out for a federal issue. The Pennsylvania courts are fully aware of the circumstances under which indigent defendCLAIMS MADE IN THE VARIOUS COURTS I II III IV Court of Common 16 Pleas of Supreme Court Supreme Court Supreme Court of 17 Allegheny County of Pennsylvania of Pennsylvania the United States 18 Petition for Petition for Petition for 19 writ of Court's opinion allowance writ of 20 habeas corpus of appeal certiorari 1 Bare denial 1 Same.1 Same.1 Failure to assign 21 of right to counsel resulted in 22 counsel. unfair trial; 23 disabled him 24 from making 25 intelligent 26 plea and led to 27 overreaching by D. A. 2 Signature2 Same.2 Here denied2 Signature not 28 lacking on he signed on indictment. 29 indictment a waiver. 30 as waiver of 31 grand jury 32 presentation. Claims waiver 33 not read to 34 him. 3 Right of3 Apparently3 No such3 Same as No. 35 17-year-old no such claim. 3, Column 1. 36 boy to claim. 37 disaffirm 38 plea of 39 guilt. Also 40 claim of 41 threats and 42 promise of 43 shorter 44 sentence. 4 Claims to4 Same.4 Same. 45 have entered 46 plea of 47 guilty to 48 only one 49 of nine 50 indictments. 5 Held incommunicado for two weeks. 6 Refusal of 51 request for 52 consultation 53 with counsel 54 followed by 55 threats. 7 Witnesses 56 not sworn. 57 ants are entitled to the assistance of counsel. See e.g. Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 24 A.2d 1. Only by assuming that the Supreme Court of Pennsylvania was heedless of its duty under the Constitution can we assume that it denied an appeal in this case because of such heedlessness rather than because it enforced allowable requirements by Pennsylvania for asserting a constitutional claim. 58 Such reasoning is not what is invidiously called legalistic. Law is essentially legalistic the sense that observance of wellrecognized procedure is, on balance, socially desirable. In the well-being of a federalism like ours observance of what on casual view may appear as a sterile technicality is important whenever this Court is brought in potential conflict with State courts. Especially is it important as to those vast reaches of the criminal law which are exclusively within State domain, and which are therefore not subject to the supervision which this Court may exercise over the lower federal courts. Of course this Court has the duty of alertness in safeguarding rights guaranteed by the Constitution of the United States against infringement by the States even in their difficult task of repressing crime and dealing with transgressors. At best, however, intervention by this Court in the criminal process of States is delicate business. It should not be indulged in unless no reasonable doubt is left that a State denies, or has refused to exercise, means of correcting a claimed infraction of the United States Constitution. 59 Intervention by this Court in the administration of the criminal justice of a State has all the disadvantages of interference from without. Whatever short-cut to relief may be had in a particular case, it is calculated to beget misunderstanding and friction and to that extent detracts from those imponderables which are the ultimate reliance of a civilized system of law. After all, this is the Nation's ultimate judicial tribunal, not a super-legal-aid bureau. If the same relief, although by a more tedious process, is available through a State's selfcorrective process, it enlists the understanding and support of the community. Considerations rooted in psychological and sociological reason underlie the duty of abstention by this Court from upsetting convictions by State courts or their refusal to grant writs of habeas corpus to those under State sentences where State action may fairly be attributed to a rule of local procedure and is not exclusively founded on denial of a federal claim. When a State court explicitly rests its decision on a State ground it is easy sailing. But even when a State court summarily disposes of a case without spelling out its ground, led to do so, as is this Court in many cases, by the burden of its docket, it is our duty not to attribute to the State court flouting of the United States Constitution but to infer regard for its own law, if to that law may reasonably be attributed a finding of inadequacy in the mode of presenting the constitutional claim for which relief is here sought on the merits. 60 I would dismiss the writ, leaving petitioner to pursue in Pennsylvania the claim he makes here. 1 Excerpts from the brief of the Commonwealth show its acceptance of the actual issue: '3. The basic question of this case is whether the petitioner was denied due process of law by reason of the fact that the Commonwealth of Pennsylvania did not appoint Counsel to represent him in the proceedings leading to his imprisonment. It is the contention of the respondent that the federal Constitution did not require that the state appoint Counsel to represent this accused since '(A) The requirement of the 6th Amendment to the Federal Constitution that the accused be represented by counsel in all criminal cases does not apply to the states and '(B) It is only in a capital case or under other special circumstances not here present that a state is required by the 14th Amendment to the Federal Constitution to appoint counsel to represent the accused.' 'The vital question to be decided, and, in our view of the case the only significant question, is whether the accused, under such facts as are properly before this Court, must be represented by counsel in order that the process leading to his confinement may be deemed due process.' 2 Petitioner in his petition for certiorari bases his caim for review in part on procedural irregularities allegedly in violation of state statutes, such as the failure of the district attorney personally to sign the indictments. Since these allegations, even if true, present no federal question, we have not considered them. 3 See Commonwealth ex rel. McGlinn v. Smith, 344 Pa. 41, 47, 48, 24 A.2d 1; Commonwealth ex rel. Penland v. Ashe, 341 Pa. 337, 341, 342, 19 A.2d 464. 4 See Rice v. Olson, 324 U.S. 786, 788, 789, 65 S.Ct. 989 991, 89 L.Ed. 1367; Walker v. Johnston, 312 U.S. 275, 286, 61 S.Ct. 574, 579, 85 L.Ed. 830; Johnson v. Zerbst, 304 U.S. 458, 468, 58 S.Ct. 1019, 1024, 82 L.Ed. 1461, 146 A.L.R. 357. 5 See e.g., Wade v. Mayo, 334 U.S. 672, 683, 684, 68 S.Ct. 1270, 1275, 1276; DeMeerleer v. State of Michigan, 329 U.S. 663, 664, 665, 67 S.Ct. 596, 597, 81 L.Ed. 584; Betts v. Brady, supra, 316 U.S. at page 472, 62 S.Ct. at page 1261, 86 L.Ed. 1595; Powell v. State of Alabama, 287 U.S. 45, 51, 52, 71, 53 S.Ct. 55, 57, 58, 65, 77 L.Ed. 158, 84 A.L.R. 527. 6 See e.g., Townsend v. Burke, 334 U.S. 736, 739, 741, 68 S.Ct. 1252, 1254, 1255; DeMeerleer v. Michigan, supra, 329 U.S. at page 665, 67 S.Ct. at page 597, 81 L.Ed. 584; Smith v. O'Grady, 312 U.S. 329, 332, 333, 61 S.Ct. 572, 573, 85 L.Ed. 859. 7 See e.g., Rice v. Olson, 324 U.S. 786, 789—791, 65 S.Ct. 989, 991, 89 L.Ed. 1367. 8 Purdon's Pa.Stat.Ann., tit. 18, § 4901. 1 The relevant docket entries of the three Pennsylvania courts which considered this case strongly indicate that all papers other than the petition for allowance of an appeal were in the Court of Common Pleas for Allegheny County when the Pennsylvania Supreme Court was determining the allowance of an appeal. The 'Docket Entries' in the Superior Court of Pennsylvania record that on July 29, 1947, twelve days after that court affirmed the order of the Court of Common Pleas, the Record of the Court of Common Pleas which had been filed in the Superior Court, was remitted to the Court of Common Pleas. The latter court's 'Appearance Docket Entry' shows that it was received on the same day. Twenty-four days later, on August 22, 1947, the petitioner filed in the Supreme Court of Pennsylvania his petition for allowance of appeal from the judgment of the Superior Court. The Docket Entries in the Supreme Court of Pennsylvania do not show that the Record which previously had been sent back to the Court of Common Pleas by the Superior Court had been filed in that Court. After this Court issued its writ on June 7, 1948, petitioner's attorney filed a 'Praecipe' with the Clerk of the Supreme Court of Pennsylvania requesting that the papers that now make up the record in this Court be certified to this Court. Although this was done under the Clerk's signature with a statement that 'the foregoing Record * * * is a true and faithful copy of the Record and Proceedings of The Supreme Court of Pennsylvania * * * in a certain suit therein pending * * *' that Record shows that the Supreme Court of Pennsylvania, after our writ of certiorari had been directed to it, had to issue its supplemental certiorari to the Court of Common Pleas to obtain the Record. * [See table on next page.]
01
335 U.S. 469 69 S.Ct. 213 93 L.Ed. 168 MICHELSONv.UNITED STATES. No. 23. Argued Oct. 14, 15, 1948. Decided Dec. 20, 1948. Mr. Louis J. Castellano, of Brooklyn, N.Y., for petitioner. Mr. Joseph M. Howard, of Washington, D.C., for respondent. Mr. Justice JACKSON delivered the opinion of the Court. 1 In 1947 petitioner Michelson was convicted of bribing a federal revenue agent.1 The Government proved a large payment by accused to the agent for the purpose of influencing his official action. The defendant, as a witness on his own behalf, admitted passing the money but claimed it was done in response to the agent's demands, threats, solicitations, and inducements that amounted to entrapment. It is enough for our purposes to say that determination of the issue turned on whether the jury should believe the agent or the accused.2 2 On direct examination of defendant, his own counsel brought out that, in 1927, he had been convicted of a misdemeanor having to do with trading in counterfeit watch dials. On cross-examination it appeared that in 1930, in executing an application for a license to deal in second-hand jewelry, he answered 'No' to the question whether he had theretofore been arrested or summoned for any offense. 3 Defendant called five witnesses to prove that he enjoyed a good reputation. Two of them testified that their acquaintance with him extended over a period of about thirty years and the others said they had known him at least half that long. A typical examination in chief was as follows: 4 'Q. Do you know the defendant Michelson? A. Yes. 5 'Q. How long do you know Mr. Michelson? A. About 30 years. 6 'Q. Do you know other people who know him? A. Yes. 7 'Q. Have you have occasion to discuss his reputation for honesty 'Q. You have talked to others? A. Yes. 8 'Q. And what is his reputation? A. Very good.' 9 These are representative of answers by three witnesses; two others replied, in substance, that they never had heard anything against Michelson. 10 On cross-examination, four of the witnesses were asked, in substance, this question: 'Did you ever hear that Mr. Michelson on March 4, 1927, was convicted of a violation of the trademark law in New York City in regard to watches?' This referred to the twenty-year-old conviction about which defendant himself had testified on direct examination. Two of them had heard of it and two had not. 11 To four of these witnesses the prosecution also addressed the question the allowance of which, over defendant's objection, is claimed to be reversible error: 12 'Did you ever hear that on October 11th, 1920, the defendant, Solomon Michelson, was arrested for receiving stolen goods?' 13 None of the witnesses appears to have heard of this. 14 The trial court asked counsel for the prosecution, out of presence of the jury, 'Is it a fact according to the best information in your possession that Michelson was arrested for receiving stolen goods?' Counsel replied that it was, and to support his good faith exhibited a paper record which defendant's counsel did not challenge. 15 The judge also on three occasions warned the jury, in terms that are not criticized, of the limited purpose for which this evidence was received.3 16 Defendant-petitioner challenges the right of the prosecution so to cross-examine his character witnesses. The Court of Appeals held that it was permissible. The opinion, however, points out that the practice has been severely criticized and invites us, in one respect, to change the rule.4 Serious and responsible criticism has been aimed, however, not alone at the detail now questioned by the Court of Appeals but at common-law doctrine on the whole subject of proof of reputation or character.5 It would not be possible to appraise the usefulness and propriety of this cross-examination without consideration of the unique practice concerning character testimony, of which such cross-examination is a minor part.6 17 Courts that follow the common-law tradition almost unanimously have come to disallow resort by the prosecution to any kind of evidence of a defendant's evil character to establish a probability of his guilt.7 Not that the law invests the defendant with a presumption of good character, Greer v. United States, 245 U.S. 559, 38 S.Ct. 209, 62 L.Ed. 469, but it simply closes the whole matter of character, disp sition and reputation on the prosecution's case-in-chief. The State may not show defendant's prior trouble with the law, specific criminal acts, or ill name among his neighbors, even though such facts might logically be persuasive that he is by propensity a probable perpetrator of the crime.8 The inquiry is not rejected because character is irrelevant;9 on the contrary, it is said to weigh too much with the jury and to so overpersuade them as to prejudge one with a bad general record and deny him a fair opportunity to defend against a particular charge. The overriding policy of excluding such evidence, despite its admitted probative value, is the practical experience that its disallowance tends to prevent confusion of issues, unfair surprise and undue prejudice.10 18 But this line of inquiry firmly denied to the State is opened to the defendant because character is relevant in resolving probabilities of guilt.11 He may introduce affirmative testimony that the general estimate of his character is so favorable that the jury may infer that he would not be likely to commit the offense charged. This privilege is sometimes valuable to a defendant for this Court has held that such testimony alone, in some circumstances, may be enough to raise a reasonable doubt of guilt and that in the federal courts a jury in a proper case should be so instructed. Edgington v. United States, 164 U.S. 361, 17 S.Ct. 72, 41 L.Ed. 467. 19 When the defendant elects to initiate a character inquiry, another anomalous rule comes into play. Not only is he permitted to call witnesses to testify from hearsay, but indeed such a witness is not allowed to base his testimony on anything but hearsay.12 What commonly is called 'character evidence' is only such when 'character' is employed as a synonym for 'reputation.' The witness may not testify about defendant's specific acts or courses of conduct or his possession of a particular disposition or of benign mental and moral traits; nor can he testify that his own acquaintance, observation, and knowledge of defendant leads to his own independent opinion that defendant possesses a good general or specific character, inconsistent with commission f acts charged. The witness is, however, allowed to summarize what he has heard in the community, although much of it may have been said by persons less qualified to judge than himself. The evidence which the law permits is not as to the personality of defendant but only as to the shadow his daily life has cast in his neighborhood. This has been well described in a different connection as 'the slow growth of months and years, the resultant picture of forgotten incidents, passing events, habitual and daily conduct, presumably honest because disinterested, and safer to be trusted because prone to suspect. * * * It is for that reason that such general repute is permitted to be proven. It sums up a multitude of trivial details. It compacts into the brief phrase of a verdict the teaching of many incidents and the conduct of years. It is the average intelligence drawing its conclusion.' Finch J., in Badger v. Badger, 88 N.Y. 546, 552, 42 Am.Rep. 263. 20 While courts have recognized logical grounds for criticism of this type of opinion-based-on-hearsay testimony, it is said to be justified by 'overwhelming considerations of practical convenience' in avoiding innumerable collateral issues which, if it were attempted to prove character by direct testimony, would complicate and confuse the trial, distract the minds of jurymen and befog the chief issues in the litigation. People v. Van Gaasbeck, 189 N.Y. 408, 418, 82 N.E. 718, 22 L.R.A.,N.S., 650, 12 Ann.Cas. 745. 21 Another paradox in this branch of the law of evidence is that the delicate and responsible task of compacting reputation hearsay into the 'brief phrase of a verdict' is one of the few instances in which conclusions are accepted from a witness on a subject in which he is not an expert. However, the witness must qualify to give an opinion by showing such acquaintance with the defendant, the community in which he has lived and the circles in which he has moved, as to speak with authority of the terms in which generally he is regarded. To require affirmative knowledge of the reputation may seem inconsistent with the latitude given to the witness to testify when all he can say of the reputation is that he has 'heard nothing against defendant.' This is permitted upon assumption that, if no ill is reported of one, his reputation must be good.13 But this answer is accepted only from a witness whose knowledge of defendant's habitat and surroundings is intimate enough so that his failure to hear of any relevant ill repute is an assurance that no ugly rumors were about.14 22 Thus the law extends helpful but illogical options to a defendant. Experience taught a necessity that they be counterweighted with equally illogical conditions to keep the advantage from becoming an unfair and unreasonable one. The price a defendant must pay for attempting to prove his good name is to throw open the entire subject which the law has kept closed for his benefit and to make himself vulnerable where the law otherwise shields him. The prosecution may pursue the inquiry with contradictory witnesses15 to show that damaging rumors, whether or not well-grounded, were afloat—for it is not the man that he is, but the name that he has which is put in issue. Another hazard is that his own witness is subject to cross-examination as to the contents and extent of the hears y on which he bases his conclusions, and he may be required to disclose rumors and reports that are current even if they do not affect his own conclusion.16 It may test the sufficiency of his knowledge by asking what stories were circulating concerning events, such as one's arrest, about which people normally comment and speculate. Thus, while the law gives defendant the option to show as a fact that his reputation reflects a life and habit incompatible with commission of the offense charged, it subjects his proof to tests of credibility designed to prevent him from profiting by a mere parade of partisans. 23 To thus digress from evidence as to the offense to hear a contest as to the standing of the accused, at its best oopens a tricky line of inquiry as to a shapeless and elusive subject matter. At its worst it opens a veritable Pandora's box of irresponsible gossip, innuendo and smear. In the frontier phase of our law's development, calling friends to vouch for defendant's good character, and its counterpart—calling the rivals and enemies of a witness to impeach him by testifying that his reputation for veracity was so bad that he was unworthy of belief on his oath were favorite and frequent ways of converting an individual litigation into a community contest and a trial into a spectacle. Growth of urban conditions, where one may never know or hear the name of his next-door neighbor, have tended to limit the use of these techniques and to deprive them of weight with juries. The popularity of both procedures has subsided, but courts of last resort have sought to overcome danger that the true issues will be obscured and confused by investing the trial court with discretion to limit the number of such witnesses and to control cross-examination. Both propriety and abuse of hearsay reputation testimony, on both sides, depend on numerous and subtle considerations, difficult to detect or appraise from a cold record, and therefore rarely and only on clear showing of prejudicial abuse of discretion will Courts of Appeals disturb rulings of trial courts on this subject.17 24 Wide discretion is accompanied by heavy responsibility on trial courts to protect the practice from any misuse. The trial judge was scrupulous to so guard it in the case be ore us. He took pains to ascertain, out of presence of the jury, that the target of the question was an actual event, which would probably result in some comment among acquaintances if not injury to defendant's reputation. He satisfied himself that counsel was not merely taking a random shot at a reputation imprudently exposed or asking a groundless question to waft an unwarranted innuendo into the jury box.18 25 The question permitted by the trial court, however, involves several features that may be worthy of comment. Its form invited hearsay; it asked about an arrest, not a conviction, and for an offense not closely similar to the one on trial; and it concerned an occurrence many years past. 26 Since the whole inquiry, as we have pointed out, is calculated to ascertain the general talk of people about defendant, rather than the witness' own knowledge of him, the form of inquiry, 'Have you heard?' has general approval, and 'Do you know?' is not allowed.19 27 A character witness may be cross-examined as to an arrest whether or not it culminated in a conviction, according to the overwhelming weight of authority.20 This rule is sometimes confused with that which prohibits cross-examination to credibility by asking a witness whether he himself has been arrested. 28 Arrest without more does not, in law any more than in reason, impeach the integrity or impair the credibility of a witness. It happens to the innocent as well as the guilty. Only a conviction, therefore, may be inquired about to undermine the trustworthiness of a witness. 29 Arrest without more may nevertheless impair or cloud one's reputation. False arrest may do that. Even to be acquitted may damage one's good name if the community receives the verdict with a wink and chooses to remember defendant as one who ought to have been convicted. A conviction, on the other hand, may be accepted as a misfortune or an injustice, and even enhance the standing of one who mends his ways and lives it down. Reputation is the net balance of so many debits and credits that the law does not attach the finality to a conviction when the issue is reputation, that is given to it when the issue is the credibility of the convict. 30 The inquiry as to an arrest is permissible also because the prosecution has a right to test the qualifications of the witness to bespeak the community opinion. If one never heard the speculations and rumors in which even one's friends indulge upon his arrest, the jury may doubt whether he is capable of giving any very reliable conclusions as to his reputation. 31 In this case the crime inquired about was receiving stolen goods; the trial was for bribery. The Court of Appeals thought this dissimilarity of offenses too great to sustain the inquiry in logic, though conceding that it is authorized by preponderance of authority. It asks us to substitute the Illinois rule which allows inquiry about arrest, but only for very closely similar if not identifical charges, in place of the rule more generally adhered to in this country and in England.21 We think the facts of this case show the proposal to be inexpedient. 32 The good charcter which the defendant had sought to establish was broader than the crime charged and included the traits of 'honesty and truthfulness' and 'being a law-abiding citizen.' Possession of these characteristics would seem as incompatible with offering a bribe to a revenue agent as with receiving stolen goods. The crimes may be unlike, but both alike proceed from the same defects of character which the witnesses said this defendant was reputed not to exhibit. It is not only by comparison with the crime on trial but by comparison with the reputation asserted that a court may judge whether the prior arrest should be made subject of inquiry. By this test the inquiry was permissible. It was proper cross-examination because reports of his arrest for receiving stolen goods, if admitted, would tend to weaken the assertion that he was known as an honest and law-abiding citizen. The cross-examination may take in as much ground as the testimony it is designed to verify. To hold otherwise would give defendant the benefit of testimony that he was honest and law-abiding in reputation when such might not be the fact; the refutation was founded on voncictions equally persuasive though not for crimes exactly repeated in the present charge. 33 The inquiry here concerned an arrest twenty-seven years before the trial. Events a generation old are likely to be lived down and dropped from the present thought and talk of the community and to be absent from the knowledge of younger or more recent acquaintances. The court in its discretion may well exclude inquiry about rumors of an event so remote, unless recent misconduct revived them. But two of these witnesses dated their acquaintance with defendant as commencing thirty years before the trial. Defendant, on direct examination, voluntarily called attention to his conviction twenty years before. While the jury might conclude that a matter so old and indecesive as a 1920 arrest would shed little light on the present reputation and hence propensities of the defendant, we cannot say that, in the context of this evidence and in the absence of objection on this specific ground, its admission was an abuse of discretion. 34 We do not overlook or minimize the consideration that 'the jury almost surely cannot comprehend the Judge's limiting instructions,' which disturbed the Court of Appeals. The refinements of the evidentiary rules on this subject are such that even lawyers and judges, after study and reflection, often are confused, and surely jurors in the hurried and unfamiliar movement of a trial must find them almost unintelligible. However, limiting instructions on this subject are no more difficult to comprehend or apply than those upon va ious other subjects; for example, instructions that admissions of a co-defendant are to be limited to the question of his guilt and are not to be considered as evidence against other defendants, and instructions as to other problems in the trial of conspiracy charges. A defendant in such a case is powerless to prevent his cause from being irretrievably obscured and confused; but, in cases such as the one before us, the law foreclosed this whole confounding line of inquiry, unless defendant thought the net advantage from opening it up would be with him. Given this option, we think defendants in general and this defendant in particular have no valid complaint at the latitude which existing law allows to the prosecution to meet by cross-examination an issue voluntarily tendered by the defense. See Greer v. United States, 245 U.S. 559, 38 S.Ct. 209, 62 L.Ed. 469. 35 We end, as we began, with the observation that the law regulating the offering and testing of character testimony may merit many criticisms. England, and some states have overhauled the practice by statute.22 But the task of modernizing the longstanding rules on the subject is one of magnitude and difficulty which even those dedicated to law reform do not lightly undertake.23 36 The law of evidence of evidence relating to proof of reputation in criminal cases has developed almost entirely at the hands of state courts of last resort, which have such questions frequently before them. This Court, on the other hand, has contributed little to this or to any phase of the law of evidence, for the reason, among others, that it has had extremely rare occasion to decide such issues, as the paucity of citations in this opinion to our own writings attests. It is obvious that a court which can make only infrequent sallies into the field cannot recast the body of case law on this subject in many, many years, even if it were clear what the rules should be. 37 We concur in the general opinion of courts, textwriters and the profession that much of this law is archaic, paradoxical and full of compromises and compensations by which an irrational advantage to one side is offset by a poorly reasoned counter-privilege to the other. But somehow it has proved a workable even if clumsy system when moderated by discretionary controls in the hands of a wise and strong trial court. To pull one misshapen stone out of the grotesque structure is more likely simply to upset its present balance between adverse interests than to establish a rational edifice. 38 The present suggestion is that we adopt for all federal courts a new rule as to cross-examination about prior arrest, adhered to by the courts of only one state and rejected elsewhere.24 The confusion and error it would engender would seem too heavy a price to pay for an almost imperceptible logical improvement, if any, in a system which is justified, if at all, by accumulated judicial exp rience rather than abstract logic.25 The judgment is 39 Affirmed. 40 Mr. Justice FRANKFURTER, concurring. 41 Despite the fact that my feelings run in the general direction of the views expressed by Mr. Justice RUTLEDGE in his dissent, I join the Court's opinion. I do so because I believe it to be unprofitable, on balance, for appellate courts to formulate rigid rules for the exclusion of evidence in courts of law that outside them would not be regarded as clearly irrelevant in the determination of issues. For well-understood reasons this Court's occasional ventures in formulating such rules hardly encourage confidence in denying to the federal trial courts a power of control over the allowable scope of cross-examination possessed by trial judges in practically all State courts. After all, such uniformity of rule in the conduct of trials in the crystallization of experience even when due allowance is made for the force of imitation. To reject such an impressive body of experience would imply a more dependable wisdom in a matter of this sort than I can claim. 42 To leave the District Courts of the United States the discretion given to them by this decision presupposes a high standard of professional competence, good sense, fairness and courage on the part of the federal district judges. If the United States District Courts are not manned by judges of such qualities, appellate review, no matter how stringent, can do very little to make up for the lack of them. 43 Mr. Justice RUTLEDGE, with whom Mr. Justice MURPHY joins, dissenting. 44 The Court's opinion candidly and interestingly points out the anomalous features characterizing the exclusion and admission of so-called character evidence in criminal cases. It also for the first time puts the stamp of the Court's approval upon the most anomalous and, what is more important, the most unfair stage in this evidentiary sequence. 45 There are three stages. The first denies the prosecution the right to attack the defendant's reputation as part of its case in chief, either by proof of bad general reputation or by proof of specific derogatory incidents disconnected from the one charged as the crime. The second permits the defendant, at his option, to prove by qualified witnesses that he bears a good general reputation or at least one not tarnished by illrepute. The witness is forbidden, however, to go into particular incidents or details of the defendant's life and conduct. The witness, once qualified, can state only the general conclusions of the community concerning the defendant's character as the witness knows that reputation. The third stage comprehends the prosecution's rebuttal, and particularly the latitude of cross-examination to be allowed. 46 I do not agree that this whole body of law is anomalous, unless indeed all the law of evidence with its numerous rules of exclusion and exceptions to them is to be so regarded. Anomalies there are, no doubt with much room for improvement. But here, if anywhere, the law is more largely the result of experience, of considerations of fairness and practicability developed through the centuries, than of any effort to construct a nicely logical, wholly consistent pattern of things. Imperfect and variable as the scheme has become in the application of specific rules, on the whole it represents the result of centuries of common-law growth in the seeking of English-speaking peoples for fair play in the trial of crime and other causes. 47 Moreover, I cannot agree that, in the sequence of the three stages relating to character evidence, the anomalous quality is equally present in each. In my judgment there is vast difference in this respect between the rulings summarizing our experience in the first two stages and those affecting the third. 48 Regardless of all considerations of mere logical consistency, I should suppose there would be few now, whether lawyers or laymen, who would advocate change in the prevailing rules governing the first two stages of the sequence. In criminal causes especially, there are sound reasons basic to our system of criminal justice which justify initially excluding the Government from showing the defendant's bad general character or reputation. 49 The common law has not grown in the tradition of convicting a man and sending him to prison because he is generally a bad man or generally regarded as one. General bad character, much less general bad reputation, has not yet become a criminal offense in our scheme. Our whole tradition is that a man can be punished by criminal sanctions only for specific acts defined beforehand to be criminal, not for general misconduct or bearing a reputation for such misconduct. 50 That tradition lies at the heart of our criminal process. And it is the foundation of the rule of evidence which denies to the prosecution the right to show generally or by specific details that a defendant bears a bad general estimate in his community. In the light of our fundamental conceptions of crime and of the criminal process, there is nothing anomalous in this exclusion. It is designed to restrain proof to the limits of the charge and to prevent conviction for one offense because perhaps others, or misconduct not amounting to crime at all, have been perpetrated or are reputed generally to lie at the defendant's door. 51 The rule which allows the defendant to prove his good standing by general reputation is, of course, a kind of exception to the hearsay rule of exclusion, though one may inquiry how else could reputation be proved than by hearsay if it is to be proved at all. This indeed presents the substantial question. Apart from its long acceptance, Edgington v. United States, 164 U.S. 361, 17 S.Ct. 72, 41 L.Ed. 467, the rule allowing the evidence to come in rest on very different considerations from the one which forbids the Government to bring in proof of bad public character as part of its case in chief. The defendant's proof comes as rebuttal. It is subject to none of the dangers involving the possibility of conviction for generally bad conduct or general repute for it which would characterize permitting the prosecution initially to show bad general reputation. The basic reason for excluding the latter does not apply to the defendant's tender of proof. 52 On the positive side the rule is justified by the ancient law which pronounces that a good name is rather to be chosen than great riches. True, men of good general repute may not deserve it. Or they may slip and fall in particular situations. But by common experience this is more often the exception than the rule. Moreover, most often in close cases, where the proof leaves one in doubt, the evidence of general regard by one's fellows may be the weight which turns the scales of justice. It may indeed be sufficient to create a clear conviction of innocence or to sow that reasonable doubt which our law requires to be overcome in all criminal cases before the verdict of guilty can be returned. 53 The apparent anomaly which excludes the prosecution's proof of bad character in the beginning but lets in the defendant's proof of good character is thus only apparent. It is part and parcel of our scheme which forbids conviction for other than specific acts criminal in character and which, in their trial, casts over the defendant the presumption of innocence until he is proved guilty beyond all reasonable doubt. To take away his right to bring in any substantial and pertinent proof bearing upon the existence of reasonable doubt is, so far, to nullify the rule requiring removal of that doubt. I reject the Court's intimation that these considerations have to some extent become obsolete or without substantial effects because we now live in cities more generally than formerly. They are basic parts of our plan, perhaps the more important to be observed because so much of our life now is urban. 54 But, for a variety of reasons, the law allows the defendant to prove no more than his general reputation, by witnesses qualified to report concerning it. He cannot show particular acts of virtue to offset the proof of his specific criminality on any theory that 'By their fruits ye shall know them.' Whether this be because such proof is irrelevant, is too distracting and timeconsuming, is summarized in the general report of good character, or perhaps for all of these reasons, the rule is settled, and I think rightly, which restricts the proof to general repute. 55 Thus far, whatever the differences in logic, differences which as usual inhere in the premises from which thinking starts, there is no general disagreement or dissatisfaction in the results. All of the states and the federal judicial system as well, approve them. No one would open the doors initially to the prosecution. No one would close them to the defense. 56 But the situation is different when we come to the third stage, that of the prosecution's rebuttal. Obviously rebuttal there should be, when the defendant has opened a line of inquiry closed to the prosecution and has sought to gain advantage by proof which it has had no chance to counteract. But the question of how the rebuttal shall be made presents the difficult problem. 57 There can be no sound objection, of course, to calling witnesses who will qualify as the witnesses for the defense are required to do, but who also will contradict their testimony. And the prosecution may inquire concerning the qualifications of the witnesses for the defense to speak concerning the defendant's general reputation. Thus far there is nothing to exceed the bounds of rebuttal or take the case out of the issues as made. 58 But these have not been the limits of proof and cross-examination. For, in the guise of 'testing the standards of the witness' when he speaks to reputation, the door has been thrown wide open to trying the defendant's whole life, both in general reputation and in specific incident. What is worse, this is without opportunity for the defendant to rebut either the fact or the innuendo for which the evidence is tendered more generally than otherwise. Hardly any incident, however remote or derogatory, but can be drawn out by asking the witness who testifies to the defendant's good character, 'Have you heard this' or 'Have you heard that.' And many incidents, wholly innocent in quality, can be turned by the prosecutor, through an inflection or tone, to cast aspersion upon the defendant by the mere asking of the question, without hope of affirmative response from the witness. 59 The dangers, the potential damage and prejudice to the defendant and his cause, have not been more clearly summarized than in the excerpt from Wigmore's classic treatise, quoted in note 4 of the Court's opinion. 335 U.S. 473, 69 S.Ct. 217. His summary of the consequences produced by the rule bears repetition and greater emphasis. He said: 60 'The rumor of the misconduct, when admitted, goes far, in spite of all theory and of the judge's charge, towards fixing the misconduct as a fact upon the other person, and thus does three improper things,—(1) it violates the fundamental rule of fairness which prohibits the use of such and not by trustworthy testimony, and (3) facts, (2) it gets at them by hearsay only, it leaves the other person no means of defending himself by denial or explanation, such as he would otherwise have had if the rule had allowed that conduct to be made the subject of an issue.' Wigmore, Evidence (3d ed., 1940) § 988. 61 These consequences are not denied. But it is said two modes of protection are available to the accused. One is to refrain from opening the inquiry into his reputation. That answer would have weight if the re uttal were limited to inquiry concerning the witness' opportunity for knowing the accused and his reputation and to producing contrary evidence by other witnesses of the same general sort as that which is refuted. But if the rule is sound which allows the accused to show his good repute and restricts him to that showing, it not only is anomalous, it is highly unjust, to exact, as the price for his doing so, throwing open to the prosecution the opportunity not only to rebut his proof but to call in question almosy any specific act of his life or to insinuate without proving that he has committed other acts, leaving him no chance to reply. A fair rule either would afford this chance or would restrict the prosecution's counterproof in the same way his own is limited. The prevailing rule changes the whole character of the case, in a manner the rules applying to the two earlier stages seek to avoid. 62 Nor is it enough, in my judgment, to trust to the sound discretion of trial judges to protect the defendant against excesses of the prosecution. To do this effectively they need standards. None are provided under the Court's ruling; indeed it would be difficult to provide them except for each case and question as they might arise. 63 The facts in this case, it seems to me, show the inadequacy of any such general and largely unrestricted delegation. They demonstrate how far and how unfairly the prosecution may be allowed to go in bringing extraneous and immaterial matters to the jury's attention, with however a probable effect of prejudice. Petitioner himself had made a clean breast of his twenty-year-old conviction for violating the New York trademark laws. That fact of course was of some use for testing his character witnesses' standards for speaking to his general repute, although the conviction was so old that conceivably it could have but little weight on the accused's reputation in 1947. 64 Then the prosecution went back seven years further and inquired whether the witnesses had heard that petitioner was arrested 'on October 11th, 1920' for receiving stolen goods. None of the witnesses had heard of this fact. The court solemnly instructed the jury that they were not to consider that the incident took place, that all that was happening was that the prosecutor was testing the witness' standard of opinion of the accused's reputation. This, after the court out of the jury's presence had required the prosecutor to make proof satisfactory to the court that the incident had taken place. 65 The very from of the question was itself notice of the fact to the jury. They well might assume, as men of common sense, that the court would not allow the question if the fact were only fiction. And why 'on October 11th, 1920,' rather than merely 'in 1920' or 'Have you ever heard of the defendant's being arrested, other than for the trademark violation?' Why also 'for receiving stolen goods'? In my opinion the only answers to these questions are, not that the prosecution was 'testing the witness' standard of opinion of reputation,' but that it was telling the jury what it could not prove directly and what the petitioner had no chance to deny, namely, that he had been so arrested; and thereby either insinuating that he had been convicted of the crime or leaving to the jury to guess that this had been the outcome. The question was a typical abuse arising from allowing this type of inquiry. It should have been excluded. There is no way to tell how much prejudice it produced. 66 Moreover, I do not think the mere question of knowledge of a prior arrest is one proper to be asked, even if inquiry as to clearly derogatory acts is to be permitted. Of course man take such an inquiry as reflecting upon the person arrested. But, for use in a criminal prosecution, I do not think they should be allowed to do so. The mere fact of a single arrest twenty-seven years before trial, without further showing of criminal proceedings or their outcome, whether acquittal or conviction, seldom could ave substantial bearing upon one's present general reputation; indeed it is not per se a derogatory fact. But it is put in generally, and I think was put in evidence in this case, not to call in question the witness' standard of opinion but, by the very question, to give room for play of the jury's unguarded conjecture and prejudice. This is neither fair play nor due process. It is a perversion of the criminal process as we know it. For it permits what the rule applied in the first stage forbids, trial of the accused not only for general bad conduct or reputation but also for conjecture, gossip, innuendo and insinuation. 67 Accordingly, I think this judgment should be reversed. I also think the prevailing practice should be changed. One judge of the Court of Appeals has suggested we do this by adopting the Illinois rule,1 namely, by limiting inquiry concerning specific incidents to questions relating to prior offenses similar to that for which the defendant is on trial. Logically that rule is subject to the same objections as the generally prevailing one. But it has the practical merit of greatly reducing the scope and volume of allowable questions concerning specific acts, rumors, etc., with comparable reduction of innuendo, insinuation and gossip. My own preference and, I think, the only fair rule would be to foreclose the entire line of inquiry concerning specific incidents in the defendant's past, both on cross-examination and on new evidence in rebuttal. This would leave room for proper rebuttal without turning the defendant's trial for a specific offense into one for all his previous misconduct, criminal or other, and would put the prosecution on the same plane with the defendant in relation to the use of character evidence. This, it seems to me, is the only fair way to handle the matter. 1 The first count charged petitioner with bribing in violation of 18 U.S.C. § 91, now 18 U.S.C. § 201, 18 U.S.C.A. § 201, and the affirmance of his conviction on this count by the Court of Appeals, 2 Cir., 165 F.2d 732, is the judgment here under review. The second count charged 'offering' the bribe as a violation of the same statute but his conviction on this count was reversed by the Court of Appeals and is not here involved. 2 Details appear in the Court of Appeals opinion, 2 Cir., 165 F.2d 732. 3 In ruling on the objection when the question was first asked, the Court said: '* * * I instruct the jury that what is happening now is this: the defendant has called character witnesses, and the basis for the evidence given by those character witnesses is the reputation of the defendant in the community, and since the defendant tenders the issue of his reputation the prosecution may ask the witness if she has heard of various incidents in his career. I say to you that regardless of her answer you are not to assume that the incidents asked about actually took place. All that is happening is that this witness' standard of opinion of the reputation of the defendant is being tested. Is that clear?' In overruling the second objection to the question the Court said: 'Again I say to the jury there is no proof that Mr. Michelson was arrested for receiving stolen goods in 1920, there isn't any such proof. All this witness has been asked is whether he had heard of that. There is nothing before you on that issue. Now would you base your decision on the case fairly in spite of the fact that that question has been asked? You would? All right.' The charge included the following: 'In connection with the character evidence in the case I permitted a question whether or not the witness knew that in 1920 this defendant had been arrested for receiving stolen goods. I tried to give you the instruction then that that question was permitted only to test the standards of character evidence that these character witnesses seemed to have. There isn't any proof in the case that could be produced before you legally within the rules of evidence that this defendant was arrested in 1920 for receiving stolen goods, and that fact you are not to hold against him; nor are you to assume what the consequences of that arrest were. You just drive it from your mind so far as he is concerned, and take it into consideration only in weighing the evidence of the character witnesses.' 4 Footnote 8 to that court's opinion reads as follows (165 F.2d 735): 'Wigmore, Evidence (3d ed. 1940) § 988, after noting that 'such inquiries are almost universally admitted,' not as 'impeachment by extrinsic testimony of particular acts of misconduct,' but as means of testing the character 'witness' grounds of knowledge,' continues with these comments: 'But the serious objection to them is that practically the above distinction—between rumors of such conduct, as affecting reputation, and the fact of it as violating the rule against particular facts—cannot be maintained in the mind of the jury. The rumor of the misconduct, when admitted, goes far, in spite of all theory and of the judge's charge, towards fixing the misconduct as a fact upon the other person, and thus does three improper things, (1) it violates the fundamental rule of fairness that prohibits the use of such facts, (2) it gets at them by hearsay only, and not by trustworthy testimony, and (3) it leaves the other person no means of defending himself by denial or explanation, such as he would otherwise have had if the rule had allowed that conduct to be made the subject of an issue. Moreover, these are not occurrences of possibility, but of daily practice. This method of inquiry or cross-examination is frequently resorted to by counsel for the very purpose of injuring by indirection a character which they are forbidden directly to attack in that way; they rely upon the mere putting of the question (not caring that it is answered negatively) to convey their convert insinuation. The value of the inquiry for testing purposes is often so small and the opportunities of its abuse by underhand ways are so great that the practice may amount to little more than a mere subterfuge, and should be strictly supervised by forbidding it to counsel who do not use it in good faith.' 'Because, as Wigmore says, the jury almost surely cannot comprehend the judge's limiting instruction, the writer of this opinion wishes that the United States Supreme Court would tell us to follow what appears to be the Illinois rule, i.e., that such questions are improper unless they relate to offenses similar to those for which the defendant is on trial. See Aiken v. People, 183 Ill. 215, 55 N.E. 695; cf. People v. Hannon, 381 Ill. 206, 44 N.E.2d 923.' 5 A judge of long trial and appellate experience has uttered a warning which, in the opinion of the writer, we might well have heeded in determining whether to grant certiorari here: '* * * evidence of good character is to be used like any other, once it gets before the jury, and the less they are told about the grounds for its admission, or what they shall do with it, the more likely they are to use it sensibly. The subject seems to gather mist which discussion serves only to thicken, and which we can scarcely hope to dissipate by anything further we can add.' L. Hand in Nash v. United States, 2 Cir., 54 F.2d 1006, 1007. In opening its cyclopedic review of authorities from many jurisdictions, CORPUS JURIS SECUNDUM summarizes that the rules regulating proof of character 'have been criticized as illogical, unscientific, and anomalous, explainable only as archaic survivals of compurgation or of states of legal development when the jury personally knew the facts on which their verdict was based.' 32 C.J.S., Evidence, § 433. 6 See Maguire, Evidence: Common Sense and Common Law (1947). Compare pp. 203—209 and pp. 74—76. 7 Greer v. United States, 245 U.S. 559, 38 S.Ct. 209, 62 L.Ed. 469; 1 Wigmore, Evidence (3d ed., 1940) § 57; 1 Wharton, Criminal Evidence (11th ed., 1935) § 330. This was not the earlier rule in English common law and is not now the rule in some civil law countries. 1 Wigmore, Evidence (3d ed., § 1940) § 193. 8 This would be subject to some qualification, as when a prior crime is an element of the later offense; for example, at a trial for being an habitual criminal. There are also well-established exceptions where evidence as to other transactions or a course of fraudulent conduct is admitted to establish fraudulent intent as an element of the crime charged. See, e.g., Fall v. United States, 60 App.D.C. 124, 49 F.2d 506, certiorari denied 283 U.S. 867, 51 S.Ct. 657, 75 L.Ed. 1471; Hatem v. United States, 4 Cir., 42 F.2d 40, certiorari denied 282 U.S. 887, 51 S.Ct. 103, 75 L.Ed. 782; Williamson v. United States, 207 U.S. 425, 28 S.Ct. 163, 52 L.Ed. 278; Allis v. United States, 155 U.S. 117, 15 S.Ct. 36, 39 L.Ed. 91; Wood v. United States, 16 Pet. 342, 10 L.Ed. 987. 9 As long ago as 1865, Chief Justice Cockburn said, 'The truth is, this part of our law is an anomaly. Although, logically speaking, it is quite clear that an antecedent bad character would form quite as reasonable a ground for the presumption and probability of guilt as previous good character lays the foundation of innocence, yet you cannot, on the part of the prosecution, go into evidence as to character.' Reg v. Rowton, 10 Cox's Criminal Cases 25, 29—30. And see 1 Wigmore, Evidence (3d ed., 1940) § 55. 10 1 Wigmore, Evidence (3d ed., 1940) § 57. 11 1 Wigmore, Evidence (3d ed., 1940) § 56; Underhill, Criminal Evidence (4th ed., 1935) § 165; 1 Wharton, Criminal Evidence (11th ed., 1935) §§ 330, 336. 12 5 Wigmore, Evidence (3d ed., 1940) § 1609; Underhill, Criminal Evidence (4th ed., 1935) § 170; 1 Wharton, Criminal Evidence (11th ed., 1935) § 333. 13 People v. Van Gaasbeck, 189 N.Y. 408, 420, 82 N.E. 718, 22 L.R.A., N.S., 650, 12 Ann.Cas. 745. The law apparently ignores the existence of such human ciphers as Kipling's Tomlinson, of whom no ill is reported but no good can be recalled. They win seats with the righteous for character evidence purposes, however hard their lot in literature. 14 Id.; 5 Wigmore, Evidence (2d ed., 1940) § 1614; Underhill, Criminal Evidence (4th ed., 1935) § 171; 1 Wharton, Criminal Evidence (11th ed., 1935) § 334. 15 1 Wigmore, Evidence (3d ed., 1940) § 58; Underhill, Criminal Evidence (4th ed., 1935) § 167; 1 Wharton, Criminal Evidence (11th ed., 1935) § 330. 16 A classic example in the books is a character witness in a trial for murder. She testified she grew up with defendant, knew his reputation for peace and quiet, and that it was good. On cross-examination she was asked if she had heard that the defendant had shot anybody and, if so, how many. She answered, 'Three or four,' and gave the names of two but could not recall the names of the others. She still insisted, however, that he was of 'good character.' The jury seems to have valued her information more highly than her judgment, and on appeal from conviction the cross-examination was held proper. People v. Laudiero, 192 N.Y. 304, 309, 85 N.E. 132. See also People v. Elliott, 163 N.Y. 11, 57 N.E. 103. 17 See, e.g., Mannix v. United States, 4 Cir., 140 F.2d 250. It has been held that the question may not be hypothetical nor assume unproven facts and ask if they would affect the conclusion, Little v. United States, 8 Cir., 93 F.2d 401; Pittman v. United States, 8 Cir., 42 F.2d 793; Filippelli v. United States, 9 Cir., 6 F.2d 121; and that it may not be so asked as to detail evidence or circumstances of a crime of which defendant was accused. People v. Marendi, 213 N.Y. 600, 107 N.E. 1058. It has been held error to use the question to get before the jury a particular derogatory newspaper article. Sloan v. United States, 8 Cir., 31 F.2d 902. The proof has been confined to general reputation and that among a limited group such as fellow employees in a particular building held inadmissible. Williams v. United States, 168 U.S. 382, 18 S.Ct. 92, 42 L.Ed. 509. 18 This procedure was recommended by Wigmore. But analysis of his innovation emphasizes the way in which law on this subject has evolved from pragmatic considerations rather than from theoretical consistency. The relevant information that it is permissible to lay before the jury is talk or conversation about the defendant's being arrested. That is admissible whether or not an actual arrest had taken place; it might even be more significant of repute if his neighbors were ready to arrest him in rumor when the authorities were not in fact. But before this relevant and proper inquiry can be made, counsel must demonstrate privately to the court an irrelevant and possibly unprobable fact—the reality of arrest. From this permissible inquiry about reports of arrest, the jury is pretty certain to infer that defendant had in fact been arrested and to draw its own conclusions as to character from that fact. The Wigmore suggestion thus limits legally relevant inquiries to those based on legally irrelevant facts in order that the legally irrelevant conclusion which the jury probably will draw from the relevant questions will not be based on unsupported or untrue innuendo. It illustrates Judge Hand's suggestion that the system may work best when explained least. Yet, despite its theoretical paradoxes and deficiencies, we approve the procedure as calculated in practice to hold the inquiry within decent bounds. 19 See Stewart v. United States, 70 App.D.C. 101, 104 F.2d 234; Little v. United States, 8 Cir., 93 F.2d 401; Filippelli v. United States, 9 Cir., 6 F.2d 121. 20 See Mannix v. United States, 4 Cir., 140 F.2d 250; Josey v. United States, 77 U.S.App.D.C. 321, 135 F.2d 809; Spalitto v. United States, 8 Cir., 39 F.2d 782, and authorities there cited. 21 The Supreme Court of Illinois, in considering its own rule which we are urged to adopt, recognized that 'the rule adhered to in this State is not consistent with the great weight of authority in this country and in England.' People v. Hannon, 381 Ill. 206, 209, 44 N.E.2d 923, 924. Authorities in all states are collected in State v. Shull, 131 Or. 224, 282 P. 237, 71 A.L.R. 1504. 22 Criminal Evidence Act, 61 & 62, Vict. c. 36. See also 51 L.Q.Rev. 443, for discussion of right to cross-examine about prior arrests. For review of English and State legislation, see 1 Wigmore, Evidence (3d ed., 1940) § 194, et seq. The Pennsylvania statute, Act of March 15, 1911, P.L. 20, § 1, discussed by Wigmore has been amended, Act of July 3, 1947, P.L. 1239, § 1, 19 P.S. § 711. The current statute and Pennsylvania practice were considered recently by the Superior Court of that state. Commonwealth v. Hurt, 163 Pa.Super. 232, 60 A.2d 828. 23 The American Law Institute, in promulgating its 'Model Code of Evidence,' includes the comment, 'Character, whenever used in these Rules, means disposition not reputation. It denotes what a person is, not what he is reputed to be. No rules are laid down as to proof of reputation, when reputation is a fact to be proved. When reputation is a material matter, it is proved in the same manner as is any other disputed fact.' Rule 304. The latter sentence may seem an oversimplification in view of the decisions we have reviewed. 24 See note 21. 25 It must not be overlooked that abuse of cross-examination to test credibility carries its own corrective. Authorities on practice caution the bar of the imprudence as well as the unprofessional nature of attacks on witnesses or defendants which are likely to be resented by the jury. Wellman, Art of Cross Examination (1927) p. 167 et seq. 1 See People v. Hannon, 381 Ill. 206, 211, 44 N.E.2d 923, for the most recent statement of the rule established by Aiken v. People, 183 Ill. 215, 55 N.E. 695; cf. People v. Page, 365 Ill. 524, 6 N.E.2d 845. In North Carolina a character witness may be asked on cross-examination about the 'general reputation of the defendant as to particular vices or virtues,' but not about rumors of specific acts of misconduct. State v. Shepherd, 220 N.C. 377, 379, 17 S.E.2d 469, 470; State v. Holly, 155 N.C. 485, 492, 71 S.E. 450. The Arizona Supreme Court, which once followed the rule adopted by the Court today, Smith v. State, 22 Ariz. 229, 196 P. 420, more recently, in reversing a judgment because a character witness was cross-examined as to his knowledge of specific acts of misconduct, stated that cross-examination should be limited to questions concerning the source of the witness' knowledge of the accused's reputation and should not include questions concerning specific acts of misconduct. Viliborghi v. State, 45 Ariz. 275, 285, 43 P.2d 210.
01
335 U.S. 464 69 S.Ct. 198 93 L.Ed. 163 GOESAERT et al.v.CLEARY et al. No. 49. Argued Nov. 19, 1948. Decided Dec. 20, 1948. Appeal from the United States District Court for the Eastern District of Michigan. Anne R. Davidow, of Detroit, Mich., for appellant. Mr. Edmund E. Shepherd, of Lansing, Mich., for appellees. Mr. Justice FRANKFURTER delivered the opinion of the Court. 1 As part of the Michigan system for controlling the sale of liquor, bartenders are required to be licensed in all cities having a population of 50,000, or more, but no female may be so licensed unless she be 'the wife or daughter of the male owner' of a licensed liquor establishment. Section 19a of Act 133 of the Public Acts of Michigan 1945, Mich.Stat.Ann. § 18,990(1), Cum.Supp.1947. The case is here on direct appeal from an order of the District Court of three judges, convened under § 266 of the old Judicial Code, now 28 U.S.C. § 2284, 28 U.S.C.A. § 2284, denying an injunction to restrain the enforcement of the Michigan law. The claim, denied below, one judge dissenting, 74 F.Supp. 735, and renewed here, is that Michigan cannot forbid females generally from being barmaids and at the same time make an exception in favor of the wives and daughters of the owners of liquor establishments. Beguiling as the subject is, it need not detain us long. To ask whether or not the Equal Protection of the Laws Clause of the Fourteenth Amendment barred Michigan from making the classification the State has made between wives and daughters of owners of liquor places and wives and daughters of non-owners, is one of those rare instances where to state the question is in effect to answer it. 2 We are, to be sure, dealing with a historic calling. We meet the alewife, sprightly and ribald, in Shakespeare, but centuries before him she played a role in the social life of England. See, e.g., Jusserand, English Wayfaring Life, 133, 134, 136-37 (1889). The Fourteenth Amendment did not tear history up by the roots, and the regulation of the liquor traffic is one of the oldest and most untrammeled of legislative powers. Michigan could, beyond question, forbid all women from working behind a bar. This is so despite the vast changes in the social and legal position of women. The fact that women may now have achieved the virtues that men have long claimed as their prerogatives and now indulge in vices that men have long practiced, does not preclude the States from drawing a sharp line between the sexes, certainly, in such matters as the regulation of the liquor traffic. See the Twenty-First Amendment and Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605. The Constitution does not require legislatures to reflect sociological insight, or shifting social standards, any more than it requires them to keep abreast of the latest scientific standards. 3 While Michigan may deny to all women opportunities for bartending, Michigan cannot play favorities among women without rhyme or reasons. The Constitution in enjoining the equal protection of the laws upon States precludes irrational discrimination as between persons or groups of persons in the incidence of a law. But the Constitution does not requ re situations 'which are different in fact or opinion to be treated in law as though they were the same.' Tigner v. State of Texas, 310 U.S. 141, 147, 60 S.Ct. 879, 882, 84 L.Ed. 1124, 130 A.L.R. 1321. Since bartending by women may, in the allowable legislative judgment, give rise to moral and social problems against which it may devise preventive measures, the legislature need not go to the full length of prohibition if it believes that as to a defined group of females other factors are operating which either eliminate or reduce the moral and social problems otherwise calling for prohibition. Michigan evidently believes that the oversight assured through ownership of a bar by a barmaid's husband or father minimizes hazards that may confront a barmaid without such protecting oversight. This Court is certainly not in a position to gainsay such belief by the Michigan legislature. If it is entertainable, as we think it is, Michigan has not violated its duty to afford equal protection of its laws. We cannot cross-examine either actually or argumentatively the mind of Michigan legislators nor question their motives. Since the line they have drawn is not without a basis in reason, we cannot give ear to the suggestion that the real impulse behind this legislation was an unchivalrous desire of male bartenders to try to monopolize the calling. 4 It would be an idle parade of familiar learning to review the multitudinous cases in which the constitutional assurance of the equal protection of the laws has been applied. The generalties on thi subject are not in dispute; their application turns peculiarly on the particular circumstances of a case. Thus, it would be a sterile inquiry to consider whether this case is nearer to the nepotic pilotage law of Louisiana, sustained in Kotch v. River Port Pilot Commissioners, 330 U.S 552, 67 S.Ct. 910, 91 L.Ed. 1093, than it is to the Oklahoma sterilization law, which fell in Skinner v. State of Oklahoma ex rel. Williamson, 316 U.S. 535, 62 S.Ct. 1110, 86 L.Ed. 1655. Suffice it to say that 'A statute is not invalid under the Constitution because it might have gone farther than it did, or because it may not succeed in bringing about the result that it tends to produce.' Roschen v. Ward, 279 U.S. 337, 339, 49 S.Ct. 336, 73 L.Ed. 722. 5 Nor is it unconstitutional for Michigan to withdraw from women the occupation of bartending because it allows women to serve as waitresses where liquor is dispensed. The District Court has sufficiently indicated the reasons that may have influenced the legislature in allowing women to be waitresses in a liquor establishment over which a man's ownership provides control. Nothing need be added to what was said below as to the other grounds on which the Michigan law was assailed. 6 Judgment affirmed. 7 Mr. Justice RUTLEDGE, with whom Mr. Justice DOUGLAS and Mr. Justice MURPHY join, dissenting. 8 While the equal protection clause does not require a legislature to achieve 'abstract symmetry'1 or to classify with 'mathematical nicety,'2 that clause does require lawmarkers to refrain from invidious distinctions of the sort drawn by the statute challenged in this case.3 9 The statute arbitrarily discriminates between male and female owners of liquor establishments. A male owner, although he himself is always absent from his bar, may employ his wife and daughter as barmaids. A female owner may neither work as a barmaid hereself nor employ her daughter in that position, even if a man is always present in the establishment to keep order. This inevitable result of the classification belies the assumption that the statute was motivated by a legislative solicitude for the moral and physicial well-being of women who, but for the law, would be employed as barmaids. Since there could be no other conceivable justification for such discrimination against women owners of liquor establishments, the statute should be held invalid as a denial of equal protection. 1 Patsone v. Commonwealth of Pennsylvania, 232 U.S. 138, 144, 34 S.Ct. 281, 282, 58 L.Ed. 539. 2 Lindsley v. Natural Carbonic Gas Co., 220 U.S. 59, 61, 78 82, 31 S.Ct. 337, 340—342, 55 L.Ed. 369, Ann.Cas.1912C, 160; see also Tigner v. State of Texas, 310 U.S. 141, 147, 60 S.Ct. 879, 882, 84 L.Ed. 1124, 130 A.L.R. 1321; Bain Peanut Co. v. Pinson, 282 U.S. 499, 501, 51 S.Ct. 228, 229, 75 L.Ed. 482; People of State of New York ex rel. Buyant v. Zimmerman, 278 U.S. 63, 73—77, 49 S.Ct. 61, 65—67, 73 L.Ed. 184, 62 AL.R. 785; Miller v. Wilson, 236 U.S. 373, 384, 35 S.Ct. 342, 344, 345, 59 L.Ed. 628, L.R.A.1915F, 829. 3 Cf. Skinner v. State of Oklahoma ex rel. Williamson, 316 U.S. 535, 62 S.Ct. 1110, 86 L.Ed. 1655; State of Missouri ex rel. Gaines v. Canada, 305 U.S. 337, 59 S.Ct. 232, 83 L.Ed. 208; McCabe v. Atchis n, T. & S.F.R. Co., 235 U.S. 151, 35 S.Ct. 69, 59 L.Ed. 169; Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220. And see Kotch v. River Port Pilot Commissioners, 330 U.S. 552, dissenting opinion 564, 67 S.Ct. 910, 916, 91 L.Ed. 1093.
12
335 U.S. 497 69 S.Ct. 201 93 L.Ed. 187 FRAZIERv.UNITED STATES. No. 44. Argued Oct. 15, 1948. Decided Dec. 20, 1948. Rehearing Denied Jan. 31, 1949. As Amended Feb. 14, 1949. See 336 U.S. 907, 69 S.Ct. 488. Mr. Edward Buckley, Jr., of Washington, D.C., for petitioner. Mr. Robert W. Ginnane, of Washington, D.C., for respondent. Mr. Justice RUTLEDGE delivered the opinion of the Court. 1 Petitioner's primary complaint is that he has been denied the trial 'by an impartial jury' which the Sixth Amendment guarantees. He was convicted of violating the Harrison Narcotics Act,1 By a jury composed entirely of employees of the Federal Government. One juror, Moore, and the wife of another, Root, were employed in the office of the Secretary of the Treasury, who is charged by law with responsibility for administering and enforcing the federal narcotics statutes.2 As against objections based on these facts and other matters, the Court of Appeals affirmed petitioner's conviction and sentence. 82 U.S.App.D.C. 332, 163 F.2d 817. He has sought relief here by application for certiorari limited to the issues relating to the jury's selection and composition. To Review the determination made of them by the Court of Appeals we granted certiorari. 333 U.S. 873, 68 S.Ct. 896. 2 Petitioner's objections comprehend an attack upon the entire panel of prospective jurors, made during the course of voir dire examination, in an effort to have the panel stricken; a challenge to the jury as finally constituted, after petitioner had xhausted his ten peremptory challenges, voir dire examination had been completed, and the twelve jurors who tried the case had been qualified; and, either separately or in conjunction with his other objections,3 a claim of reversible error on account of the inclusion of Moore and Root as jurors. An adequate understanding of the issues thus raised requires a condensed statement of the proceedings followed in the DistrictCourt in the selection of the jury. 3 Pursuant to customary practice, those proceedings began with the seating in the box of twelve prospective jurors for purposes of examination on voir dire. These twelve had been chosen previously, in accordance with prevailing practice, from jury lists maintained to supply grand and petit juries for all divisions of the District Court. Cf. D.C. Code § 11—1401 et seq. There is no claim that those lists were improperly made up. The usual preliminary examination began and continued until the noon recess, as is later noted, with counsel raising no question concerning the constitution of the lists or the panel. 4 Petitioner inquired, among other things, how many were Government employees. Five of the original twelve indicated they were. One of these was excused by the court. The other four, including Moore, remained unchallenged and served on the jury. The seven remaining veniremen, including two housewives, were engaged in private occupations. All seven were challenged peremptorily by petitioner. 5 To replace them and the one excused by the court, others including Root were called from time to time, and were examined in substantially the same manner as the original twelve. Altogether they numbered thirteen, nine Government employees, two in private employment, and two the nature of whose work does not appear. Of the latter, one was excused by the court and the other peremptorily challenged by the prosecution. Petitioner peremptorily challenged both of those in private employment and one of the nine in Government service. This exhausted petitioner's peremptory challenges and left eight unchallenged Government employees to join the four like ones originally called in composing the twelve who made up the jury as finally chosen.4 6 The Process of selection was interrupted shortly before noon, when petitioner still had two unused peremptory challenges, by a shortage of veniremen. Anticipating that others would be available later in the day, the court adjourned until 2:30 p.m. On its reconvening, additional prospective jurors were available. But petitioner then moved for the first time to strike the entire panel for alleged irregularity in the method used for selecting it, asserted to have been discovered by counsel through 'a little investigation' during the noon recess. The court denied the motion, with leave to renew the objection in a motion for a new trial if petitioner should be convicted.5 The material part of the colloquy relating to these proceedings and disclosing the grounds for the motion and its denial is set forth in the margin.6 7 Petitioner then exercised his two remaining peremptory challenges, after which he inquired of the twelve jurors then impaneled how many were employed by the Government. When all indicated they were, petitioner challenged the jury as impaneled for cause. The challenge and the court's ruling in denial of it appear below.7 Although counsel sought to intermingle with this challenge the one previously made to the panel,8 the two are distinct attacks and must be treated separately. 8 I. The method of selecting the panel.—Apart from the objection that this challenge came too late, cf. Agnew v. United States, 165 U.S. 36, 17 S.Ct. 235, 41 L.Ed. 624, it is without merit. It consists exclusively of counsel's statements, unsworn and unsupported by any proof or offer of proof. The Government did not explicitly deny those statements. But it was under no necessity to do so. The burden was upon the petitioner as moving party 'to introduce, or to offer, distinct evidence in support of the motion.' Glasser v. United States, 315 U.S. 60, 87, 62 S.Ct. 457, 472, 86 L.Ed. 680. See also Smith v. State of Mississippi, 162 U.S. 592, 16 S.Ct. 900, 40 L.Ed. 1082; Tarrance v. State of Florida, 188 U.S. 519, 23 S.Ct. 402, 47 L.Ed. 572; Martin v. State of Texas, 200 U.S. 316, 26 S.Ct. 338, 50 L.Ed. 497; cf. Brownfield v. State of South Carolina, 189 U.S 426, 23 S.Ct. 513, 47 L.Ed. 882. 9 Of itself this failure in tender of proof would require denial of the motion. But even if proof had been made or offered there would have been no showing sufficient to require contrary action. The statements, if treated as allegations, comprehended in substance but two things. One was the very brief statement of facts relating to the procedure followed, namely, the subpoenaing of about five hundred jurors, their equal division for assignment to two branches of the court, and that those in each group who did not wish to serve were 'told to step to one side.' This was all in the way of facts. From them followed counsel's vague and general conclusion that the remaining number, from which it was said jurors were picked, 'consisted mostly of Government employees and housewives, and unemployed.' Counsel then urged that this furnished basis for applying the decision in Thiel v. Southern Pacific Co., 328 U.S. 217, 66 S.Ct. 984, 90 L.Ed. 1181, 166 A.L.R. 1412, as not affording 'a proper cross-section.' 10 The trial court rightly held the Thied case inapplicable, for the reasons that it requires a showing of systematic exclusion or attempt to exclude from the panel a particular occupational group or groups otherwise eligible for jury service, and the statements and conclusions of counsel here disclosed no such attempt. Beyond this, moreover, it seems highly doubtful that the facts set forth in the statement, if proved, would constitute any irregularity. Nothing is stated concerning the numbers who stepped to one side, their occupational classifications, whether they were excused or, if any, how many, by whom or for what cause. For all one could know from the statement, those stepping to one side may have included but one in ten, and of these, half or more may have been held for jury service after claiming exemption or seeking excuse. The facts stated, therefore, taken in the light of pertinent facts omitted lay no foundation whatever for counsel's conclusions, inferentially that jurors were selected only from those not standing aside, and explicitly that the remaining number 'consisted mostly of Government employees and housewives, and unemployed.' The statement was obviously insufficient to lay any foundation for valid attack upon the method followed in selecting the panel. 11 II. Composition of the jury.—The essence of this attack consists in counsel's statements, 'Now, I have exhausted my ten challenges, and here I have twelve Government jurors who are to decide this defendant's case, which is a violation of the Federal statute, being brought in a Federal Court, prosecuted by a Federal prosecutor, and the case is presented by Federal agents.'9 So put, the challenge has the sound of plausibility. Possibly it would have more of the substance of it if in this case it did not appear that petitioner himself was responsible, by deliberate choice, for the jury's final composition. 12 Given ten arbitrary choices among twenty-two prospective jurors not disqualified for cause, of whom thirteen were Government employees and nine privately engaged, he knowingly, of his own right, rejected nine of the latter and with knowledge or the full opportunity to secure it accepted without challenge all but one of the former. It would seem that ordinarily one anxious to secure a jury representative of both private and public employment in a community like Washington,10 and particularly to avoid overweighting the jury with Government employees, well might have found a more effective way of utilizing his peremptory challenges to achieve those objectives. 13 The right of peremptory challenge is given, of course, to be exercised in the party's sole discretion and was so exercised here. We do not question petitioner's privilege to utilize his peremptory challenges as he did. But the right is given in aid of the party's interest to secure a fair and impartial jury, not for creating ground t claim partiality which but for its exercise would not exist.11 It does not follow that by using the right as he pleases, he obtains the further one to repudiate the consequences of his own choice. 14 Here petitioner was given a fairly and lawfully selected panel. From it all disqualified for cause were excused. The fully qualified jurors remaining were fairly evently distributed among persons publicly and privately employed. For reasons entirely his own, petitioner chose to eliminate the latter and retain the former. This was a deliberate choice, not an uninformed one. We need draw no conclusion concerning whether or not it was made for the purpose of creating the basis now asserted for objecting to the jury's composition.12 Rather we must take it as having been made exactly for the purpose for which the right was given, namely, to afford petitioner an opportunity beyond the minimum requirements of fair selection to express an arbitrary preference among jurors properly selected and fully qualified to sit in judgment on his case. Cf. note 11. Any other view would convict him of abusing his privilege. This we are unwilling to do. 15 By the same token we are not willing to join in repudiating the consequences of his own selection. We take petitioner at his word as expressed by his repeated choices. The fact that he exercised his peremptory challenges as he did, so frequently and consistently to eliminate privately employed jurors and retain only Government employees, hardly can be said to give cause for him to claim overweighting of the jury with Government employees. There was no defect of the panel in this respect. Nor is there any claim or basis for one that the prosecution utilized its peremptory challenges to bring about a jury constituted only of them. It would be going very far to say that in the circumstances shown by this record petitioner was deprived, either in law or in fact, of an impartial jury or indeed of one fairly representative of the community. If deprivation there was, even in the latter sense,13 it was the result of his own choice, not of imperfection in the choices tendered him by law or in th procedures of selection afforded. 16 In ruling upon petitioner's objection the trial judge assessed the situation as follows: 'Chance has resulted in this jury panel of twelve being composed of Government employees, but the jury list from which they by chance were selected is a mixture of Government employees and private employees.14 Even in this view of what took place, petitioner has no cause to complain. The well-settled rule is that, given a lawfully selected panel, free from any taint of invalid exclusions or procedures in selection and from which all disqualified for cause have been excused, no cause for complaint arises merely from the fact that the jury finally chosen happens itself not to be representative of the panel or indeed of the community.15 There is, under such circumstances, no right to any particular composition or group representation on the jury.16 17 Finally, in this phase of the case, United States v. Wood, 299 U.S. 123, 57 S.Ct. 177, 81 L.Ed. 78, goes far toward precluding petitioner's objection. That decision sustained the Act of Congress of August 22, 1935, now D.C.Code 1940, § 11—1420, removing (with specified exceptions) the disqualification of Government employees previously existing in the District of Columbia for jury service in criminal and other cases to which the Government was a party. The disqualification had arisen in 1908 by virtue of the decision, made on common-law grounds, in Crawford v. United States, 212 U.S. 183, 29 S.Ct. 260, 53 L.Ed. 465, 15 Ann.Cas. 392. 18 Owing to the large and increasing proportion of Government to private employees in the District, the effect of the Crawford decision had been by 1935 to create difficulties in securing properly qualified jurors. To meet this situation the 1935 statute was adopted.17 It continued specified exemptions previously existing, including all executive and judicial officers of the United States, and then directed in presently material part: 'All other persons, otherwise qualified according to law whether employed in the service of the government of the United States or of the District of Columbia * * * shall be qualified to serve as jurors in the District of Columbia and shall not be exempt from such service * * *.' D.C. Code 1940, § 11—1420. 19 The Wood case was a criminal prosecution for theft from a private corporation. Three of the jurors were fede al employees, challenged for cause on that ground. In sustaining the conviction and the statute the Court first held that Congress had not 'undertaken to preclude the ascertainment of actual bias,' and that the question in issue was limited to 'implied bias, a bias attributable in law to the prospective juror regardless of actual partiality.' 299 U.S. at pages 133, 134, 57 S.Ct. at pages 179, 180. As to this the Court said of the statute, 'The enactment itself is tantamount to a legislative declaration that the prior disqualification (under the Crawford ruling) was artificial and not necessary to secure impartiality.' Id., 299 U.S. at pages 148, 149, 57 S.Ct. at page 186. By way of sustaining the legislative judgment, the Court added on its own account: 20 'In criminal prosecutions the Government is acting simply as the instrument of the public in enforcing penal laws for the protection of society. In that enforcement all citizens are interested. It is difficult to see why a governmental employee, merely by virtue of his employment is interested in that enforcement either more or less than any good citizen is or should be. * * * We think that the imputation of bias simply by virtue of governmental employment, without regard to any actual partiality growing out of the nature and circumstances of particular cases, rests on an assumption without any rational foundation.' Ibid. 21 The Court was not confronted in the Wood case with the exact situation we have here, namely, that all of the jurors finally selected were Government employees. But the purport of the decision was that the mere fact of Government employment, without more, would be insufficient under the statute's mandate to disqualify a juror. Implicit in this was the conception that, insofar as that fact alone is or may be effective, Government employees and persons privately engaged were put upon the same basis without any limitation, explicit or implied, upon the number who might be selected as jurors from either group.18 The effect of these rulings, we think, was to make Government employees subject, as are all other persons and in the same manner, to challenge for 'actual bias'19 and under all ordinary circumstances only to such challenge. In that view, absent any basis for such challenge, we do not see how a right to challenge the panel as a whole can arise from the mere fact that the jury chosen by proper procedures from a properly selected panel turns out to be composed wholly of Government employees or, a fortiori, of persons in private employment. 22 The opinion in the Wood case, however, was very careful to stress more than once that the Sixth Amendment prescribes no specific tests for determining impartiality. 299 U.S. at page 133, 57 S.Ct. at page 179. It afforded further assurances, beyond those given by Art. III, § 2, par. 3, relating to trial by jury, inrespect to speed, publicity, impartiality, etc. Id., 299 U.S. at page 142, 57 S.Ct. at page 183. But it did not require in these respects 'the particular forms and procedure used at common law.' 299 U.S. at page 143, 57 S.Ct. at page 184. The opinion emphasized especially that 'Impartiality is not a technical conception. It is a state of mind. For the ascertainment of this mental attitude of appropriate indifference, the Constitution lays down no particular tests and procedure is not chained to any ancient and artificial formula.' 299 U.S. at pages 145, 146, 57 S.Ct. at page 185. 23 This seems to contemplate implicitly that in each case a broad discretion and duty reside in the court to see that the jury as finally selected is subject to no solid basis of objection on the score of impartiality, even though that basis might possibly arise through the working of chance or other lawful factors wholly within the framework of proper procedures for selecting the panel and choosing the jury from it. Such a situation could arise, if at all, only in the rarest and most extraordinary combination of circumstances. But even if that possibility is taken as conceded, for the reasons we have already stated this case presents no such problem. 24 III. The challenges to Jurors Moore and Root.—Considered as independent and individual challenges for 'actual bias,'20 the objections to these jurors come too late. Moore was a Treasury messenger. Root's wife was a Treasury employee. Petitioner's counsel knew of the employment of Root's wife and that Moore was a federal employee. He did not inquire where Moore was employed, but could have known his employment's exact nature.21 It does not appear that either Moore or Root's wife was connected with the Bureau of Narcotics or had any duty even remotely relating to its functions or those of the Secretary in relation to them.22 25 As respects challenge for 'actual bias,' the Wood opinion was careful to put Government employees on the same basis as prospective jurors privately employed. It stated: 26 'All the resources of appropriate judicial inquiry remain available in this instance as in others to ascertain whether a prospective jurors, although not exempted from service, has any bias in fact which would prevent his serving as an impartial juror. In dealing with an employee of the Government, the court would properly be solicitous to discover whether, in view of the nature or circumstances of his employment, or of the relation of the particular governmental activity to the matters involved in the prosecution, or otherwise, he had actual bias, and, if he had, to disqualify him.'23 27 Petitioner challenged neither Moore nor Root for 'actual bias,' though afforded the fullest opportunity legally and factually for doing so. After accepting them before trial, he could not challenge them successfully in a motion for a new trial. Queen v. Hepburn, 7 Cranch 290, 297, 3 L.Ed. 348; Raub v. Carpenter, 187 U.S. 159, 23 S.Ct. 72, 47 L.Ed. 119; cf. United States v. Gale, 109 U.S. 65, 3 S.Ct. 1, 27 L.Ed. 857. See Kohl v. Lehlback, 160 U.S. 293, 299-302, 16 S.Ct. 304, 306, 307, 40 L.Ed. 432. Whether or not employment in the Treasury outside the Narcotics Bureau would constitute ground for challenge for 'actual bias,'24 such employment in the connections disclosed here affecting Moore and Root was not so obvious a disqualification or so inherently prejudicial as a matter of law, in the absence of any challenge to them before trial, as to require the court of its own motion or on petitioner's suggestion afterward to set the verdict aside and grant a new trial. 28 The challenge to Moore and Root stands no better if considered, not as a belated individual challenge for 'actual bias' to each, but as additional support or buttressing for the challenge to the composition of the jury as a whole. Apart from the fact that the two sorts of challenge are distinct and are therefore to be dealt with separately, the challenge to the composition of the jury as made to the trial court and as ruled upon by it, made no special reference to either Moore or Root or the particular bases for objecrtion now raised to them.25 Those references, so far as is shown by the record, first appeared in the assignments of error made by petitioner in the Court of Appeals. They therefore came too late, even if they could be considered as forming part of the challenge to the jury's composition or as adding anything of weight to that challenge. 29 Whether the matter is considered technically or on the broader, nontechnical basis of impartiality as a state of mind, petitioner has shown no ground for believing that he did not receive a trial 'by an impartial jury' such as the Sixth Amendment assured him. The judgment of the Court of Appeals is 30 Affirmed. 31 Mr. Justice JACKSON, dissenting. 32 On one proposition I should expect trial lawyers to be nearly unanimous: that a jury, every member of which is in the hire of one of the litigants, lacks something of being an impartial jury. A system which has produced such an objectionable result and always tends to repeat it, should, in my opinion, be disapproved by this Court in exercise of its supervisory power over federal courts. 33 Were the employer an individual, a railroad, an industrial concern, or even a state, I think bias would more readily be implied; but its existence would be no more probable. This criminal trial was an adversary proceeding, with the Government both an actual and nominal litigant. It was the patron and benefactor of the whole jury, plus one juror's wife for good measure. At the same time that it made its plea to them to convict, it had the upper hand of every one of them in matters such as pay and promotion. Of late years, the Government is using its power as never before to pry into their lives and thoughts upon the slightest suspicion of less than complete trustworthiness. It demands not only probity but unquestioning ideological loyalty. A government employee cannot today be disinterested or unconcerned about his appearance of faithful and enthusiastic support for government depart ents whose prestige and record are, somewhat, if only a little, at stake in every such prosecution. And prosecutors seldom fail to stress, if not to exaggerate, the importance of the case before them to the whole social, if not the cosmic, order. Even if we have no reason to believe that an acquitting juror would be subjected to embarrassments or reprisals, we cannot expect every clerk and messenger in the great bureaucracy to feel so secure as to put his dependence on the Government wholly out of mind. I do not doubt that the government employees as a class possess a normal independence and fortitude. But we have grounds to assume also that the normal proportion of them are subject to that very human weakness, especially displayed in Washington, which leads men to '* * * crook the pregnant hinges of the knee where thrift may follow fawning.' So I reject as spurious any view that government employment differs from all other employment in creating no psychological pressure of dependency or interest in gaining favor, which might tend to predetermine issues in the interest of the party which has complete mastery over the juror's ambition and position. But even if this suspicion can be dismissed by the Court as a mere phantasy, it cannot deny that such a jury has a one-sided outlook on problems before it and an appearance of government leverage which is itself a blemish on the name of justice in the District of Columbia. 34 Because this semblance of partiality reflects on the courts, even if it does not prejudice the defendant in a particular case, I am not disposed to labor the argument as to whether counsel for this defendant did all that he might or should have done by way of objection. He did protest as soon as it was apparent what was happening to him, and that seems to me sufficient in face of adverse rulings. But even if defendant's objection were belated or technically defective, I still think the court deserves and should require a more neutral jury for its own appearances, even if defendant does not deserve and cannot demand one. 35 The cause of overloading this jury with persons beholden to the Government is no mystery and no accident. It is due to a defect in a system which will continue to operate in the same direction so long as the same practice is followed. While counsel did not prove it under oath, he stated it for the record and neither the District Attorney nor the learned Trial Judge, both of whom must have known the facts, denied or questioned his statement or asked him for better evidence. That defect is this: when the panel of jurors was drawn, the court appears to have asked all those who did not wish to serve to step aside, and they were excused from serving. 36 This amiable concession in some jurisdictions might produce no distortion of the composition of the panel; but it is certain to do just that in the District of Columbia because of the dual standard and dubious method of jury compensation. The non-government juror receives $4 per day,1 which under present conditions is inadequate to be compensatory to nearly every gainfully employed juror. But the government employee is not paid specially; instead, he is given leave from his government work with full pay while serving on the jury.2 The latter class are thus induced to jury service by protection against any financial loss, while the former are subjected to considerable disadvantage. 37 This condition makes it obvious that, if jury service is put on virtually a voluntary basis and qualified persons are allowed to decline jury service at their own option, the panel will become loaded with government employees. If this undue concentration of such jurors were accomplished by any device which excluded nongovernment jurors, it unquestionably would be condemned not only by reason of but even without resort to the doctrine that prevailed in Ballard v. United States, 329 U.S. 187, 67 S.Ct. 2 1, 91 L.Ed. 181; Thiel v. Southern Pacific Co., 328 U.S. 217, 66 S.Ct. 984, 90 L.Ed. 1181, 166 A.L.R. 1412; and Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680. 38 Is the result more lawful when it is accomplished by letting one class exclude themselves, stimulated to do so by the incentive of such a dual system of compensation? 39 Of course, the defendant and the prosecution each have peremptory challenges, ten in this case, which enable each without assigning any cause to excuse that number whom they do not wish to have sit. This defendant used many of his challenges to excuse talesmen not employed by the Government and it is hinted that he may have packed this jury against himself. The learned Trial Judge made no such suggestion, however, and he would be better able than we to detect such tactics. He blamed the situation on 'chance.' But the fickle goddess is hardly to be blamed for the result when it can be seen that the cards were stacked from the beginning. This was plainly the case when we contrast unequal advantages which the two parties could get from their equal numbers of challenges. 40 The Government was confronted by no occasion to use any of its peremptory challenges to get rid of its adversary's employees. The defendant was. But if the defendant should try to use his challenges to excuse employees of the Government, he would dismiss one only to incur a probability of getting another. If he exhausted his challenges in this effort, it would still be futile, for no one claims he had enough to displace them all. It might not be wise tactics to show suspicion or disapproval of a class some of whom will have to sit anyway. Moreover, if he used his challenges as far as they would go to dislodge government servants, it would leave him helpless to challenge any of the nongovernment jurors, for which challenge he might have good reason. 41 The disadvantage of defendant as to talesmen from government ranks is more apparent but not more more prejudicial than with talesmen from other walks of life. Whatever reason he may have had for excusing such a one, the price he would probably have had to pay for using his challenge was to have one government employee take another's place. The Government could vacate the seat of a nongovernment talesman with no such unwelcome results. The short of the thing is: in no case where the court has intervened to use its supervisory power to revise federal jury systems has there been any result so consistently and inevitably prejudicial to one of the litigants as here, under our noses. Ballard v. United States, 329 U.S. 187, 67 S.Ct. 261, 91 L.Ed. 181; Thiel v. Southern Pacific, 328 U.S. 217, 66 S.Ct. 984, 90 L.Ed. 1181, 166 A.L.R. 1412; Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680. And in cases where a strong minority of the Court has wanted to go so far as to upset a state jury system, as offensive to fundamental consideration of justice spelled out from the due process clause of the Fourteenth Amendment, there has been no such brazen unfairness in actual practice. Moore v. People of State of New York, 333 U.S. 565, 68 S.Ct. 705; Fay v. New York, 332 U.S. 261, 67 S.Ct. 1613, 91 L.Ed. 2043. 42 The precedent of United States v. Wood, 299 U.S. 123, 57 S.Ct. 177, 81 L.Ed. 78, on which the Court leans heavily, is a weak crutch. That decision held only that the absolute disqualification of any federal employee, which had been declared in Crawford v. United States, 212 U.S. 183, 29 S.Ct. 260, 53 L.Ed. 465, 15 Ann.Cas. 392, could constitutionally be removed by the Congress. In the case the Court was considering only three out of the twelve were by chance government beneficiaries and the Court was not confronted with such a systematic distortion of the jury as was at work here. It held that, individually, they were not subject to challenge for cause; that is, they were not excusable by the court merely because they were government employees. But to hold that one or a few government emplo ees may sit by chance is no precedent for holding that they may fill all of the chairs by a system of retiring everyone else. Furthermore, that opinion emphasized that the prosecution in that case was for larceny from a private corporation. That was not an offense against the Federal Government as such, except as it has responsibility for prosecuting crimes in the District that in the state would be a matter of no federal concern or even jurisdiction. But the prosecution before us is not for an offense of a private aspect; it is an offense against no one except federal government policy; and the Secretary of the Treasury, in whose own office one of these jurors was employed, has exclusive and nationwide responsibility for enforcement of the law involved. 43 If we admit every fact, premise, argument and conclusion stated in the Court's opinion, it still leaves this one situation unexplained and unjustified. In federal courts, over which we have supervisory power, sitting almost within a stone's throw of where we sit, a system is in operation which has produced and is likely again and again to produce what disinterested persons are likely to regard as a packed jury. Approval of it, after all that has been written of late on the subject of juries, makes these lofty pronouncements sound a little hollow. 44 I would reverse this rather insignificant conviction and end this system before it builds up into a scandalous necessity for reversal of some really significant conviction. 45 Mr. Justice FRANKFURTER, Mr. Justice DOUGLAS and Mr. Justice MURPHY join in this opinion. 1 26 U.S.C. § 2553, 26 U.S.C.A. § 2553. The indictment charged, substantially in the statutory language, that petitioner knowingly, wilfully, unlawfully and feloniously did 'purchase, sell, dispense and distribute' certain narcotic drugs 'not then and there, in or from, the original stamped package.' 2 Pursuant to 26 U.S.C. § 2606, 26 U.S.C.A. § 2606, the Secretary has delegated to the Commissioner of Narcotics 'the investigation, detection and prevention of violations of the Federal narcotic and marihuana laws.' 21 C.F.R., 1946 Supp. § 206.1. TheBureau of Narcotics, created within the Treasury Department, 5 U.S.C. § 282, 5 U.S.C.A. § 282, is subject to the Secretary's 'general supervision and direction,' 21 C.F.R., 1946 Supp., § 206.3, and its decisions are subject to review by him. 5 U.S.C. § 282c, 5 U.S.C.A. § 282c. There were 87,830 employees in the Treasury Department as of September 30, 1947, of whom 19,645 were employed in the District of Columbia. Monthly Report of Employment, Executive Branch of the Federal Government, U.S. Civ. Serv. Comm'n, September, 1948, Table V. Published figures are not available to show the number of these employed by the Narcotics Bureau, but obviously in view of the number and diversity of the Treasury Department's functions they must have comprised only a comparatively small fraction of the total. 3 See Part III infra. 4 In summary, twenty-five prospective jurors were examined. Of these one was peremptorily challenged by the prosecution and two were excused by the court for cause. Of the remaining twenty-two, thirteen were in Government work, nine privately employed. Petitioner peremptorily challenged the nine and one Government employee, thus exhausting his peremptory challenges. In this manner the jury composed wholly of federal employees resulted. Prior to his trial petitioner made no individual challenge to any of the twelve who constituted the jury as finally selected. They included Moore and Root. 5 The objection was renewed in petitioner's motions in arrest of judgment and for a new trial, and was denied in each instance. 6 'Mr. Buckley. If your Honor please, I have made a little investigation of the impaneling or selection of this panel here as well as selection of the other panels sitting this month, and I most respectfully submit that the method and procedure used in selecting is irregular, and I am going to move to strike this whole panel, the reason being this: that from the inquiries I have made, there were about five hundred or five hundred and a few jurors subpenaed—that is, individually subpenaed to appear here from which they selected a sufficient number of jurors here. 'If there were five hundred, they were divided into two groups, two hundred fifty for one court and two hundred fifty for another court, and of the two hundred fifty for each court, they were asked how many of those two hundred fifty did not desire to serve as jurors, to raise their hands, so those who raised their hands were told to step to one side, and out of the remaining number that were left they picked the jurors, and the remaining number that were left consisted mostly of Government employees and housewives, and unemployed. There are only a few unemployed. 'I know Your Honor has read this case in the Supreme Court, Thiel v. Southern Pacific Company (328 U.S. 217, 66 S.Ct. 984, 90 L.Ed. 1181, 166 A.L.R. 1412). This is not a proper cross-section. 'The Court. The Thiel case holds that it must be shown that there was a systematic attempt to exclude a certain type or group of persons. * * * That is what that case holds, and that is not the situation here.' 7 'Mr. Buckley. If Your Honor please, with reference to the motion which I made a while ago, moving to strike the whole panel, I now find myself in this position. I have exhausted my ten challenges. 'In selecting these different panels on the first Tuesday of the month, the Clerk says to the five hundred or two hundred fifty, whichever it may be, individuals who are summoned to appear here, from which to pick the juries, 'All those who do not desire to serve, step to one side.' That leaves a batch of Government employees and housewives. 'Now, I have exhausted my ten challenges, and here I have twelve Government jurors who are to decide this defendant's case, which is a violation of the Federal statute, being brought in a Federal Court, prosecuted by a Federal prosecutor, and the case is presented by Federal agents. I submit there is reason to challenge these people for cause. 'The Court. I will deny the motion and request at this time that you take it up later, in a motion after the verdict, if you think it is sound. I do not believe your motion is sound. Chance has resulted in this jury panel of twelve being composed of Government employees, but the jury list from which they by chance were selected is a mixture of Government employees and private employees.' 8 See note 7; cf. note 6. 9 See Note 7. 10 See note 17 infra and text. 11 The right is in the nature of a statutory privilege, variable in the number of challenges allowed, which may be withheld altogether without impairing the constitutional guaranties of 'an impartial jury' and a fair trial. Stilson v. United States, 250 U.S. 583, 586, 40 S.Ct. 28, 29, 63 L.Ed. 1154, quoted in United States v. Wood, 299 U.S. 123, 145, 57 S.Ct. 177, 185, 81 L.Ed. 78. Except in cases of treason and other capital offenses, no right to peremptory challenges existed in federal criminal trials until the Act of June 8, 1872, 17 Stat. 282, Rev.Stat. § 819 (now 28 U.S.C.A. § 1870), unless a rule of the particular federal court made applicable a provision of state law allowing peremptory challenges in noncapital cases. Act of April 30, 1790, § 30, 1 Stat. 112, 119; United States v. Randall, Fed.Cas., No. 16,118; United States v. Cottingham, Fed.Cas., No. 14,872; United States v. McPherson, Fed.Cas., No. 15,703; United States v. Krouse, Fed.Cas., No. 15,544. (However, the right of peremptory challenge in capital cases, which existed at common law, has been spoken of as 'one of the most important of the rights secured to the accused.' Pointer v. United States, 151 U.S. 396, 408, 14 S.Ct. 410, 414, 38 L.Ed. 208; see also Lewis v. United States, 146 U.S. 370, 376, 13 S.Ct. 136, 138, 36 L.Ed. 1011). In noncapital cases, such as this, the privilege affords protection additional to constitutional guaranties, to be had exclusively at the party's option. If no such privilege had been given in the District of Columbia, the normal and valid course of selection in this case would have produced a jury composed both of federal employees and persons engaged in private occupations; in other words, would have made it impossible for petitioner to raise his objection to the jury's composition. 12 See note 4; also note 11 and text. 13 The assumption is not meant to imply that such a deprivation alone would constitute grounds for challenge to the jury. See text and authorities cited infra at note 15. 14 See note 7. 15 Ruthenberg v. United States, 245 U.S. 480, 38 S.Ct. 168, 62 L.Ed. 414; Thomas v. State of Texas, 212 U.S. 278, 282, 29 S.Ct. 393, 394, 53 L.Ed. 512; State of Virginia v. Rives, 100 U.S. 313, 322, 323, 25 L.Ed. 667; Higgins v. United States, 81 U.S.App.D.C. 371, 160 F.2d 222; Id., 81 U.S.App.D.C. 371, 160 F.2d 223; see Fay v. New York, 332 U.S. 261, 284, 285, 67 S.Ct. 1613, 1625, 1626, 91 L.Ed. 2043; Thiel v. Southern Pacific Co., 328 U.S. 217, 220, 66 S.Ct. 984, 985, 90 L.Ed. 1181, 166 A.L.R. 1412: cf. Akins v. State of Texas, 325 U.S. 398, 403, 404, 65 S.Ct. 1276, 1279, 89 L.Ed. 1692. 16 Ibid. 17 See United States v. Wood, 299 U.S. at pages 132, 133, 57 S.Ct. at pages 178, 179, 81 L.Ed. 78, quoting from the opinion of the Court of Appeals, 65 App.D.C. 330, 332, 83 F.2d 587, 589. See also House Rep. 1421, Sen.Rep. 1297, 74th Cong., 1st Sess.; 79 Cong.Rec. 13,401, relating to the bill which became the Act of Congress of August 22, 1935, now D.C. Code 1940, § 11—1420. The Government's brief in the Wood case, relying upon figures assembled from various official sources, indicated that of the probable 353,949 persons otherwise available for jury service in the District of Columbia as of 1935, some 156,874, or 44.3 per cent, were disqualified to serve either by virtue of exemption or by the mere fact of employment by or receipt of benefits from the Government, under the ruling in the Crawford case. 18 Given of course a panel and jury otherwise selected in accordance with law. Since the Wood case the Court of Appeals for the District of Columbia has held that juries including four and nine Government employees were not inherently defective. Great Atlantic & Pacific Tea Co. v. District of Columbia, 67 App.D.C. 30, 89 F.2d 502; Higgins v. United States, 81 U.S.App.D.C. 371, 160 F.2d 222. The Court of Appeals for the Fifth Circuit has held that a Canal Zone jury composed entirely of persons who were either employees or tenants of the Government was not improperly constituted. Schackow v. Government of the Canal Zone, 108 F.2d 625. 19 The phrase 'actual bias' is used in this opinion as it was in the Wood case. The Wood opinion stated: 'The bias of a prospective juror may be actual or implied; that is, it may be bias in fact or bias conclusively presumed as matter of law.' 299 U.S. at page 133, 57 S.Ct. at page 179. It later pointed out that 'Challenges at common law were to the array, that is, with respect to the constitution of the panel, or to the polls, for disqualification of a juror. Challenges to the polls were either 'principal' or 'to the favor,' the former being upon grounds of absolute disqualification, the latter for actual bias.' 299 U.S. at pages 134, 135, 57 S.Ct. at page 180. As appears from the portion of the opinion quoted in the text infra at note 23, the Court regarded 'actual bias' or challenge 'to the favo ' as including not only prejudice in the subjective sense but also such as might be thought implicitly to arise 'in view of the nature or circumstances of his employment, or of the relation of the particular governmental activity to the matters involved in the prosecution, or otherwise.' 20 Cf. text infra at notes 3 and 8. 21 Apart from petitioner's opportunity for discovery by specific inquiry, lists of jury panels, showing the name, age, address, and occupation of each member are prepared in the criminal division of the District Court for the District of Columbia and are available to counsel before trial on request. 22 Cf. note 2. 23 299 U.S. at pages 133, 134, 57 S.Ct. at page 179. 24 In United States v. Wood, supra, the Court, speaking of the Crawford case, said: 'It will be observed that the employment was in the very department to the affairs of which the alleged conspiracy related. But the decision took a broader range and did not rest upon that possible distinction.' 299 U.S. at page 140, 57 S.Ct. at page 182. It is at least highly doubtful that an employment having no more relationship to the particular governmental activity involved in the prosecution than did that of Moore in this case, cf. note 2, or that of Root's wife, would give ground for challenge for 'actual bias,' although coming under the same ultimate departmental supervision, even though if timely called to the court's attention the circumstance might afford basis for the court, in an excess of caution, to excuse the venireman. 25 See note 7. 1 D.C. Code, title 11, § 1513 (1940). 2 D.C. Code, title 11, §§ 1421—23 (1940).
01
335 U.S. 595 69 S.Ct. 290 93 L.Ed. 259 HENSLEEv.UNION PLANTERS NAT. BANK & TRUST CO. et al. No. 90. Argued Dec. 4, 1948. Decided Jan. 3, 1949. Motion for Leave to File Petition for Rehearing Denied Feb. 14, 1949. See 336 U.S. 915, 69 S.Ct. 601. Mr. Arnold Raum, of Washington, D.C., for petitioner. Mr. Sam Polk Walker, of Memphis, Tenn., for respondents. PER CURIAM. 1 Respondents are the executors and trustees of the estate of William Bate Williams. They brought this action for refund, with interest, of $35,899.12 of federal estate taxes and interest paid under protest. The relevant facts, set forth in respondents' complaint and admitted by the Collector's motion to dismiss, are as follows: 2 William Bate Williams died in 1943. Under the terms of his will, the entire gross estate of $508,411.17 was bequeathed to respondents to hold in trust for the testator's 3 'beloved mother, Elizabeth Bate Williams, for and during her natural life, with the full power and authority herein conferred. 4 'I hereby direct both my executors and my trustees to pay to my mother the sum of Seven Hundred Fifty (750.00) Dollars a month to be used by her as she sees fit. In the event the income from my estate is not sufficient to pay the said Seven Hundred Fifty ($750.00) Dollars each month, then my executors and trustees are hereby empowered, authorized and directed to encroach on the corpus of the estate to pay said amount and to sell any of my property, real or personal, for this purpose. 5 'In addition to this amount my said executors and trustees are authorized and empowered to use and expend in their discretion any portion of my estate, either income or principal, for the pleasure, comfort and welfare of my mother. 6 'The first object to be accomplished in the administration and management of my estate and this trust is to take care of and provide for my mother in such manner as she may desire and my executors and trustees are fully authorized and likewise directed to manage my estate primarily for this purpose.' 7 The will went on to provide for distribution of the corpus of the estate remaining at the mother's death. Twenty-five per cent of the total remaining estate was bequeathed to the testator's cousin, and stated sums in cash were left to other named legatees. After these legacies, the balance of the estate was directed to be paid over to four named charities, in equal shares. 8 At the time of the testator's death the estate was earning a net income of approximately $15,000 per year, $6,000 more than the amount directed to be paid, at $750 per month, to the testator's mother. The mother at that time was eighty-five years old, lived on substantially less than $750 per month, and had independent investments worth approximately $100,000 which netted her an income of about $300 per month. A woman of moderate needs and without dependents, she died three years later without having requested respondents to invade the trust corpus in her behalf. 9 The disputed estate tax liability resulted from respondents' attempt to deduct from the gross estate the portion bequeathed to the four charities, in reliance on the charitable deduction provision of § 812(d) of the Internal Revenue Code.1 The Commissioner denied the deduction. The Collector here resists the refund claim, on the ground that the possibility of invasion of the corpus on behalf of the testator's mother prevented the ultimate charitable interest, at the testator's death, from being 'presently ascertainable, and hence severable from the interest in favor of the private use,' within the meaning of the applicable Treasury Regulation.2 10 On the authority of Merchants Nat. Bank of Boston v. Commissioner of Internal Revenue, 320 U.S. 256, 64 S.Ct. 108, 88 L.Ed. 35, the District Court granted the Collector's motion to dismiss. 74 F.Supp. 113. The Court of Appeals reversed. 6 Cir., 166 F.2d 993. It held that, notwithstanding the language of the testamentary provision for the 'pleasure, comfort and welfare' of the mother, the complaint's allegations of the mother's great age, independent means and modest testes raised a triable issue of fact as to whether the trust corpus was threatened with invasion and the charitable interest hence subject to depletion in favor of the testator's mother. 11 We agree with the District Court that this case is governed by the decision in the Merchants Nat. Bank of Boston case and that the suit should be dismissed. It is apparent on the face of the complaint that this testator's will did not limit the trustees' disbursements to conformity with some ready standard—as where, for example, trustees are to provide the prime beneficiary with such sums as 'may be necessary to suitably maintain her in as much comfort as she now enjoys.' Ithaca Trust Co. v. United States, 279 U.S. 151, 154, 49 S.Ct. 291, 73 L.Ed. 647. The stated income here directed to be paid to the mother was 'to be used by her as she sees fit.' Beyond this the trustees were empowered to invade or wholly utilize the corpus of the estate for the mother's 'pleasure, comfort and welfare,' bearing in mind the testator's injunction that 'The first object to be accomplished * * * is to take care of and provide for my mother in such manner as she may desire * * *.'3 As in the Merchants Nat. Bank of Boston case (320 U.S. 256, 64 S.Ct. 111), where the trustees had discretion to disburse sums for the 'comfort, support, maintenance, and/or happiness' of the prime beneficiary, so here we think it the 'salient fact * * * that the purposes for which the widow could, and might wish to have the funds spent do not lend themselves to reliable prediction.' 320 U.S. 256, 262, 64 S.Ct. 108, 112, 88 L.Ed. 35. 12 We do not overlook the unlikelihood that a woman of the mother's age and circumstances would abandon her customary frugality and squander her son's wealth. But, though there may have been little chance of that extravagance which would waste a part or consume the whole of the charitable interest, that chance remained. What common experience might regard as remote in the generality of cases may nonetheless be beyond the realm of precise prediction in the single instance. The contingency which would have diminished or destroyed the charitable interest here considered might well have been insured against, but such an arithmetic generalization of experience would not have made this charitable interest 'presently ascertainable.'4 'Rough guesses, approximations, or even the relatively accurate valuations on which the market place might be willing to act are not sufficient.' Merchants Nat. Bank of Boston v. Commissioner of Internal Revenue, supra, 320 U.S. at page 261, 64 S.Ct. at page 111, 88 L.Ed. 35. 13 Nor do we think it significant that the trust corpus was intact at the mother's death, for the test of present ascertainability of the ultimate charitable interest is applied 'at the death of the testator.' Ibid. The charitable deduction is a matter of congressional grace, and it is for Congress to determine the advisability of permitting amendment of estate tax returns at such time as the probable vesting of the charitable interest has reduced itself to unalterable fact. 14 Reversed. 15 Mr. Justice DOUGLAS and Mr. Justice JACKSON dissent upon the grounds stated in dissent in Merchants Nat. Bank of Boston v. Commissioner of Internal Revenue, 320 U.S. 256, 257, at 263, 64 S.Ct. 108, at 109, 112, 88 L.Ed. 35. 16 Mr. Justice FRANKFURTER, dissenting. 17 Wisdom too often never comes, and so one ought not to reject it merely because it comes late. Since I now realize that I should have joined the dissenters in the Merchants Nat. Bank of Boston case, 320 U.S. 256, 64 S.Ct. 108, 88 L.Ed. 35, I shall not compound error by pushing that decision still farther. I would affirm the judgment, substantially for the reasons given below. 6 Cir., 166 F.2d 993. 1 26 U.S.C. § 812(d), 53 Stat. 124, 125, as amended by Revenue Act of 1942, § 408(a), 56 Stat. 949, and Revenue Act of 1943, § 511(a), 58 Stat. 74, 75, 26 U.S.C.A. § 812(d). 2 'If a trust is created for both a charitable and a private purpose, deduction may be taken of the value of the beneficial interest in favor of the former only insofar as such interest is presently ascertainable, and hence severable from the interest in favor of the private use. * * *' U.S.Treas.Reg. 105 § 81.44 (1942). Cf. id. at § 81.46: 'If the legatee, devisee, donee, or trustee is empowered to divert the property or fund, in whole or in part, to a use or purpose which would have rendered it, to the extent that it is subject to such power, not deductible had it been directly so bequeathed, devised, or given by the decedent, deduction will be limited to that portion, if any, of the property or fund which is exempt from an exercise of such power.' 3 In view of the express priority accorded the mother's wishes, respondents' fiduciary duty to the ultimate beneficiaries, private and charitable, was ineffective to guarantee preservation of any predictable fraction of the corpus for disposition after the mother's death. The testator, indeed, made the gifts to charity subordinate not only to his mother's interest but to that of all the private beneficiaries, stating in his will that the charitable interest 'is a residuary bequest * * * and is not to infringe on any of the other legacies hereinbefore provided.' 4 '* * * (T)he fundamental question in the case at bar is not whether this contingent interest can be insured against or its value guessed at, but what construction shall be given to a statute. Did Congress in providing for the determination of the net estate taxable, intend that a deduction should be made for a contingency the actual value of which cannot be determined from any known data? Neither taxpayer, nor revenue officer—even if equipped with all the aid which the actuarial art can supply—could do more than guess at the value of this contingency. It is clear that Congress did not intend that a deduction should be made for a contingent gift of that character.' Humes v. United States, 276 U.S. 487, 494, 48 S.Ct. 347, 348, 72 L.Ed. 667.
1112
335 U.S. 538 69 S.Ct. 260 93 L.Ed. 222 AMERICAN FEDERATION OF LABOR, ARIZONA STATE FEDERATION OF LABOR, et al.v. AMERICAN SASH & DOOR COMPANY et al. LINCOLN FEDERAL LABOR UNION NO. 19129, AMERICAN FEDERATION OF LABOR et al. v. NORTHWESTERN IRON & METAL COMPANY et al. George WHITAKER, A. M. DeBruhl, T. G. Embler, et al. v. STATE OF NORTH CAROLINA. Nos. 27, 47 and 34. Decided Jan. , 1949. On Appeal From the Supreme Courts of Arizona, Nebraska, and North carolina. Appeal from the Supreme Court of the State of Arizona. Mr. H. S. McCluskey, of Phoenix, Ariz., for appellants. Mr. Donald R. Richberg, of Washington, D.C., for appellees. Mr. Justice BLACK delivered the opinion of the Court. 1 This case is here on appeal from the Supreme Court of Arizona under § 237 of the Judicial Code as amended, 28 U.S.C. 344, 28 U.S.C.A. § 344 (now § 1257). It involves the constitutional validity of the following amendment to the Arizona Constitution, adopted at the 1946 general election: 2 'No person shall be denied the opportunity to obtain or retain employment because of non-membership in a labor organization, nor shall the State or any subdivision thereof, or any corporation, individual or association of any kind enter into any agreement, written or oral, which excludes any person from employment or continuation of employment because of non-membership in a labor organization.' Laws Ariz.1947, p. 399. 3 The Supreme Court of Arizona sustained the amendment as constitutional against the contentions that it 'deprived the union appellants of rights guaranteed under the First Amendment and protected against invasion by the states under the Fourteenth Amendment to the United States Constitution'; that it impaired the obligations of existing contracts in violation of Art. I, § 10, of the United States Constitution; and that it deprived appellants of due process of law, and denied them equal protection of the laws contrary to the Fourteenth Amendment. All of these questions properly reserved in the state court, were decided against the appellants by the State Supreme Court.1 The same questions raised in the state court are presented here. 4 For reasons given in two other cases decided today we reject the appellants' contentions that the Arizona amendment denies them freedom of speech, assembly or petition, impairs the obligation of their contracts, or deprives them of due process of law. Lincoln Federal Labor Union No. 19129, American Federation of Labor v. Northwestern Iron & Metal Co., and Whitaker v. State of North Car lina, 335 U.S. 525, 69 S.Ct. 251. A difference between the Arizona amendment and the amendment and statute considered in the Nebraska and North Carolina cases has made it necessary for us to give separate consideration to the contention in this case that the Arizona amendment denies appellants equal protection of the laws. 5 The language of the Arizona amendment prohibits employment discrimination against non-union workers, but it does not prohibit discrimination against union workers. It is argued that a failure to provide the same protection for union workers as that provided for non-union workers places the union workers at a disadvantage, thus denying unions and their members the equal protection of Arizona's laws. 6 Although the Arizona amendment does not itself expressly prohibit discrimination against union workers, that state has not left unions and union members without protection from discrimination on account of union membership. Prior to passage of this constitutional amendment, Arizona made it a misdemeanor for any person to coerce a worker to make a contract 'not to join or become a member of any labor organization' as a condition of getting or holding a job in Arizona. A.C.A.1939, § 43-1608. A section of the Arizona code made every such contract (generally known as a 'yellow dog contract') void and unenforceable.2 Similarly, the Arizona constitutional amendment makes void and unenforceable contracts under which an employer agrees to discriminate against non-union workers. Statutes implementing the amendment have provided as sanctions for its enforcement relief by injunction and suits for damages for discrimination practiced in violation of the amendment.3 Whether the same kind of snactions would be afforded a union worker against whom an employer discriminated is not made clear by the opinion of the State Supreme Court in this case. But assuming that Arizona courts would not afford a remedy by injunction or suit for damages, we are unable to find any indication that Arizona's amendment and statutes are weighted on the side of non-union as against union workers. We are satisfied that Arizona has attempted both in the anti-yellow-dog-contract law and in the anti-discrimination constitutional amendment to strike at what were considered evils, to strike where those evils were most felt, and to strike in a manner that would effectively suppress the evils. 7 In National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352, this Court considered a challenge to the National Labor Relations Act on the ground that it applied restraints against employers but did not apply similar restraints against wrongful conduct by employees. We there pointed out, 301 U.S. at page 46, 57 S.Ct. at page 628, the general rule that 'legislative authority, exerted within its proper field, need not embrace all the evils within its reach.' And concerning state laws we have said that the existence of evils against which the law should afford protection and the relative need of different groups for that protection 'is a matter for the legislative judgment.' West Coast Hotel Co. v. Parrish, 300 U.S. 379, 400, 57 S.Ct. 578, 586, 81 L.Ed. 703, 108 A.L.R. 1330. We cannot say that the Arizona amendment has denied appellants equal protection of the laws. 8 Affirmed. 9 Mr. Justice MURPHY, dissents. 10 For concurring opinions of Mr. Justice FRANKFURTER and Mr. Justice RUTLEDGE, see 335 U.S. 538, 69 S.Ct. 260. 11 Mr. Justice FRANKFURTER, concurring. 12 Arizona, Nebraska, and North Carolina have passed laws forbidding agreements to employ only union members. The United States Constitution is invoked against these laws. Since the cases bring into question the judicial process in its application to the Due Process Clause, explicit avowal of individual attitudes towards that process may elucidate and thereby strengthen adjudication. Accordingly, I set forth the steps by which I have reached concurrence with my brethren on what I deem the only substantial issue here, on all other issues joining the Court's opinion. 13 The coming of the machine age tended to despoil human personality. It turned men and women into 'hands.' The industrial history of the early Nineteenth Century demonstrated the helplessness of the individual employee to achieve human dignity in a society so largely affected by technological advances. Hence the trade union made itself increasingly felt, not only as an indispensable weapon of self-defense on the part of workers but as an aid to the well-being of a society in which work is an expression of life and not merely the means of earning subsistence. But unionization encountered the shibboleths of a premachine age and these were reflected in juridical assumptions that survived the facts on which they were based. Adam Smith was treated as though his generalizations had been imparted to him on Sinai and not as a thinker who addressed himself to the elimination of restrictions which had become fetters upon initiative and enterprise in his day. Basic human rights expressed by the constitutional conception of 'liberty' were equated with theories of laissez faire.1 The result was that economic views of confined validity were treated by lawyers and judges as though the Framers had enshrined them in the Constitution. This misapplication of the notions of the classic economists and resulting disregard of the perduring reach of the Constitution led to Mr. Justice Holmes' famous protest in the Lochner case against measuring the Fourteenth Amendment by Mr. Herbert Spencer's Social Statics. 198 U.S. 45, 75, 25 S.Ct. 539, 546, 49 L.Ed. 937. Had not Mr. Justice Holmes' awareness of the impermanence of legislation as against the permanence of the Constitution gradually prevailed, there might indeed have been 'hardly any limit but the sky' to the embodiment of 'our economic or moral beliefs' in that Amendment's 'prohibitions.' Baldwin v. State of Missouri, 281 U.S. 586, 595, 50 S.Ct. 436, 439, 74 L.Ed. 1056. 14 The attitude which regarded any legislative encroachment upon the existing economic order as infected with unconstitutionality led to disrespect for legislative attempts to strengthen the wage-earner's bargaining power. With that attitude as a premise, Adair v. United States, 208 U.S. 161, 28 S.Ct. 277, 52 L.Ed. 436, 13 Ann.Cas. 736, and Coppage v. State of Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441, L.R.A. 1915C, 960, followed logically enough; not even Truax v. Corrigan, 257 U.S. 312, 42 S.Ct. 124, 66 L.Ed. 254, 27 A.L.R. 375, could be considered unexpected. But when the tide turned, it was not merely because circumstances had changed and there had arisen a new order with new claims to divine origin. The opinion of Mr. Justice Brandeis in Senn v. Tile Layers Union, 301 U.S. 468, 57 S.Ct. 857, 863, 81 L.Ed. 1229, shows the current running strongly in the new direction—the direction not of social dogma but of increased deference to the l gislative judgment. 'Whether it was wise,' he said, now speaking for the Court and not in dissent 'for the state to permit the unions to (picket) is a question of its public policy—not our concern.' 301 U.S. at page 481, 57 S.Ct. at page 863, 81 L.Ed. 1229. Long before that, in Duplex Printing Press Co. v. Deering, 254 U.S. 443, 488, 41 S.Ct. 172, 184, 65 L.Ed. 349, 16 A.L.R. 196, he had warned: 15 'All rights are derived from the purposes of the society in which they exist; above all rights rises duty to the community. The conditions developed in industry may be such that those engaged in it cannot continue their struggle without danger to the community. But it is not for judges to determine whether such conditions exist, nor is it their function to set the limits of permissible contest and to declare the duties which the new situation damands. This is the function of the legislature which, while limiting individual and group rights of aggression and defense, may substitute processes of justice for the more primitive method of trial by combat.' 16 Unions are powers within the State. Like the power of industrial and financial aggregations, the power of organized labor springs from a group which is only a fraction of the whole that Mr. Justice Holmes referred to as 'the one club to which we all belong.' The power of the former is subject to control, though, of course, the particular incidence of control may be brought to test at the bar of this Court. E.g., Northern Securities Co. v. United States, 193 U.S. 197, 24 S.Ct. 436, 48 L.Ed. 679; North American Co. v. SEC, 327 U.S. 686, 708, 66 S.Ct. 785, 797, 90 L.Ed. 945. Neither can the latter claim constitutional exemption. Even the Government—the organ of the whole people—is restricted by the system of checks and balances established by our Constitution. The designers of that system distributed authority among the three branches 'not to promote efficiency but to preclude the exercise of arbitrary power.' Mr. Justice Brandeis, dissenting in Myers v. United States, 272 U.S. 52, 293, 47 S.Ct. 21, 85, 71 L.Ed. 160. Their concern for individual members of society, for whose well-being government is instituted, gave urgency to the fear that concentrated power would become arbitrary. It is a fear that the history of such power, even when professedly employed for democratic purposes, has hardly rendered unfounded. 17 If concern for the individual justifies incorporating in the Constitution itself devices to curb public authority, a legislative judgment that his protection requires the regulation of the private power of unions cannot be dismissed as insupportable. A union is no more than a medium through which individuals are able to act together; union power was begotten of individual helplessness. But that power can come into being only when, and continue to exist only so long as, individual aims are seen to be shared in common with the other members of the group. There is a natural emphasis, however, on what is shared and a resulting tendency to subordinate the inconsistent interests and impulses of individuals. From this, it is an easy transition to thinking of the union as an entity having rights and purposes of its own. An ardent supporter of trade unions who is also no less a disinterested student of society has pointed out that 'As soon as we personify the idea, whether it is a country or a church, a trade union or an employers' association, we obscure individual responsibility by transferring emotional loyalties to a fictitious creation which then acts upon us psychologically as an obstruction, especially in times of crisis, to the critical exercise of a reasoned judgment.' Laski, Morris Cohen's Approach to Legal Philosophy, 15 U. of Chi.L.Rev. 575, 581 (1948). 18 The right of association, like any other right carried to its extreme, encounters limiting principles. See Hudson County Water Co. v. McCarter, 209 U.S. 349, 355, 28 S.Ct. 529, 531, 52 L.Ed. 828, 14 Ann.Cas. 560. At the point where the mutual a vantage of association demands too much individual disadvantage, a compromise must be struck. See Dicey, Law and Public Opinion in England 465 66 (1905). When that point has been reached—where the intersection should fall—is plainly a question within the special province of the legislature. This Court has given effect to such a compromise in sustaining a legislative purpose to protect individual employees against the exclusionary practices of unions. Steele v. Louisville & N.R. Co., 323 U.S. 192, 65 S.Ct. 226, 89 L.Ed. 173; Wallace Corp. v. National Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238, 89 L.Ed. 216; Railway Mail Ass'n v. Corsi, 326 U.S. 88, 65 S.Ct. 1483, 89 L.Ed. 2072, cf., Elgin, Joliet & Eastern R. Co. v. Burley, 325 U.S. 711, 733—734, 65 S.Ct. 1282, 1294, 1295, 89 L.Ed. 1886. The rationale of the Arizona, Nebraska, and North Carolina legislation prohibiting union-security agreements is founded on a similar resolution of conflicting interests.2 Unless we are to treat as unconstitutional what goes against the grain because it offends what we may strongly believe to be socially desirable, that resolution must be given respect. 19 It is urged that the compromise which this legislation embodies is no compromise at all because fatal to the survival of organized labor. But can it be said that the legislators and the people of Arizona, Nebraska, and North Carolina could not in reason be skeptical of organized labor's insistence upon the necessity to its strength of power to compel rather than to petsuade the allegiance of its reluctant members? In the past fifty years the total number of employed, counting salaried workers and the self-employed but not farmers or farm laborers, has not quite trebled, while total union membership has increased more than thirty-three times; at the time of the open-shop drive following the First World War, the ratio of organized to unorganized non-agricultural workers was about one to nine, and now it is almost one to three.3 However necessitous may have been the circumstances of unionism in 1898 or even in 1923, its status in 1948 precludes constitutional condemnation of a legislative judgment, whatever we may think of it, that the need of this type of regulation outweighs its detriments. It would be arbitrary for this Court to deny the States the right to experiment with such laws, especially in view of the fact that the Railroad Brotherhoods have held their own despite congressional prohibition of union security4 and in the light of the experience of countries advanced in industrial democracy, such as Great Britain and Sweden, where deeply rooted acceptance of the principles of collective bargaining is not reflected in uncompromising demands for contractually guaranteed security.5 Whether it is preferable in the public interest that trade unions should be subjected to State intervention or left to the free play of social forces, whether experience has disclosed 'union unfair labor practi es' and, if so, whether legislative correction is more appropriate than self-discipline and the pressure of public opinion—these are questions on which it is not for us to express views. The very limited function of this Court is discharged when we recognize that these issues are not so unrelated to the experience and feelings of the community as to render legislation addressing itself to them wilfully destructive of cherished rights. For these are not matters, like censorship of the press or separation of Church and State, on which history, through the Constitution, speaks so decisively as to forbid legislative experimentation. 20 But the policy which finds expression in the prohibition of union-security agreements need nor rest solely on a legislative conception of the public interest which includes but transcends the special claims of trade unions. The States are entitled to give weight to views combining opposition to the 'closed shop' with long-range concern for the welfare of trade unions. Mr. Justice Brandeis, for example, before he came to this Court, had been a staunch promoter of unionism. In testifying before the Commission on Industrial Relations, he said: 21 'I should say to those employers who stand for the open shop, that they ought to recognize that it is for their interests as well as that of the community that unions should be powerful and responsible; that it is to their interests to build up the union; to aid as far as they can in making them stronger; and to create conditions under which the unions shall be led by the ablest and most experienced men.'6 22 Yet at the same time he believed that 'The objections, legal, economic and social, against the closed shop are so strong, and the ideas of the closed shop so antagonistic to the American spirit, that the insistence upon it has been a serious obstacle to union progress.' Letter of Sept. 6, 1910, to Lawrence F. Abbott of the Outlook.7 On another occasion he wrote, 'But the American prople should not, and will not accept unionism if it involves the closed shop. They will not consent to the exchange of the tyranny of the employer for the tyranny of the employees.' Letter of Feb. 26, 1912, to Lincoln Steffens.8 In summing up his views on unionism, he said: 23 'It is not true that the 'success of a labor union' necessarily means a 'perfect monopoly'. The union, in order to attain and preserve for its members industrial liberty, must be strong and stable. It need not include every member of the trade. Indeed, it is desirable for both the employer and the union that it should not. Absolute power leads to excesses and to weakness: Neither our character nor our intelligence can long bear the strain of unrestricted power. The union attains success when it reaches the ideal condition, and the ideal condition for a union is to be strong and stable, and yet to have in the trade outside its own ranks an appreciable number of men who are non-unionist. In any free community the diversity of ch racter, of beliefs, of taste indeed mere selfishness—will insure such a supply, if the enjoyment of this privilege of individualism is protected by law. Such a nucleus of unorganized labor will check operession by the union as the union checks oppression by the employer.' Quoted from Louis D. Brandeis' contribution to a discussion entitled Peace with Liberty and Justice in 2 Nat. Civic Federation Rev., No. 2, pp. 1, 16 (May 15, 1905). 24 Mr. Brandeis on the long view deemed the preferential shop a more reliable form of security both for unions and for society than the closed shop; that he did so only serves to prove that these are pragmatic issues not appropriate for dogmatic solution. 25 Whatever one may think of Mr. Brandeis' views, they have been reinforced by the adoption of laws insuring against that undercutting of union standards which was one of the most serious effects of a dissident minority in a union shop. Under interpretations of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., undisturbed by the Taft-Hartley Act, 29 U.S.C.A. § 141 et seq.,9 and of the Railway Labor Act, 45 U.S.C.A. § 151 et seq., the bargaining representative designated by a majority of employees has exclusive power to deal with the employer on matters of wages and working conditions. Individual contracts, whether on more or less favorable terms than those obtained by the union, are barred. J. I. Case Co. v. National Labor Relations Board, 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762; Order of R. R. Telegraphers v. Railway Express Agency, 321 U.S. 342, 64 S.Ct. 582, 88 L.Ed. 788; Medo Photo Supply Corp. v. National Labor Relations Board, 321 U.S. 678, 64 S.Ct. 830, 88 L.Ed. 1007; see Elgin, Joliet & Eastern R. Co. v. Burley, 325 U.S. 711, 737, 65 S.Ct. 1282, 1296, 89 L.Ed. 1886, n. 35. Under these laws, a non-union bidder for a job in a union shop cannot, if he would, undercut the union standards. 26 Even where the social undesirability of a law may be convincingly urged, invalidation of the law by a court debilitates popular democratic government. Most laws dealing with economic and social problems are matters of trial and error.10 That which before trial appears to be demonstrably bad may belie prophecy in actual operation. It may not prove good, but it may prove innocuous. But even if a law is found wanting on trial, it is better that its defects should be demonstrated and removed than that the law should be aborted by judicial fiat. Such an assertion of judicial power deflects responsibility from those on whom in a democratic society it ultimately rests—the people. If the proponents of union-security agreements have confidence in the arguments addressed to the Court in their 'economic brief,' they should address those arguments to the electorate. Its endorsement would be a vindication that the mandate of this Court could never give. That such vindication is not a vain hope has been recently demonstrated by the voters of Maine, Massachusetts, and New Mexico.11 And although several States in addition to those at bar now have such laws,12 the legislatures of as many other States have, sometimes repeatedly, rejected them.13 What one State can refuse to do, another can undo. 27 But there is reason for judicial restraint in matters of policy deeper than the value of experiment: it is fonded on a recognition of the gulf of difference between sustaining and nullifying legislation. This difference is theoretical in that the function of legislating is for legislatures who have also taken oaths to support the Constitution, while the function of courts, when legislation is challenged, is merely to make sure that the legislature has exercised an allowable judgment, and not to exercise their own judgment, whether a policy is within or without 'the vague contours' of due process. Theory is reinforced by the notorious fact that lawyers predominate in American legislatures.14 In practice also the difference is wide. In the day-to-day working of our democracy it is vital that the power of the non-democratic organ of our Government be exercised with rigorous self-restraint. Because the powers exercised by this Court are inherently oligarchic, Jefferson all of his life thought of the Court as 'an irresponsible body'15 nd 'independent of the nation itself.'16 The Court is not saved from being oligarchic because it professes to act in the service of humane ends. As history amply proves, the judiciary is prone to misconceive the public good by confounding private notions with constitutional requirements, and such misconceptions are not subject to legitimate displacement by the will of the people except at too slow a pace.17 Judges appointed for life whose decisions run counter to prevailing opinion cannot be voted out of office and supplanted by men of views more consonant with it. They are even farther removed from democratic pressures by the fact that their deliberations are in secret and remain beyond disclosure either by periodic reports or by such a modern device for securing responsibility to the electorate as the 'press conference.' But a democracy need not rely on the courts to save it from its own unwisdom. If it is alert—and without alertness by the people there can be no enduring democracy—unwise or unfair legislation can readily be removed from the statute books. It is by such vigilance over its representatives that democracy proves itself. 28 Our right to pass on the validity of legislation is now too much part of our constitutional system to be brought into question. But the implications of that right and the conditions for its exercise must constantly be kept in mind and vigorously observed. Because the Court is without power to shape measures for dealing with the problems of society but has merely the power of negation over measures shaped by others, the indispensable judicial requisite is intellectual humility, and such humility presupposes complete disinterestedness. And so, in the end, it is right that the Court should be indifferent to public temper and popular wishes. Mr. Dooley's 'th' Supreme Coort follows th' iliction returns' expressed the wit of cynicism, not the demand of principle. A court which yields to the popular will thereby licenses itself to practice despotism, for there can be o assurance that it will not on another occasion indulge its own will. Courts can fulfill their responsibility in a democratic society only to the extent that they succeed in shaping their judgments by rational standards, and rational standards are both impersonal and communicable. Matters of policy, however, are by definition matters which demand the resolution of conflicts of value, and the elements of conflicting values are largely imponderable. Assessment of their competing worth involves differences of feeling; it is also an exercise in prophecy. Obviously the proper forum for mediating a clash of feelings and rendering a prophetic judgment is the body chosen for those purposes by the people. Its functions can be assumed by this Court only in disragard of the historic limits of the Constitution. 29 Mr. Justice RUTLEDGE, concurring. 30 I concur in the Court's judgment in No. 34, Whitaker v. North Carolina. The appellants were convicted under a warrant which charged only, in effect, that they had violated the statute 'by executing a written agreement or contract' for a closed or union shop.1 There was neither charge nor evidence that the employer, after the statute became effective, had refused employment to any person because he was not a member of a union. The charge, therefore, and the conviction were limited to the making of the contract. No other provision of the statute is now involved, as the state's attorney general conceded, indeed as he strongly urged, in the argument here. As against the constitutional objections raised to this application of the statute, I agree that the legislature has power to proscribe the making of such contracts, and accordingly join in the judgment affirming the convictions. 31 In No. 27, American Federation of Labor v. American Sash & Door Company, and in No. 47, Lincoln Federal Labor Union v. Northwestern Iron & Metal Company, as against the constitutional questions now raised, I am also in agreement with the Court's decision, but subject to the following reservation. Because no strike has been involved in any of the states of fact, no question has been presented in any of these cases immediately involving the right to strike or concerning the effect of the Thirteenth Amendment. Yet the issues so closely approach touching that right as it exists or may exist under that Amendment that the possible effect of the decisions upon it hardly can be ignored.2 Strikes have been called throughout union history in defense of the right of union members not to work with nonunion men. If today's decision should be construed to permit a state to foreclose that right by making illegal the concerted refusal of union members to work with nonunion workers, and more especially if the decision should be taken as going so far as to permit a state to enjoin such a strike,3 I should want a complete and thorough reargument of these cases before deciding so momentous a question. 32 But the right to prohibit contracts for union security is one thing. The right to force union members to work with nonunion workers is entirely another. Because of this difference, I expressly reserve judgment upon the latter question until it is squarely and inescapably presented. Although this reservation is not made expressly by the Court, I do not understand its opinion to foreclose this question. 33 Mr. Justice MURPHY concurs in this opinion insofar as it applies to Nos. 34 and 47. 1 American Federation of Labor v. American Sash & Door Co., 67 Ariz. 20, 189 P.2d 912. 2 Ariz.Code Ann. § 56-120 (1939). 3 Ariz.Sess.Laws 1947, ch. 81, p. 173. 1 Of course, theory never wholly squared with the facts. Even while laissez faire doctrines were dominant, State activity in economic affairs was considerable. See Handlin, Commonwealth: A Study of the Role of Government in the American Economy: Massachusetts, 1774—1861 (1947); Hartz, Economic Policy and Democratic Thought: Pennsylvania, 1776—1860 (1948). 2 See, e.g., State of Arizona Initiative and Referendum Publicity Pamphlet, 1946 (Compiled and Issued by the Secretary of State); Testimony before the Nebraska State Legislative Committee on Labor and Public Welfare, March 21, 1947 (transcript of the Committee's record of the substance of the testimony kindly furnished by the Department of Justice of Nebraska); The Case against the Closed Shop in Nebraska, a pamphlet published by the 'Right-to-Work Committee'; N.C.Laws 1947, c. 328, § 1 (preamble). As to the similar purpose of similar legislation in other States, see, e.g., The Open Shop in Virginia, Report of the Virginia Advisory Legislative Council to the Governor of Virginia, House Doc. No. 2, p. 7 (1947); Address of Wm. M. Tuck to the General Assembly and People of Virginia, Extra Session, House Doc. No. 1, pp. 8—9 (1947); Tucumcari (N.M.) Daily News, Oct. 6, 1948, p. 3, col. 3 (report of radio addresses by sponsors of proposed 'right-to-work amendment'). 3 In the following table, 'union membership' includes all members of AFL, CIO, and independent or unaffiliated unions, including Canadian members of international unions with headquarters in the United States; the 'employment' figures include all non-agricultural employees (i.e., wage and salary workers), non-agricultural self-employed, unpaid family workers, and domestic-service workers. Union Year Membership Employment (thousands) (thousands) 1898 467 --------................. 1900 791 17,826................... 1903 1,824 20,202................. 1908 2,092 22,871................. 1913 2,661 27,031................. 1918 3,368 33,456................. 1923 3,629 32,314................. 1928 3,567 35,505................. 1933 2,857 28,670................. 1938 8,265 34,530................. 1943 13,642................. 45,390. 1948 15,600................. 50,400 The 'union-membership' totals, except for 1948, are taken from Membership of Labor Unions in the United States, U.S. Dept. of Labor, Bureau of Labor Statistics (mimeographed pamphlet); the 'union-membership' and 'employment' totals for 1948 are preliminary estimates by the Bureau of Labor Statistics. The 'employment' figures for years up to 1928 are taken from Employment and Unemployment of the Labor Force, 1900—1940, 2 Conference Board Economic Record, 77, 80 (1940); 'employment' figures for years since 1929, except 1948, and the basis upon which they are estimated may be found in Technical Note, 67 Monthly Labor Rev., No. 1, p. 50 (1948). 4 Section 2, Fourth, of the 1934 Amendment, 48 Stat. 1187, of the Railway Labor Act of 1926, 44 Stat. 577, 45 U.S.C. § 152, Fourth, 45 U.S.C.A. § 152, subd. 4, appears on its face to bar union-shop agreements, and it has been so interpreted. 40 Op.Atty.Gen., No. 59 (Dec. 29, 1942). The wisdom of such a legislative policy is of course not for us to judge. In the following table, 'Membership of Brotherhoods' includes the Brotherhood of Locomotive Engineers, the Brotherhood of Locomotive Enginemen and Firemen, the Order of Railway Conductors, and the Brotherhood of Railroad Trainmen, with the Canadian membership of each, but not railroad employees who are members of CIO or independent unions. The 1919 figure for 'Employment Class I Railroads' includes all, not merely Class I, operating carriers. Membership of Employment Brotherhoods Class I Railroads Year (thousands) (thousands) 1919 456 1,908 1924 434 1,774 1929 423 1,661 1934 268 1,008 1939 303 988 1944 442 1,415 1947 450 1,352 The 'Membership of Brotherhoods' figures are estimates made available through the kindness of the Bureau of Labor Statistics. Those for 1924—1934 are based on Wolman, Ebb and Flow in Trade Unionism 230—31 (1936). The figures for 'Employment Class I Railroads' have been obtained from the I.C.C. annual reports entitled Statistics of Railways in the United States, that for 1919 from the 33d Ann.Rep. at 21 (1922); that for 1924 from 38th Ann.Rep. at 25 (1926); those for 1929, 1934, and 1939 from 54th Ann.Rep. at 59 (1942); that for 1944 from 60th Ann.Rep. at 55 (1948); that for 1947 from I.C.C., Bureau of Transport Economics and Statistics, Statement No. M—300, Wage Statistics of Class I Steam Railways in the United States (1947). 5 See U.S. Dept. Labor, Report of the Commission on Industrial Relations in Great Britain 23 (1938); U.S. Dept. Labor, Report of the Commission on Industrial Relations in Sweden 9 (1938). Cf. T e Universal Declaration of Human Rights, Art. 20, cl. 2, adopted by the General Assembly of the United Nations, Dec. 11, 1948, declaring that 'No one shall be compelled to belong to an association.' 6 Sen.Doc.No.415, 64th Cong., 1st Sess. 7681. For other expressions of Mr. Justice Brandeis' sympathy for the cause of trade unions, see id. at 7659—60, 7662, 7667; Brandeis, The Employer and Trades Unions in Business—a Profession 13 (1914); Industrial Co-operation, 3 Filene Co-operative Association Echo, No. 3, p. 1 (May, 1905), reprinted in The Curse of Bigness 35 (Fraenkel ed. 1935); Big Business and Industrial Liberty, reprinted in id. at 38. 7 Copy obtained from the collection of Brandeis papers at the Law Library of the University of Louisville, to which I am indebted. The latter is quoted in part in Mason, Brandeis: A Free Man's Life 301 (1946). See also testimony before the Commission on Industrial Relations, op. cit. supra, note 6, at 7680—81. As an alternative to the closed or union shop, Mr. Brandeis advocated the 'preferential union shop,' which, apparently, is also barred by the Arizona, Nebraska, and North Carolina laws. For accounts of the working of the 'preferential union shop,' see Moskowitz, The Power for Constructive Reform in the Trade Union Movement, 2 Life and Labor 10 (1912); Winslow, Conciliation, Arbitration, and Sanitation in the Cloak, Suit, and Skirt Industry in New York City, 24 Bulletin of the Bureau of Labor, No. 98, Jan., 1912, H.R.Doc.No.166, 62d Cong., 2d Sess. 203, 215. 8 Copy obtained from the University of Louisville; quoted in part in Mason, op. cit. supra, note 7, at 303—04. 9 See H.R.Rep.No.245, 80th Cong., 1st Sess. 17; 93 Daily Cong.Rec. 4491 (May 1, 1947). 10 Examples of legislative experimentation undertaken to meet a recognized need were the bank-deposit guaranty laws passed in the wake of the panic of 1907 by Kansas, Nebraska, and Oklahoma. Despite serious doubts of their wisdom, the laws were sustained against due-process attack in Noble State Bank v. Haskell, 219 U.S. 104, 31 S.Ct. 186, 55 L.Ed. 112, 32 L.R.A., N.S., 1062, Ann.Cas.1912A, 487, and Id., 219 U.S. 575, 31 S.Ct. 299, 55 L.Ed. 341; Shallenberger v. First State Bank of Holstein, Nebraska, 219 U.S. 114, 31 S.Ct. 189, 55 L.Ed. 117; Assaria State Bank v. Dolley, 219 U.S. 121, 31 S.Ct. 189, 55 L.Ed. 123. Experience proved the laws to be unworkable, see Robb, Guaranty of Ba k Deposits in 2 Encyc.Soc.Sciences 417 (1930). But since no due-process obstacle stood in the way, it remained possible to profit by past errors and attempt a more mature solution of the problem on a national scale. See Sen.Rep.No.77, 73d Cong., 1st Sess. 9—13; H.R.Rep.No.150, 73d Cong., 1st Sess. 5—7. The result was establishment of the Federal Deposit Insurance Corporation by the Banking Act of 1933, 48 Stat. 168, 12 U.S.C. § 264, 12 U.S.C.A. § 264. If that expedient should prove inadequate, the way is open for further experimentation. See Note, The Glass-Steagall Banking Act of 1933, 47 Harv.L.Rev. 325, 330—32 (1933). 11 On Sept. 13, 1948, the voters of Maine rejected 'An Act to Protect the Right to Work and to Prohibit Secondary Boycotts, Sympathetic Strikes and Jurisdictional Strikes' and 'An Act Protecting the Right of Members and Nonmembers of Labor Organizations to the Opportunity to Work.' The vote in favor of the first bill was 46,809; for the second, 13,676; against both bills, 126,285. These figures were kindly furnished by the Deputy Secretary of State of the State of Maine. On Nov. 2, 1948, the voters of Massachusetts rejected a measure prohibiting 'the denial of the opportunity to obtain or retain employment because of membership or non-membership in a labor organizatiion,' by a vote of 1,290,310 to 505,575. Report of the Executive Department of the Commonwealth of Massachusetts, Nov. 24, 1948, p. 60. On the same day the voters of New Mexico rejected a similar bill by a vote of 60,118 to 41,387 (incomplete returns). See Clovis (N.M.) News Journal, Nov. 5, 1948, p. 1, col. 3. 12 Ark.Const. Amend. No. 34, Nov. 7, 1944, and Acts of Ark.1947, Act 101; Del,.laws 1947, c. 196, § 30; Fla.Const. Decl. of Rights § 12, as amended Nov. 7, 1944; Ga.Laws 1947, No. 140, p. 616; Iowa Laws 1947, c. 296; La.Gen.Stat. § 4381.2, Dart.1939, Act No. 202 of 1934, § 2; Md.Ann.Code Gen.Laws 1939, art. 100, § 65; Nev.Comp.Laws 1929, § 10473; N.D.Laws 1947, c. 243; S.D.Const. art. 6, § 2, as amended Nov. 1, 1946, and Laws 1947, c. 92; Tenn.Public Acts 1947, c. 36; Texas Laws 1947, c. 74, Vernon's Ann.Civ.St. art. 5207a; Va.Acts of Assembly 1947, c. 2. For a valuable digest of State laws regulating labor activity see Killings-worth, State Labor Relations Acts, Appendix A, by Beverley Kritzman Killingsworth, at 267 (1948). It shows the variety and empiric character of such legislation for a single decade (1937—47). 13 The following list of rejected anticlosed-shop laws has been compiled from U.S. Dept. Labor, Division of Labor Standards, Legislative Reports, 1939 to date. Calif.: A.B.1560, 1941; S.B.974, 1941; Conn.: H.B.557, S.B.823, 1939; H.B.302, 1947; Kans.: H.B.256, S.B.410, 1939; S.C.Res.No.10, 1945; Ky.: S.B.231, 1946; Mass.: H.B.864, 1947; Minn.: S.B.102, 1947; Miss.: H.B.714, 1942; H.C.R.21, 1944 (semble); H.B.171, 1946; H.B.328, 1948; H.B.1000, 1948; Mo.: S.B.144, 1945; N.H.: H.B.225, 1945; Ohio: H.B.49, 1947; Utah: S.J.R.15, H.J.R.15, 1947. 14 See, e.g., 25 U.S.News, No. 22, p. 11 (Nov. 26, 1948). 15 Letter to Charles Hammond, Aug. 18, 1821, 15 Writings of Thomas Jefferson 330, 331 (Memorial ed., 1904). 16 Letter to Samuel Kercheval, July 12, 1816, 15 id. at 32, 34. For similar expressions of Jefferson's alarm at what he felt to be the dangerous encroachment of the judiciary upon the other functions of government, see his letters to William B. Giles, April 20, 1807, 11 id. at 187, 191; to Caesar Rodney, Sept. 25, 1810, 12 id. at 424, 425; to John Taylor, May 28, 1816, 15 id. at 17, 21; to Spencer Roane, Sept. 6, 1819, 15 id. at 212; to Thomas Ritchie, Dec. 25, 1820, 15 id. at 297; to James Pleasants, Dec. 26, 1821, 12 Works of Thomas Jefferson, 213, 214 (Federal ed., 1905); to William T. Barry, Joly 2, 1822, 15 Writings, supra, at 388; to A. Coray, Oct. 31, 1823, 15 id. at 480, 487; to Edward Livingston, March 25, 1825, 16 id. at 112. See also the passage of Jefferson's Autobiography reprinted in 1 Writings, supra, at 120 22. And see Commager, Majority Rule or Minority Rights 28—38 (1943). 17 In time, of course, constitutional obstacles may disappear or be removed. Yet almost twenty years elapsed between invalidation of the income tax in Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, 15 S.Ct. 912, 39 L.Ed. 1108, and adoption of the Sixteenth Amendment. And it took twenty years to establish the constitutionality of a minimum wage for women: it was put in jeopardy by an equally divided Court in Stettler v. O'Hara, 243 U.S. 629, 37 S.Ct. 475, 61 L.Ed. 937, and found unconstitutional in Adkins v. Children's hospital, 261 U.S. 525, 43 S.Ct. 394, 67 L.Ed. 785, 24 A.L.R. 1238, which was not overruled until West Coast Hotel Co. v. Parrish, 300 U.S. 379, 400, 57 S.Ct. 578, 585, 81 L.Ed. 703, 108 A.L.R. 1330. The frustration of popular government, moreover, is not confined to the specific law struck down; its backwash drowns unnumbered projects that might otherwise be put to trial. 1 The warrant, insofar as is material, charged that the appellants had entered into '* * * an illegal combination or conspiracy in restraint of the right to work and of trade or commerce in the State of North Carolina and against the public policy of the State of North Carolina, by executing a written agreement or contract by and between said employer and said Labor Unions and Organizations or combinations, whereby persons not members of said unions or organizations are denied the right to work for said employer, or whereby membership is made a condition of employment or continuation of said employment by said employer and whereby said named unions acquired an employment monopoly in any and all enterprises which may be undertaken by said employer are required to become or remain a member of a labor union or labor organization as a condition of employment or continuation of employment by said employer whereby said unions acquire an employment monopoly in any and all enterprises entered into by said employer in violation of House Bill #229, Session 1947, General Assembly of North Carolina, Chapter 328, 1947 Session Laws of North Carolina, and particularly sections 2—3 & 5 thereof, and Chapter 75 of the General Statutes of N.C. * * *.' 2 See note 3. 3 The syllogism might well be: The decisions in the present cases permit a state to make 'illegal' any discrimination against nonunion workers on account of that status in relation to securing or retaining employment; strikes for 'illegal objects' are 'unlawful'; 'unlawful' strikes may be enjoined; a strike by union members against working with nonunion employees is a strike for an 'illegal object'; therefore such a strike may be enjoined.
67
335 U.S. 520 69 S.Ct. 275 93 L.Ed. 208 CORAYv.SOUTHERN PAC. CO. No. 54. Argued Dec. 6, 7, 1948. Decided Jan. 3, 1949. Mr. Parnell Black, of Salt Lake City, Utah, for petitioner. Mr. A. H. Nebeker, of Salt Lake City, Utah, for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This action was brought in a Utah state court under the Federal Safety Appliance and Federal Employers' Liability Acts1 to recover damages for the death of Frank Lucus, an employee of the respendent railroad. The decedent's death occurred when a one-man flat-top motorcar crashed into the back end of an eighty-two car freight train on a main-line track at a point near Lemay, Utah. Both train and motorcar were being operated in an eastward direction on railroad business. The train unexpectedly stopped just before the crash occurred because the air in its brake lines escaped, thereby locking the brakes. The air had escaped because of a violation of the Federal Safety Appliance Act in that the threads on a valve were so badly worn that a nut became disconnected. When the brakes locked, the motorcar was several hundred feet behind the freight train moving at about the same rate as the train, not an excessive rate under ordinary circumstances. The motor was equipped with brakes which had they been applied could have stopped the car within a distance of about one hundred feet. But the decedent who was in control of the car did not apply the brakes. Apparently he and another employee with him were looking backward toward a block signal and therefore did not know the train had stopped.2 2 Despite the proof that the train had stopped because of the railroad's violation of the Federal Safety Appliance Act, the state trial judge directed the jury to return a verdict in the railroad's favor. This resulted from the court's holding that the Act didn't apply to Mr. Lucus, that the Act's protection against defective brakes did not extend to employees following and crashing into a train which stopped suddenly because of defective brake appliances. 3 On appeal the State Supreme Court affirmed. Utah, 185 P.2d 963, 969. That court agreed with the trial court's interpretation of the Safety Appliance Act and also held that the evidence failed to show that the defective appliance was the 'legal' cause of the crash and of the death of decedent. The obvious importance of the restrictive interpretation given to the two federal Acts prompted us to grant certiorari. 4 First. We cannot agree with the State Supreme Court's holding that although the railroad ran its train with defective brakes it thereby 'violated no duty owing' to the decedent. That court said that the object of the Safety Appliance Act 'insofar as brakes might be concerned, is not to protect employees from standing, but from moving trains.' 5 We do not view the Act's purpose so narrowly. It commands railroads not to run trains with defective brakes. An abrupt or unexpected stop due to bad brakes might be equally dangerous to employees and others as a failure to stop a train because of bad brakes. And this Act, fairly interpreted, must be held to protect all who need protection from dangerous results due to maintenance or operation of congressionally prohibited defective appliances Fairport, P. & E. R. Co. v. Meredith, 292 U.S. 589, 597, 54 S.Ct. 826, 829, 78 L.Ed. 1446. Liability of a railroad under the Safety Appliance Act for injuries inflicted as a result of the Act's violation follows from the unlawful use of prohibited defective equipment 'not from the position the employee may be in, or the work which he may be doing at the moment when he is injured.' Brady v. Terminal R. Ass'n, 303 U.S. 10, 16, 58 S.Ct. 426, 429, 430, 82 L.Ed. 614; Louisville & N.R. Co. v. Layton, 243 U.S. 617, 621, 37 S.Ct. 456, 457, 61 L.Ed. 931. In this case where undisputed evidence established that the train suddenly stopped because of defective air-brake appliances, petitioner was entitled to recover if this defective equipment was the sole or a contributory proximate cause of the decedent employee's death. Davis v. Wolfe, 263 U.S. 239, 243, 44 S.Ct. 64, 66, 68 L.Ed. 284; Spokane & I.E.R. Co. v. Campbell, 241 U.S. 497, 509, 510, 36 S.Ct. 683, 689, 60 L.Ed. 1125. 6 Second. The Utah Supreme Court reviewed the evidence here and held as a matter of law that the defective equipment did not proximately cause or contribute to the decedent's death. That court discussed distinctions between 'proximate cause' in the legal sense, deemed a sufficient cause to impose liability, and 'cause' in the 'philosophical sense,' deemed insufficient to impose liability. It considered the stopping of this train to have been a cause of decedent's death in the 'philosophical sense' in that the stopping created 'a condition upon which the negligence of plaintiffs' intestate operated,' one perhaps of many causes 'so insignificant that no ordinary mind would think of them as causes.' The court added, however, that the stopping 'was not the legal cause of the result,' thereby classifying it as not 'a substantial, as well as actual factor in bringing about' the decedent's death. This conclusion was reached in part upon the reasoning that 'The leak in the triple valve caused the train to stop, because as a safety device, it was designed to do just that.' 7 The language selected by Congress to fix liability in cases of this kind is simple and direct. Considera ion of its meaning by the introduction of dialectical subtleties can serve no useful interpretative purpose. The statute declares that railroads shall be responsible for their employees' deaths 'resulting in whole or in part' from defective appliances such as were here maintained. 45 U.S.C. § 51, 45 U.S.C.A. § 51. And to make its purpose crystal clear, Congress has also provided that 'no such employee * * * shall be held to have been guilty of contributory negligence in any case' where a violation of the Safety Appliance Act, such as the one here, 'contributed to the * * * death of such employee.' 45 U.S.C. § 53, 45 U.S.C.A. § 53. Congress has thus for its own reasons imposed extraordinary safety obligations upon railroads and has commanded that if a breach of these obligations contributes in part to an employee's death, the railroad must pay damages. These air-brakes were defective; for this reason alone the train suddenly and unexpectedly stopped; a motor track car following at about the same rate of speed and operated by an employee looking in another direction crashed into the train; all of these circumstances were inseparably related to one another in time and space. The jury could have found that decedent's death resulted from any or all of the foregoing circumstances. 8 It was error to direct a verdict for the railroad. The judgment of the State Supreme Court is reversed and the cause is remanded to that court for further proceedings not inconsistent with the opinion. 9 Reversed and remanded. 10 It is so ordered. 1 27 Stat. 531, 32 Stat. 943, 45 U.S.C. §§ 1, 8, 9, 45 U.S.C.A. §§ 1, 8, 9; 35 Stat. 65, as amended, 36 Stat. 291, and 53 Stat. 1404, 45 U.S.C. §§ 51, 53, 56, 59, 45 U.S.C.A. §§ 51, 53, 56, 59. 2 Petitioner was employed by the railroad as a signal maintainer. The other occupant of the motorcar had just been employed to work in the same capacity. This was the new employee's first trip and he took the trip to familiarize himself with the sign ls. Both occupants of the car were seated and looking back in the direction of a block signal. Contributory negligence is not a defense to this action.
78
335 U.S. 525 69 S.Ct. 251 93 L.Ed. 212 LINCOLN FEDERAL LABOR UNION NO. 19129, AMERICAN FEDERATION OF LABOR, et al.v.NORTHWESTERN IRON & METAL CO. et al. WHITAKER et al. v. STATE OF NORTH CAROLINA. Nos. 47 and 34. Argued Nov. 8, 9, 10, 1948. Decided Jan. 3, 1949. Appeals from the Supreme Courts of the States of Nebraska and North carolina. Mr. Herbert S. Thatcher, of Washington, D.C., for appellants Lincoln Federal Labor Union No. 19129 et al. Mr. George Pennell, of Asheville, N.C., for appellants Whitaker and others. Mr. Irving Hill, of Beverly Hills, Cal., for appellee Northwestern Iron & Metal Co. Mr. Edson Smith, of Omaha, Neb., for appellee Nebraska Small Business Men's Assn. Mr. Robert A. Nelson, of Lincoln, Neb., for appellee, State of Nebraska. Mr. Ralph Moody, of Raleigh, N.C., for appellee State of North Carolina. [Argument of Counsel from page 526 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court. 1 Under employment practices in the United States, employers have sometimes limited work opportunities to members of unions, sometimes to non-union members, and at other times have employed and kept their workers without regard to whether they were or were not members of a union. Employers are commanded to follow this latter employment practice in the states of North Carolina and Nebraska. A North Carolina statute and a Nebraska constitutional amendment1 provide that no person in those states shall be denied an opportunity to obtain or retain employment because he is or is not a member of a labor organization. To enforce this policy North Carolina and Nebraska employers are also forbidden to enter into contracts or agreements obligating themselves to exclude persons from employment because they are or are not labor union members.2 2 These state laws were given timely challenge in North Carolina and Nebraska courts on the ground that insofar as they attempt to protect non-union members from discrimination, the laws are in violation of rights guaranteed employers, unions, and their members by the United States Constitution.3 The state laws were challenged as violations of the right of freedom of speech, of assembly and of petition guaranteed unions and their members by 'the First Amendment and protected against invasion by the state under the Fourteenth Amendment.' It was further contended that the state laws impaired the obligations of existing contracts in violation of Art. I, § 10, of the United States Constitution and deprived the appellant unions and employers of equal protection and due process of law guaranteed against state invasion by the Fourteenth Amendment. All of these contentions were rejected by the Stat Supreme Courts4 and the cases are here on appeal under § 237 of the Judicial Code, 28 U.S.C. § 344, 28 U.S.C.A. § 344 (now § 1257). The substantial identity of the questions raised in the two cases prompted us to set them for argument together and for the same reason we now consider the cases in a single opinion. 3 First. It is contended that these state laws abridge the freedom of speech and the opportunities of unions and their members 'peaceably to assemble and to petition the Government for a refress of grievances.'5 Under the state policy adopted by these laws, employers must, other considerations being equal, give equal opportunities for remunerative work to union and non-union members without discrimination against either. In order to achieve this objective of equal opportunity for the two groups, employers are forbidden to make contracts which would obligate them to hire to keep none but union members. Nothing in the language of the laws indicates a purpose to prohibit speech, assembly, or petition. Precisely what these state laws do is to forbid employers acting alone or in concert with labor organizations deliberately to restrict employment to none but union members. 4 It is difficult to see how enforcement of this state policy could infringe the freedom of speech of anyone, or deny to anyone the right to assemble or to petition for a redress of grievances. And appellants do not contend that the laws expressly forbid the full exercise of those rights by unions or union members. Their contention is that these state laws indirectly infringe their constitutional rights of speech, assembly, and petition. While the basis of this contention is not entirely clear, it seems to rest on this line of reasoning: The right of unions and union members to demand that no non-union members work along with union members is 'indispensable to the right of self organization and the association of workers into unions'; without a right of union members to refuse to work with non-union members, there are 'no means of eliminating the competition of the non-union worker'; since, the reasoning continues, a 'closed shop' is indispensable to achievement of sufficient union membership to put unions and employers on a full equality for collective bargaining, a closed shop is consequently 'an indispensable concomitant' of 'the right o employees to assemble into and associate together through labor organizations. * * *' Justification for such an expansive construction of the right to speak, assemble and petition is then rested in part on appellants' assertion 'that the right to work as a non-unionist is in no way equivalent to or the parallel of the right to work as a union member; that there exists no constitutional right to work as a non-unionist on the one hand while the right to maintain employment free from discrimination because of union membership is constitutionally protected.' Cf. Wallace Corporation v. National Labor Relations Board, 323 U.S. 248, 65 S.Ct. 238, 89 L.Ed. 216. 5 We deem it unnecessary to elaborate the numerous reasons for our rejection of this contention of appellants. Nor need we appraise or analyze with particularity the rather startling ideas suggested to support some of the premises on which appellants' conclusions rest. There cannot be wrung from a constitutional right of workers to assemble to discuss improvement of their own working standards, a further constitutional right to drive from remunerative employment all other persons who will not or can not, participate in union assemblies. The constitutional right of workers to assemble, to discuss and formulate plans for furthering their own self interest in jobs cannot be construed as a constitutional guarantee that none shall get and hold jobs except those who will join in the assembly or will agree to abide by the assembly's plans. For where conduct affects the interests of other individuals and the general public, the legality of that conduct must be measured by whether the conduct donforms to valid law, even though the conduct is engaged in pursuant to plans of an assembly. 6 Second. There is a suggestion though not elaborated in briefs that these state laws conflict with Art. I, § 10, of the United States Constitution, insofar as they impair the obligation of contracts made prior to their enactment. That this contention is without merit is now too clearly established to require discussion. See Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 436—439, 54 S.Ct. 231, 239, 240, 78 L.Ed. 413, 88 A.L.R. 1481, and cases there cited. And also Veix v. Sixth Ward Building & Loan Ass'n, 310 U.S. 32, 38, 60 S.Ct. 792, 794, 84 L.Ed. 1061; East New York Savings Bank v. Hahn, 326 U.S. 230, 232, 66 S.Ct. 69, 70, 90 L.Ed. 34, 160 A.L.R. 1279. 7 Third. It is contended that the North Carolina and Nebraska laws deny unions and their members equal protection of the laws and thus offend the equal protection clause of the Fourteenth Amendment. Because the outlawed contracts are a useful incentive to the growth of union membership, it is said that these laws weaken the bargaining power of unions and correspondingly strengthen the power of employers. This may be true. But there are other matters to be considered. The state laws also make it impossible for an employer to make contracts with company unions which obligate the employer to refuse jobs to union members. In this respect, these state laws protect the employment opportunities of members of independent unions. See Wallace Corporation v. National Labor Relations Board, supra. This circumstance alone, without regard to others that need not be mentioned, is sufficient to support the state laws against a charge that they deny equal protection to unions as against employers and non-union workers. 8 It is also argued that the state laws do not provide protection for union members equal to that provided for non-union members. But in identical language these state laws forbid employers to discriminate against union and non-union members. Nebraska and North Carolina thus command equal employment opportunities for both groups of workers. It is precisely because these state laws command equal opportunities for both groups that appellants argue that the constitutionally protected rights of assembly and due process have been violated. For the constitutional protect ons surrounding these rights are relied on by appellants to support a contention that the Federal Constitution guarantees greater employment rights to union members than to non-union members. This claim of appellants is itself a refutation of the contention that the Nebraska and North Carolina laws fail to afford protection to union members equal to the protection afforded non-union workers. 9 Fourth. It is contended that these state laws deprive appellants of their liberty without due process of law in violation of the Fourteenth Amendment. Appellants argue that the laws are specifically designed to deprive all persons within the two states of 'liberty' (1) to refuse to hire or retain any person in employment because he is or is not a union member, and (2) to make a contract or agreement to engage in such employment discrimination against union or non-union members. 10 Much of appellants' argument here seeks to establish that due process of law is denied employees and union men by that part of these state laws that forbids them to make contracts with the employer obligating him to refuse to hire or retain nonunion workers. But that part of these laws does no more than provide a method to aid enforcement of the heart of the laws, namely, their command that employers must not discriminate against either union or nonunion members because they are such. If the states have constitutional power to ban such discrimination by law, they also have power to ban contracts which if performed would bring about the prohibited discrimination. Chicago, B. & Q.R. Co. v. McGuire, 219 U.S. 549, 570, 571, 31 S.Ct. 259, 263, 55 L.Ed. 328. 11 Many cases are cited by appellants in which this Court has said that in some instances the due process clause protects the liberty of persons to make contracts. But none of these cases, even those according the broadest constitutional protection to the making of contracts, ever went so far as to indicate that the due process clause bars a state from prohibiting contracts to engage in conduct banned by a valid state law. So here, if the provisions in the state laws against employer discrimination are valid, it follows that the contract prohibition also is valid. Bayside Fish Flour Co. v. Gentry, 297 U.S. 422, 427, 56 S.Ct. 513, 515, 80 L.Ed. 772. And see Sage v. Hampe, 235 U.S. 99, 104, 105, 35 S.Ct. 94, 95, 59 L.Ed. 147. We therefore turn to the decisive question under the due process contention, which is: Does the due process clause forbid a state to pass laws clearly designed to safeguard the opportunity of non-union members to get and hold jobs, free from discrimination against them because they are non-union workers? 12 There was a period in which labor union members who wanted to get and hold jobs were the victims of widespread employer discrimination practices. Contracts between employers and their employees were used by employers to accomplish this antiunion employment discrimination. Before hiring workers, employers required them to sign agreements stating that the workers were not and would not become labor union members. Such anti-union practices were so obnoxious to workers that they gave these required agreements the name of 'yellow dog contracts.' This hostility of workers also prompted passage of state and federal laws to ban employer discrimination against union members and to outlaw yellow dog contracts. 13 In 1907 this Court in Adair v. United States, 208 U.S. 161, 28 S.Ct. 277, 52 L.Ed. 436, 13 Ann.Cas. 764, considered the federal law which prohibited discrimination against union workers. Adair, an agent of the Louisville & Nashville Railroad Company, had been indicted and convicted for having discharged Coppage, an employee of the railroad, because Coppage was a member of the Order of Locomotive Firemen. This Court there held, over the dissents of Justices McKenna and Holmes, that the railroad, because of the due process clause of the Fifth Amendment, had a constitutional right to discrimin te against union members and could therefore do so through use of yellow dog contracts. The chief relance for this holding was Lochner v. State of New York, 198 U.S. 45, 25 S.Ct. 539, 49 L.Ed. 937, 3 Ann.Cas. 1133, which had invalidated a New York law prescribing maximum hours for work in bakeries. This Court had found support for its Lochner holding in what had been said in Allgeyer v. State of Louisiana, 165 U.S. 578, 17 S.Ct. 427, 41 L.Ed. 832, a case on which appellants here strongly rely. There were strong dissents in the Adair and Lochner cases. 14 In 1914 this Court reaffirmed the principles of the Adair case in Coppage v. State of Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441, L.R.A.1915C, 960, again over strong dissents, and held that a Kansas statute outlawing yellow dog contracts denied employers and employees a liberty to fix terms of employment. For this reason the law was held invalid under the due process clause. 15 The Allgeyer - Lochner - Adair - Coppage constitutional doctrine was for some years followed by this Court. It was used to strike down laws fixing minimum wages and maximum hours in employment, laws fixing prices, and laws regulating business activities. See cases cited in Olsen v. State of Nebraska ex rel. Western Reference & Bond Ass'n, 313 U.S. 236, 244—246, 61 S.Ct. 862, 864, 865, 85 L.Ed. 1305, 133 A.L.R. 1500, and Osborn v. Ozlin, 310 U.S. 53, 66, 67, 60 S.Ct. 758, 763, 84 L.Ed. 1074. And the same constitutional philosophy was faithfully adhered to in Adams v. Tanner, 244 U.S. 590, 37 S.Ct. 662, 61 L.Ed. 1336, L.R.A.1917F, 1163, Ann.Cas.1917D, 973, a case strongly pressed upon us by appellants. In Adams v. Tanner, supra, this Court with four justices dissenting struck down a state law absolutely prohibiting maintenance of private employment agencies. The majority found that such businesses were highly beneficial to the public and upon this conclusion held that the state was without power to proscribe them. Our holding and opinion in Olsen v. State of Nebraska ex rel. Western Reference & Bond Ass'n, supra, clearly undermined Adams v. Tanner. 16 Appellants also rely heavily on certain language used in this Court's opinion in Chas. Wolff Packing Co. v. Court of Industrial Relations of State of Kansas, 262 U.S. 522, 43 S.Ct. 630, 67 L.Ed. 1103, 27 A.L.R. 1280. In that case the Court invalidated a state law which in part provided a method for a state agency to fix wages and hours.6 See Chas. Wolff Packing Co. v. Court of Industrial Relations of State of Kansas, 267 U.S. 552, 565, 45 S.Ct. 441, 444, 69 L.Ed. 785. In invalidating this part of the state act, this Court construed the due process clause as forbidding legislation to fix hours and wages, or to fix prices of products. The Court also relied on a distinction between businesses according to whether they were or were not 'clothed with a public interest.' (262 U.S. 522, 43 S.Ct. 634.) This latter distinction was rejected in Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469. That the due process clause does not ban legislative power to fix prices, wages and hours as was assumed in the Wolff case, was settled as to price fixing in the Nebbia and Olsen cases. That wages and hours can be fixed by law is no longer doubted since West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703, 108 A.L.R. 1330; United States v. Darby, 312 U.S. 100, 125, 61 S.Ct. 451, 462, 85 L.Ed. 609, 132 A.L.R. 1430; Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 187, 61 S.Ct. 845, 849, 85 L.Ed. 1271, 133 A.L.R. 1217. 17 This Court beginning at least as early as 1934, when the Nebbia case was decided, has steadily rejected the due process philosophy enunciated in the Adair-Coppage line of cases. I doing so it has consciously returned closer and closer to the earlier constitutional principle that states have power to legislate against what are found to be injurious practices in their internal commercial and business affairs, so long as their laws do not run afoul of some specific federal constitutional prohibition, or of some valid federal law. See Nabbia v. New York, supra, 291 U.S. at pages 523, 524, 54 S.Ct. at pages 509, 510, 78 L.Ed. 940, 89 A.L.R. 1469, and West Coast Hotel Co. v. Parrish, supra, 300 U.S. at pages 392—395, 57 S.Ct. at pages 582, 583, 81 L.Ed. 703, 108 A.L.R. 1330, and cases cited. Under this constitutional doctrine the due process clause is no longer to be so broadly construed that the Congress and state legislatures are put in a strait jacket when they attempt to suppress business and industrial conditions which they regard as offensive to the public welfare. 18 Appellants now ask us to return, at least in part, to the due process philosophy that has been deliberately discarded. Claiming that the Federal Constitution itself affords protection for union members against discrimination, they nevertheless assert that the same Constitution forbids a state from providing the same protection for non-union members. Just as we have held that the due process clause erects no obstacle to block legislative protection of union members, we now hold that legislative protection can be afforded non-union workers. 19 Affirmed. 20 For concurring opinions of Mr. Justice FRANKFURTER and Mr. Justice RUTLEDGE, see 335 U.S. 538, 69 S.Ct. 260. 1 Section 2 of Chapter 328 of the North Carolina Session Laws, enacted in 1947, reads as follows: 'Any agreement or combination between any employer and any labor union or labor organization whereby persons not members of such union or organization shall be denied the right to work for said employer, or whereby such membership is made a condition of employment or continuation of employment by such employer, or whereby any such union or organization acquires an employment monopoly in any enterprise, is hereby declared to be against the public policy and an illegal combination or conspiracy in restraint of trade or commerce in the State of North Carolina.' Nebraska in 1946 adopted a constitutional amendment, § 13 of which reads as follows: 'No person shall be denied employment because of membership in or affiliation with, or resignation or expulsion from a labor organization or because of refusal to join or affiliate with a labor organization; nor shall any individual or corporation or association of any kind enter into any contract, written or oral, to exclude persons from employment because of membership in or nonmembership in a labor organization.' 2 Shops that refuse to employ any but union members are sometimes designated as 'closed shops,' sometimes as 'union shops.' Contracts which obligate an employer to employ none but union members are sometimes designated as union security agreements, closed shop contracts or union shop contracts. There is also much dispute as to the exact meaning of the term 'open shop.' See Encyclopedia of Social Sciences, Vol. 3 (1930), pp. 568 569. There is such an important difference in emphasis between these different labels that we think it better to avoid use of any of them in this opinion. 3 The Nebraska constitutional amendment was challenged in an action for equitable relief and for a declaratory judgment. A substantial basis of the complaint was that employers had refused to comply with the request of unions to discharge certain employees who had failed to retain union membership. In North Carolina, criminal proceedings were instituted against the appellants charging that an agreement made unlawful by the statute had been entered into by the appellant employer and the other appellants, who are officers and agents of labor unions affiliated with the American Federation of Labor. 4 State v. Whitaker, 228 N.C. 352, 45 S.E.2d 860; Lincoln Federal Labor Union No. 19129 v. Northwestern Iron & Metal Co., 149 Neb. 507, 31 N.W.2d 477. See also American Federation of Labor v. American Sash & Door Co., 67 Ariz. 20, 189 P.2d 912. An appeal in this latter case was also argued along with the two cases considered in this opinion. We have treated the Arizona case in a separate opinion, 335 U.S. 538, 69 S.Ct. 258, because the challenged Arizona amendment presents a question not raised in the Nebraska or North Carolina laws. 5 This contention rests on the premise that the Fourteenth Amendment makes the prohibitions and guarantees of the First Amendment applicable to state action. See West Virginia State Board of Education v. Barnette, 319 U.S. 624, 639, 63 S.Ct. 1178, 1186, 87 L.Ed. 1628, 147 A.L.R. 674. The pertinent language of the First Amendment is 'Congress shall make no law * * * abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.' 6 Other parts of the state statute related to matters other than wages, prices, and the making of contracts of employment. Considerations involved in the constitutional validity of those other parts of the statute are not relevant here.
67
335 U.S. 573 69 S.Ct. 278 93 L.Ed. 243 AYRSHIRE COLLIERIES CORPORATION et al.v.UNITED STATES et al. No. 25. Argued Nov. 12—15, 1948. Decided Jan. 3, 1949. Appeal from the United States District Court for the Southern District of Indiana. [Syllabus from pages 573-575 intentionally omitted] Mr. Earl B. Wilkinson, of Chicago, Ill., for appellants, Ayrshire Collieries Corp. et al. Mr. Carson L. Taylor, of Chicago, Ill., for appellant, C.M., St. P. & P.R. Co. Mr. Daniel W. Knowlton, of Washington, D.C., for appellees, The United States and Interstate Commerce Commission. Mr. Erle J. Zoll, Jr., of Chicago, Ill., for appellees, Alton R. Co. et al. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is an appeal, 38 Stat. 219, 220, 28 U.S.C. §§ 45 and 47a, 43 Stat. 938, 28 U.S.C. § 345(4), 28 U.S.C.A. §§ 45, 47a, 345(4), from a decree of a three-judge District Court, which dismissed without merit two complaints seeking to set aside a rate order of the Interstate Commerce Commission.1 2 Bituminous coal is produced in great quantities in Indiana, Illinois and western Kentucky. In each State there are producing areas that have long been grouped for rate-making purposes. These groups or districts are the Brazil-Clinton, the Linton-Sullivan, the Princeton-Ayrshire, and the Boonville in Indiana; the Northern Illinois, the Fulton-Peoria, the Springfield, the Belleville, and the Southern in Illinois; and the Western in Kentucky. Group rates have been established by the carriers so that all mines within each producing area are accorded the same rates to the same consuming destinations.2 The result is that comparative distances of the mines in one producing area from a particular consuming destination are commonly disregarded in fixing the group rate. But the Commission has long concluded that such a system of rate making for coal and other natural resources encourages competitive production and a more even development of an area.3 3 The present litigation involves group rates for carload lots from the foregoing groups in Indiana, Illinois, and Kentucky to Rockford, Freeport, Dixon and other points in northern Illinois and to Beloit, Wisconsin. 4 The order under attack in this case resulted from two proceedings before the Commission which were heard and considered together on the same record. One was an investigation in which carriers proposed certain increases in rates for carload lots of bituminous coal from some of the Indiana groups to Beloit, Wisconsin, and from all of the Indiana groups to designated Illinois destinations. Like increases in the Illinois intrastate rates to the same Illinois destinations were also sought. These proposed increases have been suspended until disposition of the proceeding. The other proceeding was an investigation instituted by the Commission, on complaint, into the intrastate carload rates from the Illinois groups to the same Illinois destinations to determine whether they were discriminatory, preferential, and prejudicial against interstate commerce and in favor of intrastate commerce. 5 These proceedings are only a recent chapter in the problem of adjustment of the coal rates for this region. 6 The Illinois Commerce Commission ordered a reduction of the intrastate rates in 1930. This resulted in a reduction of certain interstate rates from Indiana and western Kentucky to Rockford and other northern Illinois points. The Interstate Commerce Commission refused to require an increase in intrastate rates to the important Illinois destinations involved here unless the rates from the Indiana groups to the same destinations were increased.4 Subsequently the Commission found that the rates from the Illinois, Indiana and western Kentucky groups to Beloit, Wisconsin, were in the main not unreasonable but that they were unduly prejudicial to Beloit and unduly preferential to Rockford, if they exceeded the rates from the same origins to Rockford by more than 25 cents. The Commission also found on further hearing that the rates from certain of the Illinois groups to Beloit, Wisconsin, were not unreasonable but that they were unduly prejudicial to Beloit and unduly preferential to Rockford to the extent that they exceeded the Rockford rates by more than 15 cents. The Commission allowed the carriers to increase the rates to Rockford or to reduce the rates to Beloit, or both, in order to relate the rates to Beloit 15 cents over Rockford. But the intrastate rates to Rockford had been prescribed as a maximum by the Illinois Commission and therefore could not be increased. Also to increase the interstate rates without similar increases from the Illinois groups would be disruptive of the rate structure built on the group basis. Accordingly the rates to Beloit were reduced.5 7 The carriers subsequently proposed increases in the rates from the Indiana groups and the Illinois groups to Rockford and other Illinois points and, with certain exceptions, from the Indiana groups to Beloit, Wisconsin. These increases conformed to the 15-cent relation between Rockford and Beloit but placed the rates (both interstate and intrastate) more nearly at the general level of interstate rates in that territory. 8 One other fact must be mentioned if the present posture of this rate problem is to be understood. After the Illinois intrastate rates were reduced in 1930 and after the carriers' unsuccessful effort to have the earlier ones re-established, the Milwaukee road proposed to reduce its single-line rates from mines in the Brazil and Linton groups which it serves to Rockford, Freeport and other intermediate Illinois points by the amount of the Illinois intrastate reduction. The Commission ordered the proposed rate to be cancelled. The Court affirmed a decree of a District Court which permanently enjoined the order of the Commission. United States v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499, 55 S.Ct. 462, 79 L.Ed. 1023. 9 Since that time the rates of the Milwaukee from origins on its line in the Brazil and Linton groups to Rockford and other intermediate points in Illinois have been lower than the contemporaneous rates of carriers serving other origins in these respective groups to the same destinations, with the exception of the Illinois Central which in 1936 published rates from the Linton group to Rockford and other intermediate Illinois points on its lines on the same basis as the Milwaukee's single-line rates. 10 The Milwaukee and the Illinois Central serve only a part of the mines in the Brazil and Linton groups. But they carry coal from other mines in those groups even though their lines do not reach them, since they are either connecting carriers of lines that do or destination carriers. They are therefore parties to many joint rates. But the joint rates do not reflect reductions which the Milwaukee and Illinois Central made in their single-line rates. And the rate increases proposed, and suspended by the Commission on the present proceedings, continued that previous relationship. Moreover the proposed dual basis of rates to Rockford and other Illinois destinations reached by the Milwaukee was proposed to be extended to Beloit, which previously had enjoyed the same rates from all the mines in the Brazil and Linton groups. 11 As we have noted, the new proposed rates respected the 15-cent differential of Beloit over Rockford. The result was a substantial increase in the joint-line rates from the Brazil and Linton groups to Beloit as well as to Rockford. But Milwaukee's single-line rates were increased 15 cents to Rockford and none to Beloit. The result would be to accord to mines in the Brazil and Linton groups that were on the Milwaukee lines rates lower to Beloit by 17 and 12 cents, respectively, than accorded the other mines in the two groups. Furthermore the new proposed rates would establish a dual basis of rates to Beloit from the Princeton group as well. 12 The Commission disapproved the dual basis of rates. It considered what would be the fair and reasonable rate relations as between the respective origins in the several groups and as between the groups themselves. It found that present and proposed rates of the Milwaukee and Illinois Central from Indiana to the northern Illinois destinations would result in unjust discrimination as between shippers and receivers of coal and undue preference and prejudice as between the origins in the Brazil and Linton groups and as between the respective Indiana groups. It made the same findings as respects the Milwaukee's proposed rates from the Brazil, Linton nd Princeton groups to Beloit; and in that connection it also found that those rates would result in undue preference and privilege as between the Indiana groups on the one hand and the Illinois groups on the other. The Commission went on to specify rates which it approved. It ruled that the proposed rates would be unreasonable to the extent that they were above the approved rates.6 263 I.C.C. 179. 13 We agree with the District Court that the complaints must be dismissed. 14 First. It is contended that the Commission in this proceeding had authority to determine the lawfulness only of the proposed rates not of the present rates. 15 This proceeding is an investigation and suspension proceeding under § 15(7) of the Interstate Commerce Act, 44 Stat. 1447, 49 U.S.C. § 15(7), 49 U.S.C.A. § 15(7). That section, which gives the Commission broad authority upon complaint or its own initiative to investigate and determine the lawfulness of any new rate,7 provides that 'after full hearing, whether completed before or after the rate * * * goes into effect, the commission may make such order with reference thereto as would be proper in a proceeding initiated after it had become effective.' 16 The power of the Commission to deal with the situation as if the proposed new rates had become effective is necessarily a comprehensive one. It seems too plain for argument that such broad authority is ample for the modification of either proposed or existing rates or both. The power granted the Commission under § 15(1) to deal with rate schedules already effective supports that view.8 For once the Commission finds the rate to be unjust or unreasonable or unjustly discriminatory or unduly preferential or prejudicial or otherwise unlawful, the Commission is granted the power under § 15(1) to determine and prescribe the just and reasonable rate. The Commission is not bound either to approve or disapprove in toto the new rates that are proposed. It can modify the proposal in any respect and require that the proposed rates as modified or wholly different rates be substituted for the present ones. That has been the view of the Commission since the beginning;9 and we think it is the correct o e. 17 The same result obtains as respects the Milwaukee's single-line rates from origins on its lines in the Brazil and Linton groups to Beloit, Wisconsin. The Milwaukee had not proposed any change in those rates. But those rates had been republished in the proposed schedules. They were among the rates suspended by the Commission. And the Commission's order of investigation cited the Milwaukee tariff that contains those rates. Hence the Commission sought to bring them into the investigation and gave Milwaukee all the notice to which it was entitled. That the Commission had authority to include them seems clear to us. Even though we assume they are not 'new' rates within the meaning of § 15(7), they are rates 'demanded, charged, or collected' within the meaning of § 15(1). 18 Second. Section 2 of the Act, 49 U.S.C.A. § 2, makes it unlawful for a carrier to receive from one person a greater or less compensation for transporting property than it receives from another for doing a 'like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions.'10 It is pointed out that the purpose of this section is to enforce equality between shippers of like commodities over the same line or haul for the same distance and between the same points.11 This requirement, it is argued, has not been met in the present case since there is no finding that any of the coal from any origin point to any destination was being charged a higher rate than other coal from the same origin point to the same destination moving over the same line under substantially similar circumstances and conditions. The contention would be well taken if the Commission was not warranted in treating all places within a particular group or district as one origin point. Whether or not the Commission was warranted in doing so, depends primarily on the legality of its action in gathering together various origin points into one rate group for rate-making purposes. 19 As we have noted12 that has been an historic method of building coal rate structures. The Commission followed that method in this case because in its opinion such a rate structure was necessary to afford consumers, coal operators, and carriers a fair opportunity to compete in the purchase, sale and transportation of coal from the mines in the various groups of districts to the destinations in question. The Commission's power so to act is not challenged here. Yet once the legality of the grouping of mines for rate purposes is accepted, the result is clear. For the protection of one shipper against unjust discrimination in favor of another within the same group is as clearly within the purpose of § 2 as the protection of one factory against unjust discrimination in favor of another in the same community. 20 The Milwaukee and Illinois Central were granting more favorable rates to some origins than to others in the same groups or districts. Their single-line rates from mines on their own lines were much lower than joint-line rates from other mines in the same group to the same destinations. The latter are rates published by other carriers and in which Milwaukee and Illinois Central join. Milwaukee and Illinois Central therefore are parties to an arrangement which results in some mines getting lower rates than other mines in the same group on shipments to the same destinations. 21 The question remains whether that preferential treatment of shippers at some origins was an unjust discrimination within the meaning of § 2. 22 The single line rates of Milwaukee and Illinois Central from the Linton group to northern Illinois destinations were 12 cents lower than the joint-line rates to the same points from other mines in the Linton group. The like differential as respects the Brazil group was 17 cents. The proposed schedules continued that dual basis of rates and extended it to Beloit, Wisconsin. The Commission made what seems to us a permissible inference, that rates favorable to the mines on the single-rate routes played an important part in getting the great bulk of the tonnage from the roads having the higher joint rates. Thus Milwaukee served only 4 of the 30 mines in the Brazil group and only 9 of the 31 in the Linton group. But in what the Commission called a representative period, Milwaukee handled under its single-line rates over 95 per cent of the tonnage moving from Brazil to Rockford and over 78 per cent of that from Linton to Rockford. The Commission concluded that the maintenance of the dual basis of rates therefore had an important bearing on the future opportunities of shippers within the respective groups to market their coal in the destination territory. It found that there was severe competition in marketing coal in this territory and that a differentially related and finely balanced rate structure on the coal was necessary in order to meet the needs of the consuming public, the mine operators, and the carriers. For, in general, all of the mine in these groups produce coal of the same quality and grade. A difference of a few cents per ton in the transportation charge is normally sufficient to divert a coal contract from one mine to another. Yet the Commission found that the transportation conditions over the single-line routes do not differ materially from those over the joint-line routes to the same destinations from other mines in the same group; that there is no important difference in the average distances over those respective routes. 23 The latter findings especially the one respecting the similarity of transportation conditions, are severely challenged as being without any support in the evidence. These findings, when judged by the classic examples of unjust discrimination between shippers, leave much to be desired. But we think they are adequate in this case. They reflect an intimate acquaintance by the Commission with the grouping of mines for rate-making purposes. See 263 I.C.C., p. 196. The groups are themselves designed to equalize competitive opportunities. The location of the mines, their distances from destination territory, the transportation conditions over the lines that serve the various origins within a group—these are all factors which bear on the determination of what mines shall be pulled together into one group. The Commission can draw from its long experience with these groupings to determine whether any variables in transportation conditions warrant a difference of rates as between mines within one group to a common destination. Or to state it otherwise, the attack here could not succeed unless it were on the respective groupings themselves. The appellants, of course, claim the right to initiate rates within the zone of reasonableness. See United States v. Chicago, M., St. P. & P.R. Co., supra. But the Commission holds that when that power is used to establish a dual basis of rates for this coal mining region, it defeats the system of grouping by unjustly discriminating against some shippers and in favor of others in the same group. The Commission's conclusion that only by the establishment and maintenance of a single-rate basis can that unjust discrimination be avoided is an informed judgment based on a complex of many factors. It cannot be successfully challenged on this record unless the whole system of rate-making on a group basis is undermined. But no such major project is undertaken. 24 What we have just said also disposes of the attack which is made on the findings and conclusion of the Commission that the present and proposed system of dual rates creates an undue preference and prejudice as between the origins in the Brazil and Linton groups in violation of § 3(1) of the Act, 49 U.S.C.A. § 3(1).13 25 Third. The Commission found that the differentials maintained by the Wilwaukee and Illinois Central as between certain of the Indiana groups constituted an undue preference and prejudice in violation of § 3(1) of the Act.14 26 The Commission found that the differential, Linton over Brazil, should be 10 cents. This is the standard differential, in effect generally to the northwest. It found that the standard differential, Princeton over Linton, was 7 cents. Milwaukee's differential in the former would be 22 cents; and the differential of the Milwaukee and Illinois Central in the latter would be 19 cents. The main attack of appellants on this phase of the case is the Commission's conclusion that these differentials are greater than those warranted by the respective differences in distances. Facts are adduced to show that they fairly reflect differences in distances. 27 But the Commission made plain that in considering the whole problem of rate relations presented by this case it did not rely strictly upon distance. Distance was a factor but it was not controlling. The Commission deemed its task to be the creation of a rate structure that would afford a fair opportunity to compete in the purchase, sale and transportation of the coal from the various mines to the destinations in question. 28 The propriety of that action of the Commission is determinative of another phase of the case as well. It goes to the heart of appellants' objections to the differentials prescribed by the Commission as fair and reasonable as between the Indiana groups and the Illinois groups. 29 The Commission approved rates from the Indiana groups to twelve Illinois destinations which averaged $1.95 from Brazil, $2.05 from Linton, and $2.12 from Princeton-Boonville. These rates, the Commission found, compared favorably with the proposed rates to the same destinations from the Illinois groups,15 apart from exceptions not now material. 30 The chief problem of the Commission in this case was to provide a rate structure which would afford fair and reasonable relations of rates to northern Illinois destinations, both as between the respective origin groups and as between Indiana groups and Illinois groups. There had been historically no fixed relation either between the former or the latter. And the appearance of a dual basis of rates greatly distorted the picture. The Commission did in this case what the Court pointed out in United States v. Chicago, M., St. P. & P.R. Co., supra, 294 U.S. at page 510, 55 S.Ct. at page 467, 79 L.Ed. 1023, it had not done there, viz., it adjudged the fairness of the relation subsisting between Illinois and Indiana rates. 31 Appellants however contend that what the Commission did was holly arbitrary. They point to instances where the rate from an Indiana group is more than the rate from an Illinois group even though the haul is shorter. They say that what the Commission did was to adjust the rates not to compensate for the transportation service rendered but to favor Illinois groups over Indiana groups. They give illustration after illustration of the inconsistencies between the specific rates, assuming, as the Commission found, that the transportation conditions which were involved were the same. From that argument appellants seek to make two points—(1) that the rates approved by the Commission do not reflect group differentials designed to eliminate discrimination and preference and (2) that, even though they do, individual rates are established that are wholly arbitrary in violation of the principle that each destination is entitled to a reasonable rate. 32 We cannot deny the Commission authority to use averages as a measure of the relationship between the rates of the Indiana groups on the one hand and the Illinois groups on the other. The averages would be some indication of the closeness of the alignment. The important comparison here is in the regional or group differentials. These differentials in the present case were not designed so as to be faithful to the factor of distance. The Commission followed the common practice in giving diminishing weight to distance and increasing weight to competition as the length of the haul increased. The Commission said, 263 I.C.C. at 204, 33 'In approving the foregoing rate relations, we have kept in mind the importance to consumers, coal operators, and railroads of relating these differentially-related coal rates, not strictly upon distance, but so as to afford all concerned a fair opportunity to compete in the purchase, sale, and transportation of coal from Illinois and Indiana mines to these destinations. The rates between the various origin groups in these fields have never been made with primary regard for distance, and to so make them now would have the effect eventually of eliminating practically all competition between most of them, a result which would be highly undesirable to the consumer, whose interests we may not disregard.'16 34 There is no doubt, therefore, that the C mmission believed that the competitive factor was an important one in considering this problem of rate relationships. The result may, as appellants contend, favor some Illinois mines over Indiana as respects certain markets. That would seem to follow, for example, from the elimination of the low single-line rate that the Commission found to be disruptive of rate relations between these groups. But it does not indicate that the rates approved by the Commission were unlawful. That might be established by showing, for example, that the Commission gave weight only to the competitive factor. Yet all that appellants attempt here is to show that discrepancies in rates are not warranted by any difference in transportation conditions or in distance. That is not enough provided the Commission was justified in considering the element of competition. 35 We think it was. Rate structures are not designed merely to favor the revenues of producers and carriers. The Commission has the consumer interest to safeguard as well.17 And when it undertakes to rationalize the interests of the three, great complexities are often encountered. The economics of the bituminous coal industry have baffled even experts. We would depart from our competence and our limited function in this field if we undertook to accommodate the factors of transportation conditions, distance and competition differently than the Commission has done in this case. That is a task peculiarly for it. In fashioning what the Commission called a differentially related and finely balanced rate structure for this coal, there is no place for dogma or rigid formulae. The problem calls for an expert, informed judgment on a multitude of facts. The result is that the administrative rate-maker is left with broad discretion as long as no statutory requirement is overlooked. Yet that is, of course, precisely the nature of the administrative process in this field. See Board of Trade v. United States, 314 U.S. 534, 548, 62 S.Ct. 366, 372, 373, 86 L.Ed. 432; State of New York v. United States, 331 U.S. 284, 347—349, 67 S.Ct. 1207, 1240, 1241, 91 L.Ed. 1492. 36 Fourth. Appellants argue that the Commission acted beyond its authority because it did not afford the carriers alternative methods of removing the discrimination which was found to exist. See Texas & Pacific R. Co. v. United States, 289 U.S. 627, 53 S.Ct. 768, 77 L.Ed. 1410. And Milwaukee argues that the Commission was without power to direct it to cease from granting the undue preference found to exist between its single-line rate and the higher joint-line rates, since it had no control over the latter. 37 This is not a case like Texas & Pacific R. Co. v. United States, supra, where the Commission issues a so-called alternative order directing the carriers to remove an unjust discrimination or undue preference which has been found. That kind of order leaves a choice to the carriers whether to eliminate the unlawful practice by raising one rate, lowering the other, or altering both. But as we recently held in State of New York v. United States, supra, 331 U.S. at page 342, 67 S.Ct. at pages 1237, 1238, 91 L.Ed. 1492, that rule is not applicable where the Commission itself undertakes to correct the unlawful practice by prescribing the just and reasonable rate. The Commission has taken that action here. As we noted above, the present proceeding was one under § 15(1) and § 15(7). Section 15(1) gives the Commission power to determine and prescribe the just and reasonable rate once it finds, inter alia, that an rate charged is unjustly discriminating or unduly preferential or prejudicial. The Commission in the present case has exercised that power. It has prescribed approved rates. They are rates which in the Commission's judgment will eliminate the unjust discrimination and undue preference found to exist in this rate structure. Hence the question whether Milwaukee effectively controlled the higher joint-line rates is irrelevant here. State of New York v. United States, supra. 38 Finally it is suggested that the order is invalid because the Commission did not find that the preferential rates were noncompensatory. But once a forbidden discrimination or preference in rates is found, the Commission may remove it even though the rates are within the zone of reasonableness. State of New York v. United States, supra, 331 U.S. at page 344, 67 S.Ct. at page 1238, 91 L.Ed. 1492. 39 Affirmed. 1 A prior decree sustaining this order of the Commission was reversed by the Court because one member of the three-judge District Court had not participated in the decision. Ayrshire Collieries Corp. v. United States, 331 U.S. 132, 67 S.Ct. 1168, 91 L.Ed. 1391. 2 Another characteristic of coal rate structures has been the rate differentials. For example, Brazil is the base group in Indiana on coal traffic to the Illinois and Wisconsin destinations invo ved in this litigation. Hence the rates, expressed in cents per ton, from the other Indiana groups are stated in terms of differences from the Brazil group rate. 3 See Hitchman Coal & Coke Co. v. Baltimore & O.R. Co., 16 I.C.C. 512, 520; Waukesha Lime & Stone Co. v. Chicago, M. & St. P.R. Co., 26 I.C.C. 515, 518; Wisconsin & Arkansas Lbr. Co. v. St. Louis, I.M. & S.R. Co., 33 I.C.C. 33, 37, 38; Public Utilities Commission v. Oregon Short Line R. Co., 33 I.C.C. 103, 106; Southwestern Interstate Coal v. Arkansas W.R. Co., 89 I.C.C. 73, 84, 85. And see New York Harbor Case, 47 I.C.C. 643, 712; Illinois Commerce Commission v. United States, 292 U.S. 474, 486, 54 S.Ct. 783, 788, 78 L.Ed. 1371. 4 See Intrastate Rates on Bituminous Coal, 182 I.C.C. 537, 549, 550. 5 The history of this rate problem is briefly summarized by the Commission in its report on the present case. 263 I.C.C. 179. For earlier aspects of it see Intrastate Rates on Bituminous Coal in Illinois, 182 I.C.C. 537; Fairbanks-Morse & Co. v. Alton & S.R., 195 I.C.C. 365, 251 I.C.C. 181; Illinois Coal Traffic Bureau v. Ahnapee & W.R. Co., 204 I.C.C. 225; Coal to Illinois and Wisconsin, 232 I.C.C. 151. And see Coal fr m Indiana to Illinois, 197 I.C.C. 245, 200 I.C.C. 609, the order in which, as we discuss hereafter in the opinion, was held invalid by United States v. Chicago, M., St. P. & P.R. Co., 294 U.S. 499, 55 S.Ct. 462, 79 L.Ed. 1023. 6 The order entered by the Commission in the proceeding to determine whether the intrastate rates were unjustly discriminatory against interstate commerce is not under attack here. It required the carriers to desist from practices which the Commission found to be discriminatory and to establish and maintain for the intrastate transportation of coal rates no lower than the approved rates. 7 'Whenever there shall be filed with the commission any schedule stating a new individual or joint rate, fare, or charge, or any new individual or joint classification, or any new individual or joint regulation or practice affecting any rate, fare, or charge, the commission shall have, and it is hereby given, authority, either upon complaint or upon its own initiative without complaint, at once, and if it so orders without answer or other formal pleading by the interested carrier or carriers, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, fare, charge, classification, regulation, or practice; and pending such hearing and the decision thereon the commission, upon filing with such schedule and delivering to the carrier or carriers affected thereby a statement in writing of its reasons for such suspension, may from time to time suspend the operation of such schedule and defer the use of such rate, fare, charge, classification, regulation, or practice, but not for a longer period than seven months beyond the time when it would otherwise go into effect; and after full hearing, whether completed before or after the rate, fare, charge, classification, regulation, or practice goes into effect, the commission may make such order with reference thereto as would be proper in a proceeding initiated after it had become effective.' 8 'That whenever, after full hearing, upon a complaint made as provided in section 13 of this part, or after full hearing under an order for investigation and hearing made by the commission on its own initiative, either in extension of any pending complaint or without any complaint whatever, the commission shall be of opinion that any individual or joint rate, fare, or charge whatsoever demanded, charged, or collected by any common carrier or carriers subject to this part for the transportation of persons or property, as defined in the first section of this part, or that any individual or joint classification, regulation, or practice whatsoever of such carrier or carriers subject to the provisions of this part, is or will be unjust or unreasonable or unjustly discriminatory or unduly preferential or prejudicial, or otherwise in violation of any of the provisions of this part, the commission is hereby authorized and empowered to determine and prescribe what will be the just and reasonable individual or joint rate, fare, or charge, or rates, fares, or charges, to be thereafter observed in such case, or the maximum or minimum, or maximum and minimum, to be charged, and what individual or joint classification, regulation, or practice is or will be just, fair, and reasonable, to be thereafter followed, and to make an order that the carrier or carriers shall cease and desist from such violation to the extent to which the commission finds that the same does or will exist, and shall not thereafter publish, demand, or collect any rate, fare, or charge for such transportation other than the rate, fare, or charge so prescribed, or in excess of the maximum or less than the minimum so prescribed, as the case may be, and shall adopt the classification and shall conform to and observe the regulation or practice so prescribed.' 9 See Advances in Rates—Western Case, 20 I.C.C. 307, 314; Lignite Coal from N. Dakota, 126 I.C.C. 243, 244. 10 'That if any common carrier subject to the provisions of th § part shall, directly or indirectly, by any special rate, rebate, drawback, or other device, charge, demand, collect, or receive from any person or persons a greater or less compensation for any service rendered or to be rendered, in the transportation of passengers or property, subject to the provisions of this part, than it charges, demands, collects, or receives from any other person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is prohibited and declared to be unlawful.' 11 See Interstate Commerce Commission v. Baltimore & O.R. Co., 145 U.S. 263, 280, 12 S.Ct. 844, 849, 36 L.Ed. 699; Interstate Commerce Commission v. Alabama Midland R. Co., 168 U.S. 144, 166, 18 S.Ct. 45, 48, 49, 42 L.Ed. 414; Barringer & Co. v. United States, 319 U.S. 1, 6, 729, 63 S.Ct. 967, 970, 87 L.Ed. 1171. 12 See note 3, supra. 13 'It shall be unlawful for any common carrier subject to the provisions of this part to make, give, or cause any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic, in any respect whatsoever; or to subject any particular person, company, firm, corporation, association, locality, port, port district, gateway, transit point, region, district, territory, or any particular description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever * * *.' 14 'The Milwaukee and the Illinois Central join in rates from the Princeton and Boonville groups to these northern Illinois destinations which reflect differences between those groups on the one hand, and the Brazil and Linton points served by those two respondents on the other, that are substantially greater than the so-called standard differentials and greater t an are warranted by the respective differences in distance.' 15 The Commission in determining maximum reasonable rates from the Fulton-Peoria group to Iowa destinations developed the so-called Midland scale. See Midland Electric Coal Corp. v. Chicago, N. & W.R. Co., 232 I.C.C. 5. It used the so-called Indiana-Illinois scale for the same purpose in connection with certain Indiana groups to eastern-central Illinois designations. See Coal Trade Assn. v. Baltimore & O.R. Co., 190 I.C.C. 743. In the present case the Commission made certain adjustments in those scales, see 263 I.C.C. at 186, and used them in the comparison of the approved Indiana rates with the approved Illinois rates. Those combined rates for Indiana to twelve northern Illinois destinations average 86.1 per cent of the Indiana-Illinois scale and 70.7 per cent of the Midland scale. While the combined rates for the Illinois groups to those destinations averaged 85.4 per cent and 70.3 per cent of those scales. The Commission approved rates of $2.22 from Brazil to Beloit, Wisconsin, $2.32 from Linton, and $2.39 from Princeton-Boonville, rates which the Commission found compared favorably with the present rates from the Illinois groups to Beloit. Taken as a whole, the approved rates from Indiana to Beloit averaged 94.3 per cent of the Indiana-Illinois scale and 77.1 per cent of the Midland scale, while the combined present rates from the Illinois groups to Beloit average 92.9 per cent and 76.6 per cent of the respective scales. 16 The Commission made this additional observation concerning the weight it gave to distance, 263 I.C.C. at 204, 'And in according such weight to distance as seemed to us to be fair and reasonable, we have also kept in mind that the average distances of record, and as used in this report, especially from Illinois mines, frequently reflect seeming inconsistencies from the same group to destinations in close proximity to each other. For example, Amboy is located south of and about 12 miles over the Illinois Central and across country less distant from the Illinois groups than Dixon, but the average shortest-tariff route distance from the Springfield group is 9 miles greater and from the southern Illinois group 1 mile greater to the former than to the latter. By use of the short tariff routes the distance to Amboy is 9 miles greater from Springfield and 7 miles greater from southern Illinois than to Dixon. These variations in distance are due to the different routes used and also to the fact that frequently the group rate applies from a larger number of origins to one destination than to another. Thus, to Dixon the Springfield rate is published from 61 origins on 15 originating railroads, but to Amboy the rate applies from only 23 origins on 8 railroads. So also, the southern Illinois rate applies from 75 origins on 7 roads to Dixon and 65 origins on 5 roads to Amboy. The variations in distance thus brought about are much greater from Illinois groups than from Indiana groups. It is plain, therefore, that comparisons based on distance, especially as between Indiana and Illinois groups to particular destinations, can not be accepted as controlling, but must be evaluated with the above facts in mind.' 17 The consumer interest traditionally has been prominent in the Commission's consideration of the type of problem presented here. See Andy's Ridge Coal Co. v. Southern R. Co., 18 I.C.C. 405, 410; Waukesha Lime and Stone Co. v. C.M. & St. P.R. Co., supra, at 518, 519; Wisconsin & Arkansas Lumber Co. v. St. L., I.M. & S.R. Co., supra, at 37, 38; Southwestern Coal Operators' Assn. v. A.W.R. Co., supra, at 85; Coal to Illinois, 7 Wisconsin, supra, at 167, 169.
78
335 U.S. 560 69 S.Ct. 269 93 L.Ed. 235 JUNGERSENv.OSTBY & BARTON CO. et al. OSTBY & BARTON CO. et al. v. JUNGERSEN. JUNGERSEN v. BADEN et al. Nos. 7, 8 and 48. Argued Nov. 10, 1948. Decided Jan. 3, 1949. Motion for Leave to File Petition for Rehearing Denied Feb. 14, 1949. See 336 U.S. 915, 69 S.Ct. 599. Mr. William H. Davis, of Orange, N.J., for Jungerson. Mr. John Vaughan Groner, of New York City, for Ostby and Barton Co., et al. Mr. Justice REED delivered the opinion of the Court. 1 The issue here is the validity of United States Patent No. 2,118,468 which covers a 'method of casting articles of intricate design and a product thereof.' 2 The patent was granted to Jungersen on May 24, 1938. In 1941, Ostby and Barton Company instituted in the United States District Court for the District of New Jersey, an action for a declaratory judgment that the patent was invalid and not infringed. Jungersen, by counterclaim, alleged infringement and sought an injunction. The District Court held Claims 1—4 valid but not infringed and Claims 5—6 invalid because too broad. 65 F.Supp. 652. The United States Court of Appeals for the Third Circuit affirmed on the reasoning of the District Court. 163 F.2d 312. We denied petitions by both parties for certiorari. 332 U.S. 851, 852, 68 S.Ct. 356. 3 In 1944, Jungersen filed suit against Baden in the United States District Court for the Southern District of New York, in which he alleged infringement of the patent and sought damages, profits, and injunctive relief. That court held all the claims invalid. 69 F.Supp. 922. The United States Court of Appeals for the Second Circuit affirmed. 166 F.2d 807. 4 Vacating the prior orders which denied it in the Ostby and Barton proceeding, we granted certiorari in both cases in order to settle the conflict. 334 U.S. 835, 68 S.Ct. 1496.1 Since the parties do not assert error in those portions of the lower courts' decisions which concern infringement, the sole issue before us is the validity of the patent. 5 The method described in the Jungersen patent, Claims 1—4, consists of the following steps: (1) The production of a model of the article to be cast, (2) the formation around this model of a 'primary mould' of plastic material 'such as rubber' which is 'capable of assuming intimate contact with the intricate designs of the model' and which will 'retain a lasting shape through subsequent treatment,' (3) the casting in this mould of a pattern consisting of molten wax or other mate ial of a low melting point which is made to assume the minute configurations of the mould by means of centrifugal force, (4) the removal of this pattern (which has become solid upon cooling) from the primary mould, and the formation around it of a 'secondary mould' of refractory material, such as plaster of Paris, which 'will assume all the contours of its intricate design,' (5) the removal of the wax or similar material from the secondary mould, or 'investment' as it is called, by the application of heat, thus melting it out, and finally (6) the casting of the desired molten metal into the cavity in the investment by the application of centrifugal force as in (3), above. 6 This method is capable of producing 'small metal articles, particularly articles of intricate detail such as jewelry which frequently are designed with hollows, undercut portions and perforations, so that they will have a smooth clean surface faithful in detail to the original and free from imperfections or holes, and to enable such result being accomplished with the minimum of expense.' The patentee claims that it made possible the accurate reproduction of intricate designs in far less time than had previously been required. 7 Claim 5 describes in more general terms the formation of a primary mould around the original pattern, the removal of the pattern from the mould, the introduction of molten wax into the mould 'by force sufficient to deposit the material into the depression or depressions of the primary mould' and the employment of the wax pattern for the manufacture of a casting mould. Claim 6 covers 'an article of jewelry' of intricate design made by the process disclosed by Claim 5. It describes the article of jewelry only by reference to the process by which it is manufactured. Obviously if the first four claims are invalid, the last two must likewise fall. 8 An examination of the prior art as it existed at the time of this alleged invention reveals that every step in the Jungersen method was anticipated. We think that his combination of these steps was, in its essential features, also well known in the art. 9 Jungersen's process is nothing more than a refinement of a method known as the 'cire perdue' or 'lost wax' process, which was in use as early as the sixteenth century.2 The Treatises of Benvenuto Cellini on Goldsmithing and Sculpture, pp. 87—89, reveals a process which consists of filling a primary mould with molten wax, building a secondary mould around the wax model thus obtained, melting the wax from this mould and pouring the desired metal in the secondary mould. In 1904 United States Patent No. 748,996, issued the Spencer, described a substantially identical process in which the primary mould was made, as in the patent here involved by vulcanizing rubber around the original model or pattern. In England a process similar to Spencer's had been the basis of a patent issued to Haseltine in 1875.3 10 The above-described developments in the prior art suggested no limitation of their applicability to any particular type of casting. Spencer stated that the purpose of his process was to produce accurate replicas of the original pattern, which could be of 'intricate form' and which could 'have any number of sides or surfaces or undercut or projecting parts.' Haseltine described his object as the production of 'a casting in metal from a given pattern, which casting will be a perfect copy of such pattern without requiring much, if any, after finishing or chiselling work.' 11 The patentee claims that the invention in his combination lies in the use, in conjunction with the 'lost wax' process, of centrifugal force. Long before the issuance of this patent, however, those skilled in the art recognized and disclosed the nesessity for the application of force in order to make molten materials fit snugly the intricate details of the mould. Haseltine applied pressure of about twenty pounds per square inch to cause the molten metal 'to lie to the dense mould and produce a sharp and well-defined casting.' He accomplished this by introducing the metal into the mould through a pipe about six feet in height.4 United States Patent No. 1,238,789 issued to Kralund in 1917 teaches the application of pressure to the wax and the molten metal by means of an ordinary pressure die casting apparatus. 12 Whether these types of pressure are the equivalent of centrifugal force we need not decide since it is evident from patents and publications that the use of the latter was well known in the art. In 1923 McManus patented a casting machine which was adapted 'to the casting of jewelry, such as gold rings, small trinkets, etc., where metal or other dies or moulds may be * * * filled by centrifugal casting methods.' United States Patent No. 1,457,040. He claimed 'a means for transferring fused material from the furnace (in which the material was melted) to the mould under the action of centrifugal force.' In a paper on current casting methods which he presented to the Institute of Metals in England in 1926, one George Mortimer, with reference to the difficulty in filling a mould by gravity, stated: 13 'It was natural, therefore, that engineers should early turn their attention to some form of artificial pressure, whereby the mould could be filled by force, and soundness and clean definition seemingly assured. 14 'The simplest form of artificial pressure is that of centrifugal force. * * *'5 Centrifugal force was commonly used in dental casting prior to 1938.6 15 Thus it is clear that the 'lost wax' process, the use of a flexible primary mould, and the use of centrifugal force were all old in the art of casting. The patentee claims that the centrifugal forcing of wax into the primary mould had never before been combined with the other features of his process. We think this fact is of no legal significance. Where centrifugal force was common as a means of introducing molten metal into the secondary mould, its use in an intermediate step to force molten wax into the primary mould was not an exemplification of inventive genius such as is necessary to render the patent valid. Cf. Lincoln Engineering Co. of Illinois v. Stewart-Warner Corp., 303 U.S. 545, 58 S.Ct. 662, 82 L.Ed. 1008; Cuno Engineering Corp. v. Automatic Devices Corp., 314 U.S. 84, 62 S.Ct. 37, 86 L.Ed. 58. The patentee himself admitted that the same principle was employed in both steps.7 Thus Jungersen employed in his claimed invention well known skills and practices in a manner and for a purpose long familiar in the field of casting. His claimed improvement is therefore not patentable. 16 The patentee contends, however, that jewelry casting is a separate and distinct art; that consequently the advancements in other types of casting mentioned above cannot be viewed as the prior art in reference to this patent. The answer to this is twofold. In the first place, this patent is not restricted to the casting of jewelry. Its stated object is to 'facilitate the casting of small metal articles, particularly articles of intricate detail such as jewelry. * * *' Secondly we think that the improvements in the art of casting which were disclosed by the patents and publications discussed above were so obviously applicable to the type of casting sought to be effected by Jungersen that he was bound by knowledge of them. Mandel Bros. v. Wallace, 335 U.S. 291, 295, 296, 69 S.Ct. 73, 75, 76. 17 Numerous licenses under the patent were issued in the United States and other countries. The fact that this process has enjoyed considerable commercial success, however, does not render the patent valid. It is true that in cases where the question of patentable invention is a close one, such success has weight in tipping the scales of judgment toward patentability. Goodyear Tire & Rubber Co. v. Ray-O-Vac. Co., 321 U.S. 275, 279, 64 S.Ct. 593, 594, 595, 88 L.Ed. 721, and cases cited in footnote 5 thereof. Where, as here, however, invention is plainly lacking, commercial success cannot fill the void. Dow Chemical Co. v. Halliburton Oil Well Cementing Co., 324 U.S. 320, 330, 65 S.Ct. 647, 651, 89 L.Ed. 973; Toledo Pressed Steel Co. v. Standard Parts, Inc., 307 U.S. 350, 356, 357, 59 S.Ct. 897, 899, 900, 83 L.Ed. 1334; Textile Machine Works v. Louis Hirsch Textile Machines, 302 U.S. 490, 498, 499, 58 S.Ct. 291, 294, 295, 82 L.Ed. 382; 1 Walker, Patents (Deller, 1937) § 44. Little profit would come from detailed examination of the cases cited above or those indicated by reference. Commercial success is really a makeweight where the patentability question is close. 18 Increased popular demand for jewelry or alertness in exploitation of the process may well have played an important part in the wide use of the patent. We cannot attribute Jungersen's success solely or even largely to the novelty of his process. 19 We hold all the claims of the patent invalid for want of invention. 20 Nos. 7 and 48 affirmed. 21 No. 8 reversed. 22 Mr. Justice FRANKFURTER, with whom Mr. Justice BURTON joins, dissenting. 23 This is not one of those patent controversies that carry serious consequences for an important industry and thereby for the general public. The case does, however, raise basic issues regarding the judiciary's role in our existing patent system. These issues were stated by Judge Learned Hand when the litigation was before the Court of Appeals for the Second Circuit. Since this Court's opinion has not, to my mind, met the questions which he raised, and since I cannot improve upon what Judge Learned Hand wrote, I adopt his opinion as mine. 24 'In Jungersen's British patent, as my brothers truly say, he based his invention solely upon forcing the wax and the metal into completely intimate contact with every crevice of the mould, and for this he disclosed a centrifuge as the means. Moreover, it had already been known by other moulders of fine patterns that the metal might not fill all the spaces necessary for perfect reproduction. For example, in 1873 Haseltine disclosed a device which set up a pressure of twenty pounds to the square inch; and this too in a 'lost wax' process. True, he did not disclose using similar pressure for the wax, and he did not use a centrifuge; but McManus used a centrifuge to force fusible metal into all the crevices of the mould, and that too in a 'lost wax' process, the knowledge of which he appears to have assumed, for he does not disclose how to make the wax model. Kralund also showed a pressure die-casting process, as applied to the 'lost wax' method; and he used pressure to force his wax into intimate co nection with the first die as well as upon the molten metal of the final casting: but his original die was of steel and he does not describe its manufacture. 25 'Nevertheless, in spite of all these approaches, and of the fact that all the elements of the disclosure were to be found in the prior art, it remains true that Jungersen's process in its entirety had never been assembled before; no one had ever thought of combining all those steps in a single sequence. True, had the combination not been new in this objective sense, it could not have been patented merely by turning it to a new use; and that would have been so, although it might have taken as much originality to see that it could be put to the new use, as it takes to make an outstanding invention. It would have been a final answer that Congress has never seen fit to extend its constitutional power to 'discoveries' as such, and has limited patents to an 'art, machine, manufacture, or composition of matter,'1 as we have often said—the last time in Old Town Ribbon & Carbon Co., Inc., v. Columbia Ribbon & Carbon Manufacturing Co.2 My point is that, if there is a new combination, however trifling the physical change may be, nothing more is required than that, to take the step or steps, added 'invention,' is needed; and 'invention,' whatever else it may be, is within the category of mental activities and of those alone. In the case at bar the answer must therefore depend upon how we shall appraise the departure from what had gone before in terms of creative imagination; indeed, I do not understand what other test could be relevant. 26 'If that be the test, I submit that Jungersen's process meets it. From time immemorial jewelry had been manufactured by the earlier processes; so that the need, if need there was, had existed for years. Moreover, two of those earlier processes 'cuttlefish casting and sand-casting'—have now become 'of little commercial significance'; 'die-stamping' and Jungersen's process 'are the only substantial methods now commercially used'; and in the manufacture of a hundred rings or less 'die-stamping' is more expensive. Had some technological advance held up the change, and had Jungersen made it only a short time after the obstacle had been removed, I should agree that the inference of outstanding originality would have been greatly weakened; but that was not the fact. Indeed, it is the very basis of the defence that for years all the elements lay open and available, and that nothing was needed but the paltry modification which has proved so fruitful. To that I make the answer on which courts in the past used to ring the changes with wearisome iteration. If all the information was at hand, why was the new combination so long delayed? What better test of invention can one ask than the detection of that which others had all along had a strong incentive to discover, but had failed to see, though all the while it lay beneath their eyes? True, the whole approach to the subject has suffered a shift within the last decade or so, which I recognize that we should accept as authoritative. Moreover, I am not aware of the slightest bias in favor of the present system; I should accept with equanimity a new system or no system. However, I confess myself baffled to know how to proceed, if we are at once to profess to apply the system as it is, and yet in every concrete instance we are to decide as though it did not exist as it is. In the cast at bar, I can only say that, so far as I have been able to comprehend those factors which have been held to determine invention, and to which at least lip service continues to be paid, the combination in suit has every hall-mark of a valid patent.' 27 Judge Hand's opinion is reported 166 F.2d at page 811. 28 Mr. Justice JACKSON, dissenting. 29 I think this patent meets the patent statute's every requirement. And confronted by this record an industry heretofore galled by futility and frust ation may well be amazed at the Court's dismissal of Jungersen's ingenious and successful efforts. 30 Of course, commercial success will not fill any void in an invalid patent. But it may fill the void in our understanding of what the invention has meant to those whose livelihood, unlike our own, depends upon their knowledge of the art. Concededly, in this high-pressure age sales volume may reflect only powerful promotion or marketing magic, and its significance as an index of novelty or utility may rightly be suspected. But Jungersen's success was grounded not in the gullibility of the public but in the hard-headed judgment of a highly competitive and critical if not hostile industry. Knowing well its need for and its failure to achieve improvements on available processes, that industry discarded them, adopted this outsider's invention, and made it a commercial success. 31 It would take a singular self-assurance on the part of one who knows as little of this art as I do, or as I can learn in the few hours that can be given to consideration of this case, to ignore the judgment of these competitors who grew up in the industry and say that they did not know something new and useful when they saw it. And if Benvenuto Cellini's age-old writings are so revealing to us laymen of the appellate Bench, it is hard to see why this practical-minded industry which the Court says was following Cellini failed through all the years to get his message. 32 It would not be difficult to cite many instances of patents that have been granted, improperly I think, and without adequate tests of invention by the Patent Office. But I doubt that the remedy for such Patent Office passion for granting patents is an equally strong passion in this Court for striking them down so that the only patent that is valid is one which this Court has not been able to get its hands on. 33 I agree with the opinion of Judge Learned Hand below. 1 In No. 7 we are asked to consider the decision of the Court of Appeals for the Third Circuit as to claims 5 and 6; in No. 8, the decision of that court as to claims 1 through 4; and in No. 48, the decision of the Court of Appeals for the Second Circuit as to all the claims of the patent. 2 20 Encyclopaedia Britannica (1948), p. 229. 3 British Patent No. 2467. A French publication by Verleye entitled 'La Gravure, etc.' (1924) describes in detail all of the elements of Jungersen's process except the use of centrifugal force. 4 'La Gravure, etc.,' supra, note 3, advocates the use of steam pressure. 5 35 Journal of the Institute of Metals, 371, 377. 6 'Dental-casting methods employ four distinct principles; namely, gravity, centrifugal, vacuum, and pressure. * * * 'The centrifugal method has the advantage of great simplicity, and fills the mold by the force exerted in throwing the metal off on a tangent while being revolved about a center.' Stern, Diecasting Practice (1st ed., 1930), p. 10. 7 An excerpt from the testimony follows: 'Q. And when the machine is revolved, when it is centrifuged, it makes no difference whether it be molten wax or molten metal, does it, in the fact that it throws out the molten material into the gate? A. It would throw out anything of weight if it is made free to leave. 'Q. And that applies to wax as well as metal, does it not? A. It applies to wax and metal, but in a greater amount to the metal than to the wax. 'Q. But they both operate in the same way under the influence of the centrifugal machine? A. The same principle is used, yes. 'Q. And the molten material in both cases is ntroduced into the mold? A. Yes.' 1 § 31, Title 35 U.S.C.A. 2 2 Cir., 159 F.2d 379, 382.
78
336 U.S. 28 69 S.Ct. 358 93 L.Ed. 477 COMMISSIONER OF INTERNAL REVENUEv.JACOBSON (two cases). Nos. 32, 33. Argued Nov. 8, 1948. Decided Jan. 17, 1949. Mr. Arnold Raune, of Washington, D.C., for petitioner. Mr. Theodore R. Colborn, of Cleveland, Ohio, for respondent. Mr. Justice BURTON delivered the opinion of the Court. 1 This decision applies the federal income tax to gains derived by a debtor from his purchase of his own obligations at a discount and his consequent control over their discharge. It presents the specific question whether a solvent natural person, in straitened financial circumstances, must include in his gross income for federal income tax purposes the difference between (1) the face amount of his personal indebtedness as the maker of secured bonds, originally issued by him at face value for cash, and (2) a lesser amount paid by him for their purchase. The debtor's obligations were not unpaid balances of purchase prices which could be readjusted by the discharge of the obligations. The proceeds of the obligations were not traced into identifiable losses offsetting the debtor's realized gains from the discharge of these obligations. Each seller knew that the bonds he sold were being bought by or for the maker of them. In each sale the bondholder sought to minimize his probable loss by getting as much as possible, directly or indirectly, from the maker of the bonds as the one available purchaser of them. The maker of the bonds, at the same time sought to reduce his obligations as much as possible by buying the bonds as cheaply as he could. While each seller thus knew that he was receiving from the maker of the bonds less than their face amount, there is no finding that any seller intended to transfer or release something for nothing or to make a gift of any part of his claim, as distinguished from making a sale and assignment of his whole claim for the highest available price. The maker thus realized a gain from each purchase and the Commissioner of Internal Revenue found correctly that, for federal income tax purposes, the maker must include that gain in his gross income for the tax year in which he made the purchase. 2 The respondent, Lewis F. Jacobson, in 1938, 1939 and 1940 resided, practiced law and owned or controlled substantial property interests in Chicago, Illinois. In 1943 the petitioner, Commissioner of Internal Revenue, found deficiencies in the income taxes paid by the respondent for each of those years. Those deficiencies totaled $3,967.97, of which about $2,500 are now before us. This case arose from the Commissioner's addition to the reported gross income of the respondent of the differences between (1) the principal face amounts of certain leasehold bonds executed by the respondent and (2) the lesser amounts paid by him for their purchase. Such purchases were made by or for him substantially as follows: Purchased Percentage D—Direct of face B—Through Principal amount 3 Date of purchase broker face Purchase paid by 4 C—Through amount price purchaser- 5 bondholders' maker- 6 committee taxpayer 1938 7 Apr. 9, 1938....... D. $450.00 $202.50 45 8 June 9, 1938....... D. 3,600.00 1,620.00 45 Aug. 17,1938....... D. 900.00 405.00 45 1939 9 Feb. 15, 1939...... B. 1,800.00 900.00 50 June 16, 1939...... D. 450.00 225.00 50 Oct. 23, 1939...... B. 180.00 86.50 48 1940 Apr. 4, 1940....... C. 270.00 130.00 48 May 21, 1940....... C. 450.00 210.00 47 10 May 23, 1940....... C. 2,700.00 1,080.00 40 11 June 19, 1940...... C. 1,800.00 720.00 40 July 1, 1940....... B. 450.00 200.00 45 July 3, 1940....... B. 450.00 200.00 45 July 10, 1940...... B. 450.00 184.50 41 Sept. 23, 1940..... B. 450.00 185.00 41 12 Total......... ---------- $14,400.00 $6,348.50 ---------- 13 Upon the respondent's petition, the Tax Court reviewed the Commissioner's findings and— 14 'Held that, as to the bonds acquired by petitioner (Jacobson, the respondent here) through direct negotiations with the bondholdes, he is not taxable on the gain therefrom under the doctrine of Helvering v. American Dental Co., 318 U.S. 322, 63 S.Ct. 577, 87 L.Ed. 785; held, further, that petitioner is taxable on the gain realized in the purchases from bondholders through the secretary of the bondholders' committee and the security dealers, under the doctrine of the Supreme Court in United States v. Kirby Lumber Co., 284 U.S. 1, 52 S.Ct. 4, 76 L.Ed. 131, he being at all times solvent.' 6 T.C. 1048. 15 Six of the sixteen judges dissented and five of those six voted to uphold Commissioner completely, on the ground that none of the transactions were gratuitous. 6 T.C. 1048, 1057—1059. The Commissioner petitioned the Court of Appeals for the Seventh Circuit to review that part of the judgment which was unfavorable to him. The respondent did the same as to the remainder of the judgment. That court decided against the Commissioner on both petitions. It held that, because the respective sellers knew that the bonds they sold were being bought by or for the respondent, as the maker of them, any excess of the face values of the bonds over their sales prices should be treated as gifts to the respondent and as exempt from income tax. 164 F.2d 594. Due to the importance of the issues in the unsettled field of the taxability of gains derived by a debtor from his discharge of his own obligations at a discount, we granted certiorari in both cases. 333 U.S. 866, 68 S.Ct. 792. We have heard and decided them together. 16 The further material facts, as found by the Tax Court or as shown by undisputed evidence, are as follows: 17 By purchases made in 1922 and 1923 the respondent acquired a 99-year lease, running from May 1, 1914, together with a two-story store, office and apartment building on the leased premises in Chicago. On or about May 1, 1925, he borrowed $90,000 from a nearby bank and, together with his wife, executed in return 200 bonds secured by a trust deed mortgaging to that bank the leasehold and the improvements thereon. The bonds bore interest at 6 1/2 per cent per annum and were for the total principal amount of $90,000, with $2,500 maturing semiannually up to and including November 1, 1931. The balance of the bonds, totalling $57,500, were to mature May 1, 1932. The original proceeds were used by the respondent to retire the existing encumbrance, of an undisclosed amount, on the property, pay for a $16,250 addition made by him to the building on the leasehold and pay the necessary brokerage commission of approximately 10 per cent of t e loan, plus the cost of printing the bonds and other expenses in connection with the loan. A remaining 'small surplus' was paid to the respondent. In 1925 the respondent, for the purposes of computing depreciation, allocated $76,580.56 to the improvements, including the new addition, and $40,000 to the leasehold, out of their total cost to him of $116,580.56. 18 The bonds due on or before November 1, 1931, were paid at or about their maturities. The debtor has never been in default on any interest payment. However, after the trustee bank closed on June 8, 1931, a committee was formed to represent the holders of this issue of bonds. May 1, 1932, the respondent secured from the committee and individual bondholders a five-year extension of the maturity on all of the bonds and a reduction in the interest rate from 6 1/2 to 5 per cent. During this extention the respondent issued his checks in the names of the respective bondholders to cover interest due them. The checks were delivered by the secretary of the bondholders' committee, the respondent kept himself fully informed as to the identity and location of the respective bondholders and they, in turn, frequently visited him to learn about his financial condition and that of the trusteed property. In 1937 he procured a further extension of the maturity of the bonds to May 1, 1942, and, in that connection, paid 10 per cent on the principal of each bond, leaving a total outstanding balance of $51,750 payable on these bonds. 19 The Tax Court found that in 1938 the fair market value of the leasehold and the improvements thereon was $80,000 and that in 1939 and 1940 it was the same, less accrued depreciation. The respondent testified that he valued it at considerably less, even as low as twice the amount of its gross income, or about $32,000. The gross and net income from the trusteed property, after deduction of expenses, depreciation and also the interest on the bonds, was: 20 The respondent received from his law practice and other sources the following additional gross income: 1938, $38,390.85; 1939, $35,644.78; and 1940, $35,279.59. The Tax Court said that: 'On the strength of the showing of petitioner's assets and liabilities, we find petitioner was solvent during each of the taxable years 1938, 1939, and 1940.' 6 T.C. 1948, at page 1053. The Court of Appeals said: 'The Tax Court found that the taxpayer was solvent during each of the taxable years 1938, 1939 and 1940, and we accept the finding, although a perusal of the record makes it quite apparent that he was in straitened financial circumstances.' 164 F.2d at page 596. 21 In his petition to the Tax Court the respondent stated, and it has not been disputed, that the value of the leasehold and building had sharply depreciated since his acquisition of them. The neighborhood had changed, stores were vacant or paid less than half of their previous rents, from 1932 to 1938 the value of the property was substantially less than its cost to him, conditions were getting worse and he felt certain that he would sustain a large loss in connection with the property.1 22 The Tax Court's findings describe each bond sale that is material. Some were to the respondent personally and some to his law partner, acting on his behalf. The rest were made indirectly to the respondent through brokers or through the bondholders' committee. The Tax Court said that each sale that was made through a broker or the committee was closely akin to an open market transaction. It made no finding that any seller intended to transfer or release something for nothing. It referred to all of the respondent's acquisitions of bonds as purchases. Apparently the bonds were payable to bearer and the Tax Court referred to them as negotiable bonds. Each seller made a complete transfer to the respondent of all the seller's rights to or under the bonds. Each seller thus determined the amount of his own loss on his investment. Each knew that the maker of the bond would acquire or secure control over it and would thus be enabled to reduce his liabilities by its face amount. Except for the 10 per cent paid on each bond in 1937, there is no evidence that any bondholder at any time received any partial payment on any bond or consented to a reduction of the indebtedness evidenced by the bond. There is no suggestion that any of the respondent's payments made in 1938, 1939 or 1940 were made specifically in partial reduction of the respondent's obligation as evidenced by a bond or that any bondholder specifically discharged him from any part of the balance of that obligation. On the other hand, it does appear that each of such payments was made in consideration of the transfer to the respondent of title to the entire bond. Each bond was delivered to the respondent evidencing his obligation for its full original face amount, less only the 10 per cent payment made, on account, in 1937. At the time of the trial, the respondent apparently still held the purchased bonds 'intact.' The Court of Appeals repudiated any distinction made by the Tax Court for present purposes between the direct and indirect sales to the respondent. The Court of Appeals based its decision on each seller's knowledge that he was transferring his bond to the maker of it. Thus far we agree. The Court of Appeals, however, without any finding of intent by the respective sellers to transfer or release something for nothing, as distinguished from an intent to get the highest available price for their entire claims, treated the respondent's gain from each purchase as exempt from the taxation imposed by § 22(a) of the Revenue Act of 19382 and of the Internal Revenue Code, because that court felt itself obliged by precedent to classify each such gain as a 'gift' under § 22(b)(3) of that Act3 and Code. We hold, however, that those Sections do not, in the light of the decisions of this Court, permit that result. 23 The first test of the taxability of such gains relates to their inclusion within such gains relates to their inclusion with the gross income of the taxpayer under § 22(a), without reference to the specific exclusions made from it by § 22(b). The other test consists of the application to such gains of any of those specific exclusions. We hold that these gains come within § 22(a) but not within any of the exclusions from gross income stated in § 22(b). 24 The respondent realized an immediate financial gain from his purchase of these bonds at a discount. By that acquisition he was enabled, at will, to cancel them and thus discharge himself from liability to pay them. While the record indicates that he held them 'intact', apparently without crediting released indebtedness on them or otherwise physically cancelling them in whole or in part (except for the 10 per cent payments made by him on each bond in 1937), his possession of them and control over them is not disputed and the petitioner has properly treated their acquisition as constituting a reduction of the respondent's debts to the extent of their face amount. At the time of their purchase the respondent was unconditionally and primarily bound to pay their face amounts on May 1, 1942, with interest. Although in straitened financial circumstances he was solvent, both before and after his acquisition of the bonds, and the bonds apparently were collectible from him in full through appropriate enforcement proceedings. His acquisition, and consequent control over the discharge of these bonds, therefore, improved his net worth by the difference between their face amount and the price he paid for them. It also relieved him of the semiannual interest payments on them of 5 per cent per annum. His acquisition of them likewise reduced the face amount of the lien held by others upon his leasehold property. In the first instance he had received the full face amount in cash for these bonds so that his repurchase of them for 50 per cent, or less, of that amount reflected a substantial benefit which he had derived from the use of that borrowed money.4 These were not purchase money bonds. The gains from their cancellation were not akin to reductions in balances due on the prices of previously acquired property. The respective sellers of the bonds bore no relation to the respondent other than that of creditors. The gains derived by the respondent through these purchases were comparable to those he would have realized if he had purchased, at the same discount, like bonds issued by a third party and had resold them at full face value or had turned them in at full value as a credit upon some other indebtedness of the respondent. His gains were comparable in their nature to those which he would have reali ed if a third party, pursuant to a contract, had paid off his indebtedness on these bonds for him to the extent of the discount at which he purchased them.5 The nature of the gain derived by a debtor from his purchase of his own obligatins at a discount is the same whether the debtor is a corporation or a natural person. That such a gain comes within the meaning of gross income as used in federal income tax laws was long ago recognized by the Treasury Department's Regulations and by this Court in the leading cases in this field.6 United States v. Kirby Lumber Co., 284 U.S. 1, 52 S.Ct. 4, 76 L.Ed. 131; Helvering v. American Chicle Co., 291 U.S. 426, 54 S.Ct. 460, 78 L.Ed. 891. Similar provisions appeared in the Regulations in effect in 1938-1940.7 25 If § 22(a) stood alone, without the exclusions stated in § 22(b), the gain realized by the respondent in this case unquestionably would constitute gross income for income tax purposes. The provisions of § 22(b) and the decisions of this Court do not change that result. On the contrary, they confirm it. 26 A striking demonstration of the meaning given by Congress to § 22(a) appears in its Amendments to § 22(b) of the Internal Revenue Code by the Revenue Act of 1939, c. 247, 53 Stat. 862, approved June 29, 1939.8 These Amendments then applied only to taxable years beginning after December 31, 1938, and only to discharges of indebtedness occurring on or after June 29, 1939. The value of these Amendments for the purposes of the instant case is not so much in the exclusions which they prescribe, as in the clear light which their own limitations shed upon §§ 22(a) and 22(b) to the extent that those Sections remain unchanged. 27 Unless those Sections as they stood in 1938 meant that the gains derived by a debtor corporation from its purchases of its own obligations at a discount resulted in gross income under § 22(a), there was no need for these 1939 Amendments. Furthermore, as the status of natural persons and corporations is not differentiated in § 22(a), the new Amendments make it equally clear that, inasmuch as they relieve only certain corporations from the taxability of gains derived from their purchases of their own obligations at a discount, it must be that similar gains derived by natural persons also remain taxable under § 22(a). The strength of this reflection of the Amendments upon the unamended Sections is emphasized by their temporary character. The Amendments expressly provide that they shall not apply to a taxable year beginning after December 31, 1942. This indicates that, for its permanent program, Congress regarded such gains as properly taxable and it indicates that the Amendments were intended to authorize temporary changes in policy and were not clarifications of existing or continuing tax policies. While the time limit originally prescribed has been subsequently extended, the extensions have been made by separate Acts, each for a period of one to three years.9 This repeated emphasis upon their temporary character increases the contrast which they make with the permanent policy of Congress as to the general taxability of this kind of gains under § 22(a). 28 These Amendments describe gains corresponding lmost precisely with those derived by the respondent from his transactions in the instant case but the Amendments apply only to corporate gains. They thus indicate that such gains wee recognized as not having been excluded from gross income by § 22(b)(3) or by any other Section. If they had been so excluded there would have been no need for the new Amendments to exclude those which they did, even temporarily. Furthermore, those gains are not excluded from gross income for all purposes of the income tax laws. Section 22(b)(9) excludes them only from the ordinary income taxes for the taxable year in which the taxpaying corporation purchases its own securities at a discount.10 Furthermore, the exclusion under s 22(b)(9), as distinguished from other exclusions under § 22(b), is available only upon the express condition that the taxpayer makes and files at the time of filing the return its consent to the Regulations11 prescribed under § 113(b)(3)12 then in effect. That Section and such Regulations require that, where any amount is excluded by a corporation from its gross income under § 22(b)(9) on account of its discharge of its own indebtedness, the whole or a part of such amount shall be applied to the reduction of the basis of property held by the taxpayer during any portion of the taxable year in which such discharge occurs. The amount to be so applied and the properties to which the reduction shall be allocated are to be determined by Regulations approved by the Secretary of the Treasury. This means that such a gain, instead of being completely excluded as exempt from taxation, is postponed, for income tax purposes, until a later date when the property is disposed of in a way which will permit another form of ascertainment of the taxpayer's gain or loss in its disposition.13 These provisions therefore demonstrate that Congress, at least since 1939, has prescribed that, in order for a corporate taxpayer to exclude from its gross income under § 22(a) certain gains attributable to the discharge within the taxable year of the taxpayer's indebtedness evidenced by bonds, the taxpayer must consent to the subsequent use of those gains in reducing the basis of property held by the taxpayer during any portion of the taxable year in which such discharge occurred. A corporate taxpayer with gains meeting these specifications but not filing the required consent would be obliged to include those gains in its gross income, unless additional facts brought them under some other exemption. A fortiori, a natural person, such as the respondent in the instant case, who has derived gains precisely within these specifications but who, as a natural person, is ineligible to file the required consent is obliged to include those gains in his gross income under § 22(a). It remains, therefore, to consider whether there are facts in this case which bring this respondent's transactions within any exclusion other than that stated in § 22(b)(9).14 29 The only provision for the exclusion of these types of gains from the respondent's gross income that is presented for our consideration is the general exemption of gifts from taxation prescribed by § 22(b)(3).15 This was applied by this Court in favor of a taxpayer in Helvering v. American Dental Co., 318 U.S. 322, 63 S.Ct. 577, 87 L.Ed. 785, as well as by the court below in the instant case. Both the general provision for taxation of income and this provision for the exclusion of gifts from gross income, for income tax purposes, have been in the Federal Income Tax Acts in substantially their present form since the Revenue Act of 1916.16 The contrast between the provisions is striking. The income taxed is described in sweeping terms and should be broadly construed in accordance with an obvious purpose to tax income comprehensively. The exemptions, on the other hand, are specifically stated and should be construed with restraint in the light of the same policy. Congress could have excluded from the gross income of all taxpayers the gains derived by debtors either from their acquisitions of their own obligations at a discount and their consequent control over them, or from their respective releases from all or part of such obligations by their respective creditors upon the debtor's payment to the creditor of something less than the full amount of the debt. Congress, especially since the Revenue Act of 1938, has been cognizant of this issue and of its power to meet it as stated, but it has chosen to extend such relief only on the above described restricted and temporary basis and only in the case of corporations. In its treatment of the issue Congress also has required the corporate taxpayer's consent to an alternative plan for a reduction of the corporation's basis of property values to be used in later determinations of its gains or losses. This special treatment is far different from the total exclusion of a gain resulting from an exempt gift. If such gains were already exempted as gifts under § 22(b)(3), as representing something transferred to the debtor for nothing, there would have been no need for § 22(b)(9). The conclusion to be drawn is that such transfers as are described in § 22(b)(9) could not, without more, quality as exempt gifts under § 22(b)(3). The same may be said of the acquisition, by a natural person, of his own obligations as debtor. The facts in the instant case present a situation quite similar to one contemplated by § 22(b)(9) except that the taxpayer here is a natural person. This emphasizes the taxability of the gains before us. 30 In the instant case the relation between the bondholder and the respondent may be assumed in each transaction to have been one in which the ultimate parties were known to each other to be such. There was no suggestion in the evidence or the findings that any bondholder was acting from any interest other than his own. Each transaction was a sale. The seller sought to get as high a price as he could for the bond and the buyer sought to pay as low a price as he could for the same bond. If the transaction had been completely on the open market through a stock exchange, the conduct and intent of each party could have been the same and there would have been little, if any, basis for any claim that the respondent's gain was not taxable income. The mere fact that the seller knew that he was selling to the maker of the bond as his only available market did not change the sale into a gift. In the absence of proof to the contrary, the intent of the seller may be assumed to have been to get all he could for his entire claim. Although the sales price was less than the face of the bond and less than the original issuing price of the bond, there was nothing to indicate that the seller was not getting all that he could for all that he had. There is nothing in the evidence or findings to indicate that he intended to transfer or did transfer something for nothing. The form of the transaction emphasized this relationship. The seller assigned the entire bond to his purchaser. The seller did not first release the maker from a part of the maker's obligation and, having made the maker a gift of that release, then sell him the balance of the bond or vice versa. It the seller actually had intended to give the maker some gift the natural reflection of that gift would have been a credit on the face of the bond or at least some record or testimony evidencing the release. This is not saying that the form of the transaction is conclusive. Assuming that the extension of the maturity of the bonds in the instant case was binding on the creditor, we do not rest this case upon the fact that the sale was made before maturity or that the seller may have received valid consideration for a total release of his claim because the debtor's payment was made before maturity. It is quite possible that a bondholder might make a gift of an entire bond to anyone, including the maker of it. The facts and findings in this case do not establish any such intent of the seller to make a gift in contradiction of the natural implications arising from the sales and assignments which he made. It is conceivable, although hardly likely, that a bondholder, in the ordinary course of business and without any express release of his debtor, might have sold part of his claims on the bonds he held at the full face value of those parts and then have made a gift of the rest of his claims on those bonds to the same debtor 'for nothing.' It is that kind of extraordinary transaction that the respondent asks us, as a matter of law, to read into the simple sales which actually took place and from which he derived financial gains. We are unable to do so on the findings before us. Cf. Bogardus v. Commissioner of Internal Revenue, 302 U.S. 34, 58 S.Ct. 61, 82 L.Ed. 32. 31 The situation in each transaction is a factual one. It turns upon whether the transaction is in fact a transfer of something for the best price available or is a transfer or release of only a part of a claim for cash and of the balance 'for nothing.' The latter situation is more likely to arise in connection with a release of an open account for rent or for interest, as was found to have occurred in Helvering v. American Dental Co., supra, than in the sale of outstanding securities, either of a corporation as described in § 22(b)(9), or of a natural person as presented in thi case. For these reasons we hold that the Commissioner was justified in finding a taxable gain, rather than an exempt gift, in each of the transactions before us. The judgment of the Court of Appeals accordingly is reversed and the cause is remanded for further action in accordance with this opinion. It is so ordered. 32 Reversed and remanded. 33 Mr. Justice RUTLEDGE, although joining in the Court's judgment and opinion, is of the view that the result is essentially in conflict with that reached in Helvering v. American Dental Co., 318 U.S. 322, 63 S.Ct. 577, 87 L.Ed. 785. 34 .Mr. Justice REED with whom Mr. Justice DOUGLAS joins, dissenting. 35 As detailed in Helvering v. American Dental Co., 318 U.S. 322, 63 S.Ct. 577, 581, 87 L.Ed. 785, the problems of the tax results to the debtor of the release of indebtedness have been difficult. That opinion shows that both Congress and Internal Revenue Regulations have taken varying views as to whether a taxpayer should pay an income tax on such balance sheet improvements.1 36 We held in the American Dental case in 1943 that the 'receipt of financial advantages gratuitously' was a gift under Int.Rev.Code § 22, 26 U.S.C.A. § 22. Congress has made no change in the law since that time, nor has it been requested to do so. For the reasons discussed at length in that case, we are of the opinion that the judgment of the Court of Appeals should be affirmed. 1 In his petition to the Tax Court, the respondent, in describing the sale of bonds to him at a discount in 1939, said: 'It was self interest and good business judgment exercised by all prudent persons to take cash settlements, when otherwise greater losses might be incurred. I have done that very thing myself, and have advised clients to do so in similar circumstances. Most real estate bonds in Chicago were selling from 5c to 25c on the dollar in 1932 to 1940.' In the instant case the respondent was found to have been solvent before, as well as after, his realization of the gains in question. The payment of the bonds purchased by him was secured by the mortgage of his leasehold property which property had a fair market value substantially in excess of the face amount of the bonds. The record fails to establish any sufficient basis for a claim that the respondent had suffered losses which, or tax purposes, offset his gains from his purchase of the bonds. Little of the $90,000 originally received by him for the bonds was used to purchase property. There is no finding or substantial evidence showing specifically how those funds were invested. Even if they are traced, in part, into the addition made to the building on the leasehold premises and into the discharge of the then existing encumbrance on those premises, the total so used is not shown and the shrinkage in the value of those investments is not clearly ascertained in the taxable years in question. The ratio of the loss in value of the leasehold property indicated by the Tax Court findings is about 32 per cent of its cost in 1925 but this loss is merely based upon estimates. The respondent claims a larger shrinkage but there is not a sufficient ascertainment of it to permit consideration of its use as an offset to the respondent's gains in 1938, 1939 or 1940. See 2 Mertens, Law of Federal Income Taxation, § 11.20 and n. 99 (1942). 2 'Sec. 22. Gross income. '(a) General definition.—'Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind nd in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property, also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. * * *' 52 Stat. 457. This was re-enacted as § 22(a), I.R.C., 53 Stat. 9, and amended in a manner not material here in 53 Stat. 574, 575, 26 U.S.C. (1940 ed.), § 22(a), 26 U.S.C.A. § 22(a). The Revenue Act of 1938 applied to the respondent's income in 1938 and the Internal Revenue Code to that in 1939 and 1940. 3 'Sec. 22. Gross income. '(b) Exclusions from gross income.—The following items shall not be included in gross income and shall be exempt from taxation under this title: '(3) Gifts, bequests, and devises.—The value of property acquired by gift, bequest, devise, or inheritance (but the income from such property shall be included in gross income) * * *.' 52 Stat. 458. This was re-enacted as § 22(b)(3), I.R.C., 53 Stat. 10, 26 U.S.C. (1940 ed.), § 22(b)(3), 26 U.S.C.A. § 22(b)(3), without material change. 4 See note 1, supra, showing the varied uses to which the respondent applied these proceeds and showing that it is not practicable in this case to determine his losses from his resulting investments, and much less to offset them against his gains now at issue. His tax benefits from those losses are thus postponed until some such occasion as the sale of the properties reflecting them makes it possible to ascertain the losses clearly. 5 Such discharges of a taxpayer's debts by payments made for his benefit are realizable income to him. In Douglas v. Willcuts, 296 U.S. 1, 9, 56 S.Ct. 59, 62, 80 L.Ed. 3, 101 A.L.R. 391, this Court said: 'The question is one of statutory construction. We think that the definitions of gross income (Revenue Acts, 1926, § 213, 1928, § 22 (26 U.S.C.A.Int.Rev.Acts, pages 163, 354)) are broad enough to cover income of that description. They are to be considered in the light of the evident intent of the Congress 'to use its power to the full extent.' Irwin v. Gavit, 268 U.S. 161, 45 S.Ct. 475, 476, 69 L.Ed. 897; Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 89, 55 S.Ct. 50(52), 79 L.Ed. 211. We have held that income was received by a taxpayer, when, pursuant to a contract, a debt or other obligation was discharged by another for his benefit. The transaction was regarded as being the same in substance as if the money had been paid to the taxpayer and he had transmitted it to his creditor. Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918; United States v. Boston & Maine Railroad, 279 U.S. 732, 49 S.Ct. 505, 73 L.Ed. 929.' 6 '* * * By the Revenue Act of (November 23,) 1921, c. 136, § 213(a) 42 Stat. 238, gross income includes 'gains or profits and income derived from any source whatever,' and by the Treasury Regulations authorized by § 1303 (26 U.S.C.A. § 1245), that have been in force through repeated re-enactments, 'If the corporation purchases and retires any of such bonds at a price less than the issuing price or face value, the excess of the issuing price or face value over the purchase price is gain or income for the taxable year.' Article 545(1)(c) of Regulations 62, under Revenue Act of 1921. See Article 544(1)(c) of Regulations 45, under Revenue Act of 1918; Article 545(1)(c) of Regulations 65, under Revenue Act of 1924; Article 545(1)(c) of Regulations 69, under Revenue Act of 1926; Article 68(1)(c) of Regulations 74, under Revenue Act of 1928. We see no reason why the Regulations should not be accepted as a correct statement of the law. '* * * The defendant in error has realized within the year an accession to income, if we take words in their plain popular meaning, as they should be taken here.' United States v. Kirby Lumber Co., 284 U.S. 1, 2, 3, 52 S.Ct. 4, 76 L.Ed. 131. 7 'Art. 22(a)—14. Cancellation of indebtedness.—(a) In general. The cancellation of indebtedness, in whole or in part, may result in the realization of income. If, for example, an individual performs services for a creditor, who in consideration thereof cancels the debt, income in the amount of the debt is realized by the debtor as compensation for his services. A taxpayer realizes income by the payment or purchase of his obligations at less than th ir face value. 'Art. 22(a)—18. Sale and purchase by corporation of its bonds. (1) (a) If bonds are issued by a corporation at their face value, the corporation realizes no gain or loss. (b) If the corporation purchases any of such bonds at a price in excess of the issuing price or face value, the excess of the purchase price over the issuing price or face value is a deductible expense for the taxable year. (c) If, however, the corporation purchases any of such bonds at a price less than the issuing price or face value, the excess of the issuing price or face value over the purchase price is gain or income for the taxable year.' Treasury Regulations 101, promulgated under the Revenue Act of 1938. In Treasury Regulations 103, promulgated under the Internal Revenue Code, §§ 19.22(a)—14 and 19.22(a)—18 were identical with the above. Even today they are the same in Treasury Regulations 111, promulgated under the Internal Revenue Code, as §§ 29.22(a) 13 and 29.22(a)—17. 8 These Amendments are contained in § 215 of the Internal Revenue Act of 1939, c. 247, 53 Stat. 862, 875, 876, 26 U.S.C. (1940 ed.), §§ 22(b)(9), 113(b) (3), 26 U.S.C.A. §§ 22(b)(9), 113(b)(3). They added to the Internal Revenhe Code § 22(b)(9) and § 113(b)(3), both relating to the discharge of indebtedness. A cross reference is made to the latter in the former. Such § 215, in its entirety, is as follows: 'Sec. 215. Discharge of indebtedness. '(a) Income from discharge of indebtedness.—Section 22(b) of the Internal Revenue Code (relating to exclusions from gross income) is amended by adding at the end thereof the following new paragraph: "(9) Income from discharge of indebtedness.—In the case of a corporation, the amount of any income of the taxpayer attributable to the discharge, within the taxable year, of any indebtedness of the taxpayer or for which the taxpayer is liable evidenced by a security (as hereinafter in this paragraph defined) if— "(A) it is established to the satisfaction of the Commissioner, or "(B) it is certified to the Commissioner by any Federal agency authorized to make loans on behalf of the United States to such corporation or by any Federal agency authorized to exercise regulatory power over such corporation, that at the time of such discharge the taxpayer was in an unsound financial condition, and if the taxpayer makes and files at the time of filing the return, in such manner as the Commissioner, with the approval of the Secretary, by regulations prescribes, its consent to the regulations prescribed under section 113(b)(3) then in effect. In such case the amount of any income of the taxpayer attributable to any unamortized premium (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be included in gross income and the amount of the deduction attributable to any unamortized discount (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be allowed as a deduction. As used n this paragraph the term 'security' means any bond, debenture, note, or certificate, or other evidence of indebtedness, issued by any corporation, in existence on June 1, 1939. This paragraph shall not apply to any discharge occurring before the date of the enactment of the Revenue Act of 1939, or in a taxable year beginning after December 31, 1942.' '(b) Basis reduced.—Section 113(b) of the Internal Revenue Code (relating to the adjusted basis of property) is amended by adding at the end thereof the following new paragraph: "(3) Discharge of indebtedness.—Where in the case of a corporation any amount is excluded from gross income under section 22(b)(9) on account of the discharge of indebtedness the whole or a part of the amount so excluded from gross income shall be applied in reduction of the basis of any property held (whether before or after the time of the discharge) by the taxpayer during any portion of the taxable year in which such discharge occurred. The amount to be so applied (not in excess of the amount so excluded from gross income, reduced by the amount of any deduction disallowed under section 22(b)(9)) and the particular properties to which the reduction shall be allocated, shall be determined under regulations (prescribed by the Commissioner with the approval of the Secretary) in effect at the time of the filing of the consent by the taxpayer referred to in section 22(b)(9). The reduction shall be made as of the first day of the taxable year in which the discharge occurred except in the case of property not held by the taxpayer on such first day, in which case it shall take effect as of the time the holding of the taxpayer began.' '(c) Taxable years to which applicable.—The amendments made by this section shall be applicable to taxable years beginning after December 31, 1938.' 53 Stat. 875, 876. See also, Treasury Regulations 103, promulgated under the Internal Revenue Code; § 19.22(b)(9)—1, Income from discharge of indebtedness; § 19.22(b)(9)—2, Making and filing of consent; § 19.113(b)(3)—1, Adjusted basis: Discharge of corporate indebtedness: General rule; § 19.113(b)(3)—2, Adjusted basis: Discharge of corporate indebtedness: Special cases. 9 While § 22(b)(9) originally did not apply to any discharge occurring in a taxable year beginning after December 31, 1942, 53 Stat. 875, this date was changed to December 31, 1945, 56 Stat. 811; December 31, 1946, 59 Stat. 574; December 31, 1947, 60 Stat. 749; and December 31, 1949, 61 Stat. 179. 10 The exclusions made by § 22(b) apply to the taxes imposed by the Income Tax Chapter of the Internal Revenue Code. These include the ordinary income taxes but not the additional income taxes such as those imposed on personal holding companies or the excess-profits taxes. 11 Treasury Regulations 103, supra, §§ 19.113(b)(3)—1 and 2 cover the subject. They provide a comprehensive procedure for decreasing the cost or other basis of a taxpaying corporation's properties as a condition of its taking advantage of § 22(b)(9). This procedure applies not only in 'the case of indebtedness incurred to purchase specific property' but also in 'the case of specific property (other than inventory or notes or accounts receivable) against which, at the time of the discharge of the indebtedness, there is a lien (other than a lien securing indebtedness incurred to purchase such property) * * *.' It even provides that if any excess of amount excluded from gross income under § 22(b)(9) exceeds hose two adjustments, the cost or other basis of all the property of the debtor other than inventory and notes and accounts receivable shall be reduced proportionately and, finally, the balance, if any, of the amount excluded from the debtor's gross income is applied to the reduction of the cost or other basis of the debtor's inventory or notes or accounts receivable. It thus offers affirmatively a broad alternative plan for reaching the corporate debtor's gains from its discharge of its indebtedness at a discount. 12 See note 8, supra. 13 Subsequent Amendments have altered these provisions but have not changed their general effect nor their reflection upon the meaning of § 22(a). For the extension of the temporary nature of the provisions, see note 9, supra. The requirement of a specially certified 'unsound financial condition' for a corporate taxpayer in order to make § 22(b)(9) applicable was eliminated by the Revenue Act of 1942. That Act also eliminated the limitation to securities in existence on June 1, 1939. 56 Stat. 811. In making these temporary provisions Congress had in mind especially the conditions presented by railroads and other corporations then seeking to liquidate heavy indebtedness. The Committees reporting the bills for passage emphasized the limitations that were imposed by these Amendments upon corporations seeking to excluded from taxable income the gains derived from their acquisition of their own securities at a discount. H.R. Rep. No. 855, 76th Cong., 1st Sess. 5, 23—25 (1939); Sen. Rep. No. 648, 76th Cong., 1st Sess. 2—3, 5 (1939). Obviously it was expected that these provisions would decrease the existing burdens of income taxation. It certainly was not intended to impose a burden of postponed taxability upon gains which otherwise would have been completely exempted from taxation by § 22(b)(3). 14 Several provisions have extended comparable relief to other taxpayers. None of them apply to the respondent. They emphasize, however, the understanding of Congress that, without special provision for their exclusion, the gains of a taxpayer from the discharge of his indebtedness at a discount are required by § 22(a) to be included in his gross income. They recognize that the mere exclusion of 'gifts' under § 22(b)(3) is not enough to cover factual situations like those presented in § 22(b)(9) or in the other relief provisions above mentioned. Among these relief provisions are the following: Exclusion, from excess profits credit, of income derived from the retirement or discharge by the taxpayer of the taxpayer's own obligations if they have been outstanding more than 18 months. Internal Revenue Code, §§ 711(a)(1)(C), 711(a)(2)(E), and § 711(b)(1)(C), 26 U.S.C.A. § 711, added by the Second Revenue Act of 1940, c. 757, 54 Stat. 976—978, repealed by the Revenue Act of 1945, c. 453, 59 Stat. 568. Exclusion, from gross income, for income tax purposes, of the income of railroad corporations attributable to their discharge of their indebtedness to the extent realized from a modification or cancellation of indebtedness, pursuant to an order of court. Internal Revenue Code, § 22(b)(10), added by the Revenue Act of 1942, c. 619, 56 Stat. 812, applicable to taxable years beginning after December 31, 1939, but not applicable to any discharge in a taxable year beginning after December 31, 1945; this latter date extended to December 31, 1946, 59 Stat. 574; December 31, 1947, 60 Stat. 749; and December 31, 1949, 61 Stat. 179. 15 See note 3, supra. 16 'Sec. 2. (a) That, subject only to such exemptions and deductions as are hereinafter allowed, the net income of a taxable person shall include gains, profits, and income derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, businesses, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever: * * * 'Sec. 4. The following income shall be exempt from the provisions of this title (Title I.—Income Tax): 'The proceeds of life insurance policies paid to individual beneficiaries upon the death of the insured; the amount received by the insured, as a return of premium or premiums paid by him under life insurance, endownment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon the surrender of the contract; the value of property acquired by gift, bequest, devise, or descent (but the income from such property shall be included as income); interest upon the obligations of a State or any political subdivision thereof or upon the obligations of the United States or its possessions or securities issued under the provisions of the Federal farm loan Act of July seventeenth, nineteen hundred and sixteen; the compensation of the present President of the United States during the term for which he has been elected, and the judges of the Supreme and inferior courts of the United States now in office, and the compensation of all officers and employees of a State, or any political subdivision thereof, except when such compensation is paid by the United States Government.' (Italics supplied.) Revenue Ac of 1916, c. 463, 39 Stat. 756, 757, 758, 759. See also, An Act To reduce tariff duties and to provide revenue for the Government, and for other purposes. October 3, 1913, 38 Stat. 114, 167, § II, subd. B. 1 Helvering v. American Dental Co., supra, 318 U.S. 322, page 326, note 5, p. 328, note 9, 63 S.Ct. 577, 579, 580, 87 L.Ed. 785, particularly tax free railroad adjustments under c. XV, § 735, 53 Stat. 1140.
1112
336 U.S. 1 69 S.Ct. 371 93 L.Ed. 453 LEIMAN et al.v.GUTTMAN et al. No. 88. Argued Dec. 13, 1948. Decided Jan. 17, 1949. Mr. Samuel Marion, of New York City, for petitioner. Messrs. Barney Rosenstein and Leo Praeger, both of New York City, for respondent. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Section 221 of Ch. X of the Bankruptcy Act, 52 Stat. 897, 11 U.S.C. § 621, 11 U.S.C.A. § 621, provides: 2 'The judge shall confirm a plan if satisfied that—* * * 3 '(4) all payments made or promised by the debtor or by a corporation issuing securities or acquiring property under the plan or by any other person, for services and for costs and expenses in, or in connection with, the proceeding or in connection with the plan and incident to the reorganization, have been fully disclosed to the judge and are reasonable or, if to be fixed after confirmation of the plan, will be subject to the approval of the judge * * *.' 4 The question presented by this case is whether that provision gives the bankruptcy court exclusive jurisdiction over petitioners' claim for services as attorneys in the reorganization of Pittsburgh Terminal Coal Corp., the debtor. 5 Petitioners were attorneys for a protective committee representing public holders of the preferred stock of the debtor. The committee had on deposit 584 shares of the preferred stock from four stockholders. The committee agreed to hold those shares in escrow for the purpose of affording petitioners 'additional compensation' for their services in the reorganization proceedings of the debtor.1 6 Petitioners rendered valuable service in connection with the reorganization. When the plan was confirmed, they applied to the bankruptcy court for an allowance. That court allowed them $37,500 out of the estate. It concluded that, while that amount was all the estate should bear, their services were worth more than the allowance. But it held that it had no jurisdiction to pass on the amount of the allowance which should be paid under the escrow agreement. In re Pittsburgh Terminal Coal Corp., D.C., 69 F.Supp. 656. 7 Since in their view that court did not have jurisdiction of the claim, petitioners did not appeal from that order but brought instead the present suit in the New York courts for specific performance of the escrow agreement and for delivery of the deposited stock in accordance with the terms of that agreement. The Court of Appeals answered in the negative the following certified question: 8 'Has the Supreme Court of the State of New York jurisdiction over the subject matter of this action to recover for legal services rendered to the stockholders committee which are not compensable out of the assets of the Debtor's estate, in a Chapter X reorganization proceeding under the United States Bankruptcy Act?' 297 N.Y. 201, at page 204, 78 N.E.2d 472, at page 473. 9 The case is here on a petition for certiorari which we granted because of the importance of the question in administration of the Act. 10 We reviewed in Woods v. City Nat. Bank & Trust Co. of Chicago, 312 U.S. 262, 61 S.Ct. 493, 85 L.Ed. 820, and Brown v. Gerdes, 321 U.S. 178, 64 S.Ct. 487, 88 L.Ed. 659, the design of Ch. X insofar as fees and allowances are concerned. There we were dealing with fees and allowances payable out of the estate. Here we are dealing with fees which are incident to the reorganization but not payable out of the estate. Under the less comprehensive language of § 77B the leading authority was that the bankruptcy court had jurisdiction over the latter claims as well. In re McCrory Stores Corp., 2 Cir., 91 F.2d 947. We would be unmindful of history and heedless of statutory language if we held that the power of the bankruptcy court in this respect had been contracted2 as a result of Ch. X. 11 The control of the judge is not limited to fees and allowances payable out of the estate. Section 221(4) places under his control 'all payments made or promised' (1) by 'the debtor' or (2) 'by a corporation issuing securities or acquiring property under the plan' or (3) 'by any other person' for services rendered 'in connection with' the proceeding or 'in connection with' the plan and 'incident to' the reorganization. The services of petitioners concededly met those requirements; and the committee against whose stock a lien is sought to be asserted would plainly be included within the words 'any other person.' Moreover, these petitioners are included in the classes of claimants to whom the judge is empowered to allow reasonable compensation.3 To lift petitioner's claim from § 221(4) would therefore be to rewrite it or to hold that when extended so far it was unconstitutional. The latter has not even been intimated. The former is not permissible. 12 The aim of the expanded controls over reorganization fees and expenses is clear. The practice had been to fix them by private arrangement outside of court.4 The deposit agreement under which committees commonly functioned was viewed as a private contract,5 which granted the committee a lien on the deposited securities for its fees and expenses. By terms of the agreement the committee was normally the sole judge of their amount.6 This gave rise to serious abuses. There was the spectacle of fiduciaries fixing the worth of their own services and exacting fees which often had no relation to the value of services rendered.7 The result was that the effective amount received by creditors and stockholders under the plan was determined not by the court but by reorganization manager and committees. 13 Hence Congress instituted controls, controls which became more pervasive as § 77B was evolved into Ch. X. Section 211 requires that a committee file with the court a statement disclosing specified information including the agreement under which it operates.8 The scrutiny clause of § 212 gives the court power to set aside any of the provisions of such an agreement which it finds to be 'unfair or not consistent with public policy.' And § 221(4) is written in pervasive terms—it applies to 'all payments' for services 'in connection with' the proceeding or 'in connection with' the plan and 'incident to' the reorganization, whoever pays them.9 A statute establishing such broad supervision over committees cannot be presumed to be niggardly in its grant of authority when it deals with the matter which of all the others has the most direct impact on those whom it aims to protect. 14 We can find in this language no exemption for the kind of committee that petitioners represented. The fact that the committee may have represented a smaller or more intimate group than a conventional committee is irrelevant. The statute was designed to police the return which all security holders obtain from reorganization plans. The net return cannot be kept under supervision if private arrangements expressed in escrow agreements are to control. For the impact of excessive fee claims is the same whether they are charged directly against the estate or against the claim which represents a proportionate interest in the estate. 15 Nor is it an answer to say that state courts can supervise allowances of this nature if the bankruptcy court is disallowed authority to do so. The happenstance of litigation in the state courts is not the equivalent of the administrative rule adopted by Congress when it asked that committee claimants submit their requests to the bankruptcy court. The incidence of fees on reorganization plans is so great that control over them is deemed indispensable to the court's determination whether the plan should be confirmed. Section 221(4) provides, indeed, one of the standards by which the court makes that determination. Since the determination of allowances has been made an integral part of the process of confirmation which is exclusively entrusted to the bankruptcy court, we cannot infer that it may be delegated to a state court. Moreover, it is the bankruptcy court that is in the best position to know what work was done by the fee claimant, how important and involved it was, how much it benefited the whole group of security holders and how much it benefited the one class alone, how much of it was necessary, how much of it was effective. That court has already determined what the estate should pay. The question that remains is how much of a charge should be made against the escrowed stock and whether the state court or the bankruptcy court should determine what that charge should be. Certainly where, as in this case, the services benefited in part the estate and in part one class of security holders, it is the bankruptcy court that is in the position to weigh the interrelated issues of fact and make a fair allocation between the two. 16 These practical considerations support the literal reading of § 221(4) that it is the bankruptcy court that has jurisdiction to pass on these fees. Its jurisdiction is therefore exclusive. See Brown v. Gerdes, supra. 17 Petitioners did not appeal from the order of the District Court holding that it had no jurisdiction over these claims. But no reason is apparent why the petitioners may not apply to the District Court for an allowance even at this date. We were advised during the course of argument that the final decree under § 228 has not been entered.10 Yet though it has been, there is no reason in view of the special circumstances of this case why application cannot be made at the foot of the decree. 18 Affirmed. 19 Mr. Justice JACKSON, dissenting in part. 20 I agree with the opinion of the Court insofar as it holds that a committee of stockholders constituted under the Bankruptcy Act may not disburse or commit fiduciary funds in its own hands under general deposit agreement, nor funds of the estate, to pay attorneys' fees except as allowed by the federal court, and a contract to pay more from such funds would not be enforceable. But the opinion goes beyond that. As to agreements between stockholders and counsel which do not affect funds of the estate or of the committee, I see no reason to say that such contracts are subject to control by the Bankruptcy Court, or indeed, that in such a case as this, that there is any practical way in which the Bankruptcy Court can effectively assert such a jurisdiction as the opinion bestows upon It. 21 It seems to me that the Court is converting a provision of the Bankruptcy Act designed to prevent lawyers from overreaching stockholders into an authority for stockholders to swindle lawyers. It may appear like an instance of man biting dog, but the case before us is actually one of client snaring lawyer. The Court's opinion is a rather abstract declaration and my difficulty with it can be understood only from fuller recital of the facts. 22 This case has not been tried nor even been at issue. It was decided on motion to dismiss in the trial and intermediate appellate courts of New York State. All that was before the New York Court of Appeals was a certified abstract question to which I think it returned a correct abstract answer. But that question was not the only or the basic question presented by the case. 23 From a record that is unsatisfactory for decision of issues so important to the bar and to those interested in reorganizations, the following facts appear. 24 Pittsburgh Terminal Coal Corporation, as debtor, was in reorganization under Chapter X of the Bankruptcy Act. Three of these defendants, in a manner and with powers and duties not disclosed, became a 'Committee for Preferred Stockholders.' Whether any stock was deposited with them as suc does not appear and the Committee seems to have represented only the interests of a family group, heavily interested in preferred stock, which comprised and dominated the Committee. The Committee originally retained these lawyers. 25 The situation appears to have been one of those in which existence of any estate, and hence of any value to the preferred stock, depended upon the outcome of a lawsuit for 'uncovering mismanagement and malfeasance.' Remuneration for the lawyers who were to press the suit was contingent upon their creating an estate; but in such cases courts are properly reluctant after the event to include in allowances, compensation for the risk of doing much work for nothing. 26 These lawyers faced to slim a chance of fair compensation that they proposed to withdraw. To induce them to continue, four individual stockholders put 20% of their preferred stock in escrow with the defendant Committee under a separate written contract. This stock does not appear to have been previously deposited with the Committee, nor was it deposited at this time under the general stockholders' agreement but only under the special escrow agreement. The agreement with the lawyers recited, 'This Committee has secured these shares from the stockholders listed above for the purpose of affording to you additional compensation for your services in the above matter. They have been obtained and are held in escrow on the condition that they be delivered to you only at such time as the reorganization proceedings' are terminated and final settlement of claims made, and delivery was conditioned on faithful and satisfactory service by the lawyers. 27 After an estate was created by the efforts of the lawyers, the stockholders repudiated the agreement and contended that counsel's services were only compensable from the estate without resort to the escrow contract. The attorneys thereupon sought compensation by an allowance from the estate. Judge Gibson's final opinion on the application recites facts among which are the following: 28 The chairman of the Committee for Preferred Stockholders, 'while not denying that claimants had rendered services which could not be charged against the Debtor, and which were rendered at a time when any such compensation from the debtor's estate seemed improbable, asserted that the deposit of stock in escrow was to be effective only in case no considerable award should be made from the debtor's estate.' He indicates that the mismanagement litigation was 'the source of the ultimate fortunate recovery of the fund for distribution.' But he finds 'that claimants rendered services to the preferred stockholders named in the escrow agreement which were not compensable from the fund distributed by order of the Court. Among such services were those rendered in connection with the sinking fund claims, Guttman's criticism of the Trustee's sales of machinery and his management of the real estate, his rent collections and the repair of the debtor's houses and other property.' 29 The Debtor, the Committee and the Securities and Exchange Commission joined and 'contended that in a Chapter X proceeding the court has the duty of determining the reasonableness of all fees, whether compensable fees chargeable to the estate or for those which are non-compensable and which cannot be so charged.' But Judge Gibson held otherwise and I think very properly, concluded, 'In the instant case no sufficient fund has been credited to the depositing stockholders against which any allowance to claimants could be charged. The judgment, if any were entered, would be directly against the stockholders.' (All emphasis supplied.) This he thought 'seems to stretch the interpretative powers of this court too far.' 30 Thus denied compensation on a quantum meruit basis for services admittedly rendered for and of value to these stockholders, and the Bankruptcy Court holding itself without jurisdiction to enforce their contract, these lawyers then went into the courts of the State of New Y rk to enforce it. They named members of the Committee as such as defendants. This was quite proper, for it was the 'Committee' which, as escrow agent, held the stock in question. The complaint asked judgment that the Committee deliver up the property of which it was stakeholder but asked no judgment against the Committee that would be payable from any other fund or property in its hands. The suit also made parties defendant the individual preferred stockholders in whose behalf the agreement was made and who became parties to it individually by putting up their stocks and against whom Judge Gibson held he had no power in the bankruptcy proceeding to enter judgment. This action is thus against both individuals and the Committee. 31 However, the question which was certified to the Court of Appeals, and which is all that we took for review on certiorari to that court, ignores any question of individual liability and only asks (297 N.Y. 201, 78 N.E.2d 473), 'Has the Supreme Court of the State of New York jurisdiction over the subject matter of this action to recover for legal services rendered to the stockholders committee which are not compensable out of the assets of the Debtor's estate, in a Chapter X reorganization proceeding under the United States Bankruptcy Act.' 32 Read literally, I agree that the answer to that abstract question is 'No.' A committee organized under the Act is a fiduciary whose commitments are made subject to the supervision of the court. I do not think it can undertake, out of its trust funds or out of stocks deposited only under the general agreement provided for by the Act, to pay for services that are beyond the power of the court to supervise. 33 But this Court, if I read aright, holds that no contract between any person and a lawyer for services in a reorganization proceeding can fix the basis or amount of the fee even if such fees are not payable out of the estate or out of any funds in the court's control, because 'The statute was designed to police the return which all security holders obtain from reorganization plans. The net return cannot be kept under supervision if private arrangements expressed in escrow agreements are to control.' 34 I had not understood that the Bankruptcy Act in reorganization cases disables anybody, even if a stockholder, from employing his own lawyer on such terms as he sees fit to fix by contract or that it disables lawyers from accepting such retainers. To invalidate them, so far as compensation is concerned, is the effect, and, as I understand it, the intent of this decision. If one privately may retain a lawyer, I know of no reason why he may not fix his fee, contingent or otherwise, and secure the promised compensation by pledge of stock in the company being reorganized, or pay the fee in such stock. 35 I am unaware of any public interests protected by this denial of the right to hire one's own counsel for a fixed or determinable fee in such cases. The good served by court supervision in preventing lawyer raids on fiduciary funds is not advanced by this ruling. These shares were put up by individual stockholders, presumably mentally competent adults, in what proved to be a good bargain, even if they have to perform it, and a windfall if they do not. Are people situated as they were to be disabled from agreeing upon a fee that will induce counsel to expose mismanagement of the bankrupt or the trustee in cases where, as here, the chances of compensation otherwise are doubtful? 36 This Court seems to recognize unfairness in the situation it is creating and suggests that it may be remedied by a new application for larger fees to the Bankruptcy Court. But we do not tell the court what to do with the new application nor where it went wrong as to the former one. Indeed, we could not tell it of its mistake, if any, for we have only scattered bits of information about the evidence on which the previous order was made. If we would but put ourselves in the position of that court, I think it will at once appear how impractical § today's decision. 37 Judge Gibson apparently agreed that the services for which either the estate or the Committee, as such, should pay are adequately compensated by the allowance of $37,500. The reason he did not allow more was that services above that value were performed for neither the estate nor the Committee but for the individual stockholders who employed and agreed to pay the lawyers. Do we, without seeing the record, reverse this finding? If so, do we hold that the services Judge Gibson enumerated as not rendered for benefit of the estate or the Committee were rendered for one or the other instead of for the individuals? Or do we say that, even if such services were rendered to individuals, the estate should pay for them? From what fund is the additional compensation we are suggesting to be paid? Would not other parties in interest have a just grievance if the estate of the bankrupt is burdened with paying for extra-estate services? And what other fund is there in reach of the court's order? 38 What we seem to be saying is that an Act whose purpose is to give the Bankruptcy Court ample powers to see that no improper fees are charged on the estate really compels it to make the estate pay fees of lawyers for private parties in connection with reorganization. I cannot follow this. 39 But if we do not mean they shall be paid from the estate or the Committee, Judge Gibson has already pointed out that there is no other fund. Can this Court say he is wrong and that we know of one? It is suggested that the Bankruptcy Court may make an allowance to counsel for the individual services and charge them against the escrowed stock. I am not aware of anything which gives the Bankruptcy Court power to adjudicate the controversy, which is essentially a contract action between the individual stockholders and their lawyers, merely because the services involved appearing in the reorganization case. Clearly the Court is holding that the contract is not valid insofar as it fixed the fee. Is it then valid as basis for allowing some fee, but invalid as to the one agreed upon? If on quantum meruit basis the allowed fee exceeds the present value of the stock, may the Bankruptcy Court grant a personal judgment for the deficiency? If not, the contract is good to limit the lawyer's fee but not good to assure payment of it. And if valuable services have been rendered under the contract for which an allowance might otherwise be proper, should it be denied if other conditions of the contract are not fulfilled? 40 I am unable to find any basis in law for saying that the Bankruptcy Court has anything whatever to do with a private contract to employ and pay a lawyer to guard personal interests in a reorganization case, unless it is sought to charge the fee against the estate, or against stock deposited under a general agreement with the Committee formed under the Act. This situation involves neither, but only stock specially placed in a stakeholder's hands under the escrow contract with counsel. 41 An experienced and able District Judge knew all the facts and we do not. The lawyers involved made a complete disclosure, as should any lawyer who applies to the court for an allowance. Judge Gibson approved the fees so fixed that the estate paid its share and only its share, which seems to fulfill the purposes of the Federal Act. 42 But he set apart certain items of services for which he made no allowance because they were rendered for private parties. Those parties had a contract as to what, under the peculiar circumstances, should be paid for those services. Judge Gibson left the controversy as to that contract to the state courts to adjudicate. An action has been brought to require delivery of the stock put in escrow by the individuals to compensate their lawyers. The action seeks no money judgment and no relief that would affect or could accept the estate in the hands of the Bankruptcy Court. 43 I should remand the case of the courts of New York for such further proceedings as tate law provides for its adjudication and not inconsistent with our holding that fiduciary funds cannot be committed except by the Bankruptcy Court. 44 The CHIEF JUSTICE and Mr. Justice FRANKFURTER join in this opinion. 1 The relevant part of the escrow agreement provided: 'These shares are held in escrow by this Committee pending the termination of all proceedings in the matter of the Pittsburgh Terminal Coal Corporation. 'This Committee has secured these shares from the stockholders listed above for the purpose of affording to you additional compensation for your services in the above matter. They have been obtained and are held in escrow on the condition that they be delivered to you only at such time as the reorganization proceedings in the matter of Pittsburgh Terminal Code Corporation are finally terminated and a final settlement of all suits and claims made by this Committee in behalf of the preferred stockholders have been settled. It is further condtioned upon faithful and satisfactory performance of your duties as counsel to this Committee until the termination of all proceedings.' 2 The indicated purpose was to strengthen not to impair the existing controls which § 77B, 11 U.S.C.A. § 207, established in regard to allowances. See Sen. Rep. No. 1916, 75th Cong., 3d Sess. 22 (1938); H.R. Rep. No. 1409, 75th Cong., 1st Sess. 45 (1937). 3 Section 242, 11 U.S.C.A. § 642, provides: 'The judge may allow reasonable compensation for services rendered and reimbursement for proper costs and expenses incurred in connection with the administration of an estate in a proceeding under this chapter or in connection with a plan approved by the judge, whether or not accepted by creditors and stockholders or finally confirmed by the judge— '(1) by indentu e trustees, depositaries, reorganization managers, and committees or representatives of creditors or stockholders; '(2) by any other parties in interest except the Securities and Exchange Commission; and '(3) by the attorneys or agents for any of the foregoing except the Securities and Exchange Commission.' 4 See Part VIII, Protective Committee Report, Securities and Exchange Commission (1940), pp. 232 et seq. 5 See Habirshaw Electric Cable Co. v. Habirshaw Electric Cable Co., Inc., 2 Cir., 296 F. 875, 879, 43 A.L.R. 1035. 6 See Part I, Protective Committee Report, Securities and Exchange Commission (1937), pp. 642, 644, 645, 646—647: 'An examination of the 846 deposit agreements received with replies to the Commission's questionnaire reveals that 841 agreements, or 99.4 percent, provided that the committee should be entitled to fees or expenses or both. Of those 841 deposit agreements, 672 agreements, or 79.9 percent, gave the committee an express lien upon the deposited securities, for expenses or compensation, or both. 742, or 88.2 percent, clothed the committee with power to pledge deposited securities to secure loans to finance its activities. These powers commonly may be exercised by the committee in its sole discretion free from supervision by any independent agency or by the depositors. 'The deposit agreements provide little check upon the amounts the committees may charge for fees and expenses. As we have stated above, 841 of the 846 deposit agreements that we examined provided that the committee should be entitled to payment of its fees or expenses or both. In 469 the amount of compensation and expenses which the committee might charge against the deposited securities was unlimited. That is to say, in 55.4 per cent of the cases neither the aggregate amount nor the amount per unit of securities which committees could claim for their expenses and services was limited. 'in the 705 cases not associated with Section 77 or Section 77B proceedings machinery was provided for having some independent person or agency review the amount of the fees and expenses of these committees in only 2.13 percent of these cases. In the balance of the cases, numbering 690, the committee had reserved to itself the right to determine, within the limits prescribed by the agreement, the amount which it could charge for fees and expenses. And in 403 of these 690 cases, the agreements prescribed no limitations. These fiduciaries, therefore, had in the vast majority of the cases provided machinery whereby they became the sole arbiters of the worth of their own services and of the propriety of their expenses. As we have pointed out, it was usually provided that the compensation to be fixed by the committee must be 'reasonable.' But this restriction in and of itself would mean little, since the committee and the committee alone was to determine what was 'reasonable.' And it is no answer to say that a court of equity would review these fees on complaint of a depositor and disallow sums beyond a 'reasonable' amount or disallow improper items of expense. Such relief would necessitate litigation by the depositors. Considering the time, expense, and difficulty of legal questions involved, such a remedy would for all practical purposes furnish no check whatsoever on the extravagance of committee members.' 7 See Part II, Protective Committee Report, Securities and Exchange Commission (1937), pp. 351 et seq. 8 It is to be noted that while this provision only applies to committees representing more than twelve creditors or stockholders, the scrutiny clause contained in § 212 and the power to control allowances contained in § 221(4) is not so restricted. 11 U.S.C.A. §§ 611, 612, 621(4). 9 Sen. Rep. No. 1916, supra, note 2, at 36, explains § 221(4) as follows: 'Subsection (4) of section 221, derived from section 77B(f)(5), requires full disclosure and the approval by the judge of all payments for services, and for costs and expenses, in connection with the plan or the proceedings, whether such payments are made or promised by the debtor, or by any corporation succeeding to it, or by any other person.' Section 77B(f)(5) provided that 'the judge shall confirm the plan if satisfied that * * * (5) all amounts to be paid by the debtor or by any corporation or corporations acquiring the debtor's assets, and all amounts to be paid to committees or reorganization managers, whether or not by the debtor or any such corporation for services or expenses incident to the reorganization, have been fully disclosed and are reasonable, or are to be subject to the approval of the judge * * *.' 10 Section 228, 11 U.S.C.A. § 628, provides: 'Upon the consummation of the plan, the judge shall enter a final decree— '(1) discharging the debtor from all its debts and liabilities and terminating all rights and interests of stockholders of the debtor, except as provided in the plan or in the order confirming the plan or in the order directing or authorizing the transfer or retention of property; '(2) discharging the trustee, if any; '(3) making such provisions by way of injunction or otherwise as may be equitable; and '(4) closing the estate.'
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335 U.S. 632 69 S.Ct. 337 93 L.Ed. 288 SPIEGEL'S ESTATE et al., Petitioners,v.COMMISSIONER OF INTERNAL REVENUE. COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. CHURCH'S ESTATE et al. Nos. 3 and 5. Supreme Court of the United States January 17, 1949 Decided Jan. 17, 1949. On Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit. On Writ of Certiorari to the United States Court of Appeals for the Third Circuit. Concurring and dissenting opinions. For majority opinions, see 335 U.S. 701, 69 S.Ct. 301, 335 U.S. 632, 69 S.Ct. 322. Mr. Arnold Raum, of Washington, D.C., for petitioner. Mr. William W. Owens, of New York City, for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case raises questions concerning the interpretation of that part of § 811(c) of the Internal Revenue Code, 26 U.S.C.A. § 811(c), which for estate tax purposes requires including in a decedent's gross estate the value of all the property the decedent had transferred by trust or otherwise before his death which was 'intended to take effect in possession or enjoyment at or after his death * * *.' Estate of Spiegel v. Commissioner, 335 U.S. 701, 69 S.Ct. 301, involves questions which also depend upon interpretation of that provision of § 811(c). After argument and consideration of the cases at the October 1947 Term, an order was entered restoring them to the docket and requesting counsel upon reargument particularly to discuss certain questions broader in scope than those originally presented and argued. Journal Supreme Court, 297—298, June 21, 1948. Those additional questions have now been fully treated in briefs and oral arguments. 2 This case involves a trust executed in 1924 by Francois Church, then twenty-one years of age, unmarried and childless. He executed the trust in New York in accordance with state law. Church and two brothers were named co-trustees. Certain corporate stocks were transferred to the trust with grant of power to the trustees to hold and sell the stocks and to reinvest the proceeds. Church reserved no power to alter, amend, or revoke, but required the trustees to pay him the income for life. This reservation of life income is the decisive factor here. 3 At Church's death (which occurred in 1939) the trust was to terminate and the trust agreement contained some directions for distribution of the trust assets when he died. These directions as to final distribution did not, however, provide for all possible contingencies. If Church died without children and without any of his brothers or sisters, or their children, surviving him, the trust instrument made no provision for disposal of the trust assets. Had this unlikely possibility come to pass (at his death there were living, five brothers, one sister, and ten of their children) the distribution of the trust assets would have been controlled by New York law. It has been the government's contention that under New York law had there been no such surviving trust beneficiaries the corpus would have reverted to the decedent's estate. This possibility of reverter plus the retention by the settlor of the trust income for life, the Government has argued, requires inclusion of the value of the trust property in the decedent's gross estate under our holding in Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368. 4 The Hallock case held that where a person while living makes a transfer of property which provides for a reversion of the corpus to the donor upon a contingency terminable at death, the value of the corpus should be included in the decedent's gross estate under the 'possession or enjoyment' provision of § 811(c) of the Internal Revenue Code.1 In this case, the Tax Court, relying upon its former holdings2 declared that 'The mere possibility of reverter by operation of law upon a failure of the trust, due to the death of all the remaindermen prior to the death of decedent, is not such a possibility as to come within the Hallock case.' This holding made it unnecessary for the Tax Court to decide the disputed question as to whether New York law operated to create such a reversionary interest. The United States Court of Appeals for the Third Circuit, one judge dissenting, affirmed on the ground that it could not identify a clear-cut mistake of law in the Tax Court's decision. 161 F.2d 11. The United States Court of Appeals for the Seventh Circuit in the Spiegel case found that under Illinois law there was a possibility of reverter and reversed the Tax Court, holding that possible reversion by operation of law required inclusion of a trust corpus in a decedent's estate. Commissioner v. Spiegel's Estate, 159 F.2d 257. Other United States courts of appeal have held the same.3 Because of this conflict we granted certiorari in this and the Spiegel case. 5 Counsel for the two estates have strongly contended in both arguments of these cases that the law of neither New York nor Illinois provides for a possibility of reverter under the circumstances presented. They argue further that even if under the law of those states a possibility of reverter did exist, it would be an unjustifiable extension of the Hallock rule to hold that such a possibility requires inclusion of the value of a trust corpus in a decedent's estate. The respondent in this case pointed out the extreme improbability that the decedent would have outlived all his brothers, his sister, and their ten children. He argues that the happening of such a contingency was so remote, the money value of such a reversionary interest was so infinitesimal, that it would be entirely unreasonable to hold that the Hallock rule requires an estate tax because of such a contingency. But see Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 112, 65 S.Ct. 508, 510, 89 L.Ed. 783, 159 A.L.R. 227. 6 Arguments and consideration of this and the Spiegel case brought prominently into focus sharp divisions among courts, judges and legal commentators, as to the intended scope and effect of our Hallock decision, particularly whether our holding and opinion in that case are so incompatible with the holding and opinion in May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244, that the latter can no longer be accepted as a controlling interpretation of the 'possession or enjoyment' provision of § 811(c).4 May v. Heiner held that the corpus of a trust transfer need not be included in a settlor's estate, even though the settlor had retained for himself a life income from the corpus. We have concluded that confusion and doubt as to the effect of our Hallock case on May v. Heiner should be set at rest in the interest of sound tax and judicial administration. Furthermore, if May v. Heiner is no longer controlling, the value of the Church trust corpus was properly included in the gross estate, without regard to the much discussed state law question, since Church reserved a life estate for himself. For reasons which follow, we conclude that the Hall ck and May v. Heiner holdings and opinions are irreconcilable. Since we adhere to Hallock, the May v. Heiner interpretation of the 'possession or enjoyment' provisions of § 811(c) can no longer be accepted as correct. 7 The 'possession or enjoyment' provision appearing in § 811(c) seems to have originated in a Pennsylvania inheritance tax law in 1826.5 As early as 1884 the Supreme Court of Pennsylvania held that where a legal transfer of property was made which carried with it a right of possession with a reservation by the grantor of income and profits from the property for his life, the transfer was not intended to take effect in enjoyment until the grantor's death: 'One certainly cannot be considered, as in the actual enjoyment of an estate, who has no right to the profits or incomes arising or accruing therefrom.' Reish, Adm'r v. Commonwealth, 106 Pa. 521, 526. That court further held that the Possession or enjoyment' clause did not involve a mere technical question of title, but that the law imposed the death tax unless one had parted during his life with his possession and his title and his enjoyment. It was further held in that case that the test of 'intended' was not a subjective one, that the question was not what the parties intended to do, but what the transaction actually effected as to title, possession and enjoyment. 8 Most of the states have included the Pennsylvania-originated 'possession or enjoyment' clause in death tax statutes, and with what appears to be complete unanimity, they have up to this day, despite May v. Heiner, substantially agreed with this 1884 Pennsylvania Supreme Court interpretation.6 Congress used the 'possession or enjoyment' clause in death tax legislation in 1862, 1864, and 1898. ,12 Stat. 432, 485; 13 Stat. 223, 285; 30 Stat. 448, 464. In referring to the provision in the 1898 Act, this Court said that it made 'the liability for taxation depend, not upon the mere vesting, in a technical sense, of title to the gift, but upon the actual possession or enjoyment thereof.' Vanderbilt V. Eidman, 196 U.S. 480, 493, 25 S.Ct. 331, 334, 49 L.Ed. 563. And five years before the 1916 estate tax statute incorporated the 'possession or enjoyment' clause to frustrate estate tax evasions, 39 Stat. 756, 780, this Court had affirmed a judgment of the New York Court of Appeals sustaining the constitutionality of its state inheritance tax in an opinion which said: 'It is true that an ingenious mind may devise other means of avoiding an inheritance tax, but the one commonly used is a transfer with reservation of a life estate.' Matter of Keeney's Estate, 194 N.Y. 281, 287, 87 N.E. 428, 429; Keeney v. Comptroller of State of New York, 222 U.S. 525, 32 S.Ct. 105, 56 L.Ed. 299, 38 L.R.A.,N.S., 1139. And see Helvering v. Bullard, 303 U.S. 297, 302, 58 S.Ct. 565, 567, 82 L.Ed. 852, where the foregoing quotation was repeated with seeming approval. 9 From the first estate tax law in 1916 until May v. H iner, supra, (281 U.S. 238, 50 S.Ct. 287) was decided in 1930, trust transfers which were designed to distribute the corpus at the settlor's death and which reserved a life income to the settlor had always been treated by the Treasury Department as transfers 'intended to take effect in possession or enjoyment at * * * his death'. The regulations had so provided and millions of dollars had been collected from taxpayers on this bases. See e.g., T.D. 2910, 21 Treas.Dec. 771 (1919); and see 74 Cong.Rec. 7078, 7198 7199 (March 3, 1931). This principle of estate tax law was so well settled in 1928, that the Circuit Court of Appeals decided May v. Heiner in favor of the Government in a one-sentence per curiam opinion. 3 Cir., 32 F.2d 1017. Nevertheless, March 2, 1931, this Court followed May v. Heiner in three cases in per curiam opinions, thus upsetting the century-old historic meaning and the long standing Treasury interpretation of the 'possession or enjoyment' clause. Burnet v. Northern Trust co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412; McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413. 10 March 3, 1931, the next day after the three per curiam opinions were rendered, Acting Secretary of the Treasury Ogden Mills wrote a letter to the Speaker of the House explaining the holdings in May v. Heiner and the three cases decided the day before. He pointed out the disastrous effects they would have on the estate tax law and urged that Congress 'in order to prevent tax evasion,' immediately 'correct this situation' brought about by May v. Heiner and the other cases. 74 Cong.Rec. 7198, 7199 (1931). He expressed fear that without such action the Government would suffer 'a loss in excess of one-third of the revenue derived from the federal estate tax, with anticipated refunds of in excess of $25,000,000.' The Secretary's surprise at the decisions and his apprehensions as to their tax evasion consequences were repeated on the floor of the House and Senate. 74 Cong.Rec. supra. Senator Smoot, Chairman of the Senate Finance Committee, said on the floor of the Senate that this judicial interpretation of the statute 'came almost like a bombshell, because nobody ever anticipated such a decision.' 74 Cong.Rec. 7078. Both houses of Congress unanimously passed and the President signed the requested resolution that same day.7 11 February 28, 1938, this Court held that neither passage of the resolution nor its later inclusion in the 1932 Revenue Act was intended to apply to trusts created before its passage. Hassett v. Welch (Helvering v. Marshall), 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858. Accordingly, if the corpus of the Church trust executed in 1924 is to be included in the settlor's estate without this court's involvement in the intricacies of state property law, it must be done by virtue of the possession and enjoyment section as it stood without the language added by the joint resolution. 12 Crucial to the Court's holding in May v. Heiner was its finding that no interest in the corpus passed at the settlor's death because legal title had passed from the settlor irrevocably when the trust was executed; for this reason the grantor's reservation of the trust income for his life8—one of the chief bundle-of-ownership interests—was held not to bring the transfer within the category of transfers 'intended to take effect in * * * enjoyment at * * * his death'. This Court had never before so limited the possession or enjoyment section.9 Thus was formal legal title rather than the substance of a transaction made the sole test of taxability under § 811(c). For from the viewpoint of the grantor the significant effect of this transaction was his continued enjoyment and retention of the income until his death; the important consequence to the remaindermen was the postponement of their right to this enjoyment of the income until the grantor's death. 13 The effect of the court's interpretation of this estate tax section was to permit a person to relieve his estate from the tax by conveying its legal title to trustees whom he selected, with an agreement that they manage the estate during his life, pay to him all income and profits from the property during his life, and deliver it to his chosen beneficiaries at death. Preparation of papers to defeat an estate tax thus became an easy chore for one skilled in the 'various niceties of the art of conveyancing.' Klein v. United States, 283 U.S. 231, 234, 51 S.Ct. 398, 399, 75 L.Ed. 996. And by this simple method one could, despite the 'possession or enjoyment' clause, retain and enjoy all the fruits of his property during life and direct its distribution at death, free from taxes that others less skilled in tax technique would have to pay. Regardless of these facts May v. Heiner held that such an instrument preserving the beneficial use of one's property during life and providing for its distribution and delivery at death was 'not testamentary in character.' May v. Heiner, supra, 281 U.S. at page 243, 50 S.Ct. at page 287, 74 L.Ed. 826, 67 A.L.R. 1244. Cf. Keeney v. New York, supra, 222 U.S. at pages 535, 536, 32 S.Ct. at page 107. 14 One year after May v. Heiner, this Court decided Klein v. United States, supra. There the grantor made a deed conveying property to his wife for her life with provisions that if she survived him she should 'by virtue of this conveyance take, have, and hold the said lands in fee simple,' but the fee was to 'remain vested in' him should his wife die first. This Court pointed out that in general and under the law of Illinois where the deed was made, vesting of title in the grantee 'depended upon the condition precedent that the death of the grantor happen before that of the grantee.' Thus, since it was found that under Illinois law, legal title to the land had been retained by the husband, it was held that the value of the land should be included in his gross estate under the 'posse sion or enjoyment' section. The Court did not cite May v. Heiner. 15 In 1935, this Court decided Helvering v. St. Louis Union Trust Co., 296 U.S. 39, 56 S.Ct. 74, 80 L.Ed. 29, 100 A.L.R. 1239, and Becker v. St. Louis Union Trust Co., 296 U.S. 48, 56 S.Ct. 78, 80 L.Ed. 35. In each of these cases the Court again, as in May v. Heiner, delved into the question of legal title under rather subtle property law concepts and decided that the legal title of the trust properties there, unlike the situation in the Klein transfer, had passed irrevocably from the grantor. This passage of bare legal title was held to be enough to render the possession or enjoyment section inapplicable. These cases were expressly overruled by Helvering v. Hallock. 16 Helvering v. Hallock was decided in 1940. Three separate trusts were considered in the Hallock case. These three trusts as those considered in the St. Louis Union Trust and Becker cases, had been executed with provisions for reversion of the trust properties to the grantors should the grantors outlive the beneficiaries. The trusts had been executed in 1917, 1919, and 1925. In the Hallock case this Court was again asked to limit the effect of § 811(c) by emphasis upon the formal passage of legal title. By such concentration on elusive legal title, the Court was invited to lose sight of the plain fact that complete enjoyment had been postponed. We declined to limit the effectiveness of the possession or enjoyment provision of § 811(c) by attempting to define the nature of the interest which the decedent retained after his inter vivos transfer. We called attention to the snares which inevitably await an attempt to restrict estate tax liability on the 'niceties of the art of conveyancing' 309 U.S. at page 117, 60 S.Ct. at page 450, 84 L.Ed. 604, 125 A.L.R. 1368. We declared that the statute now under consideration 'taxes not merely those interests which are deemed to pass at death according to refined technicalities of the law of property. It also taxes inter vivos transfers that are too much akin to testamentary dispositions not to be subjected to the same excise,' 309 U.S. page 112, 60 S.Ct. page 448, and inter vivos gifts 'resorted to, as a substitute for a will, in making dispositions of property operative at death.' 309 U.S. page 114, 60 S.Ct. page 449. 17 As pointed out by the dissent in Hallock, we there directly and unequivocally rejected the only support that could possibly suffice for the holdings in May v. Heiner. That support was the court's conclusion in May v. Heiner, that retention of possession or enjoyment of his property was not enough to require inclusion of its value in the gross estate if a trust grantor had succeeded in passing bare legal title out of himself before death. In Hallock we emphasized our removal of that support by declaring that § 811(c) 'deals with property not technically passing at death but with interests theretofore created. The taxable event is a transfer inter vivos. But the measure of the tax is the value of the transferred property at the time when death brings it into enjoyment.' 309 U.S. pages 110, 111, 60 S.Ct. page 447. 18 Moreover, the Hallock case, 309 U.S. page 114, 60 S.Ct. page 449, stands plainly for the principle that 'In determining whether a taxable transfer becomes complete only at death we look to substance, not to form. * * * However we label the device (if) it is but a means by which the gift is rendered incomplete until the donor's death' the 'possession or enjoyment' provision applies. 19 How is it possible to call this trust transfer 'complete' except by invoking a fiction? Church was sole owner of the stocks before the transfer. Probably their greatest property value to Church was his continuing right to get their income. After legal title to the stocks was transferred, somebody still owned a property right in the stock income. That property right did not pass to the trust beneficiaries when the trust was executed; it remained in Church until he died. He made no 'complete' gift ffective before that date, unless we view the trust transfer as a 'complete' gift to the trustees. But Church gave the trustees nothing, either partially or completely. He transferred no right to them to get and spend the stock income. And under the teaching of the Hallock case, quite in contrast to that of May v. Heiner, passage of the mere technical legal title to a trustee is not necessarily crucial in determining whether and when a gift becomes 'complete' for estate tax purposes. Looking to substance and not merely to form, as we must unless we depart from the teaching of Hallock, the inescapable fact is that Church retained for himself until death a most valuable property right in these stocks—the right to get and to spend their income. Thus Church did far more than attach a 'string' to a remotely possible reversionary interest in the property, a sufficient reservation under the Hallock rule to make the value of the corpus subject to an estate tax. Church did not even risk attaching an unbreakable cable to the most valuable property attribute of the stocks, their income. He simply retained this valuable property, the right to the income, for himself until death, when, for the first time the stock with all its property attributes 'passed' from Church to the trust beneficiaries. Even if the interest of Church was merely 'obliterated,' in May v. Heiner language, it is beyond all doubt that simultaneously with his death, Church no longer owned the right to the income; the beneficiaries did. It had then 'passed.' It never had before. For the first time, the gift had become 'complete.' 20 Thus, what we said in Hallock was not only a repudiation of the reasoning which was advanced to support the two cases (St. Louis Union Trust and Becker) that Hallock overruled, but also a complete rejection of the rationale of May v. Heiner on which the two former cases had relied. Hallock thereby returned to the interpretation of the 'possession or enjoyment' section under which an estate tax cannot be avoided by any trust transfer except by a bona fide transfer in which the settlor, absolutely, unequivocally, irrevocably, and without possible reservations, parts with all of his title and all of his possession and all of his enjoyment of the transferred property. After such a transfer has been made, the settlor must be left with no present legal title in the property, no possible reversionary interest in that title, and no right to possess or to enjoy the property then or thereafter. In other words such a transfer must be immediate and out and out, and must be unaffected by whether the grantor lives or dies. See Shukert v. Allen, 273 U.S. 545, 547, 47 S.Ct. 461, 71 L.Ed. 764, 49 A.L.R. 855; Smith v. Shaughnessy, 318 U.S. 176, 63 S.Ct. 545, 87 L.Ed 690. We declared this to be the effect of the Hallock case in Goldstone v. United States, 325 U.S. 687, 690, 691, 65 S.Ct. 1323, 1324, 1325, 89 L.Ed. 1871, 159 A.L.R. 1330. There we said with reference to § 811(c) in connection with our Hallock ruling: '* * * It thus sweeps into the gross estate all property the ultimate possession or enjoyment of which is held in suspense until the moment of the decedent's death or thereafter. * * * Testamentary dispositions of an inter vivos nature cannot escape the force of this section by hiding behind legal niceties contained in devices and forms created by conveyancers.' And see Fidelity-Philadelphia Trust Co. v. Rothensies, supra, and Commissioner v. Field's Estate, 324 U.S. 113, 65 S.Ct. 511, 89 L.Ed. 786, 159 A.L.R. 230. 21 It is strongly urged that we continue to regard May v. Heiner as controlling and leave its final repudiation to Congress. Little effort is made to defend the May v. Heiner interpretation of 'possession or enjoyment' on the ground that it truly reflects the congressional purpose, nor do we think it possible to attribute such a purpose to Congress. There is no persuasive argument, if any at all, that trusts reserving life estates with remainders over at grantors' eaths are not satisfactory and effective substitutes for wills. In fact, the purpose of this settlor as expressed in his trust papers was to make 'provision for any lawful issue' he might 'leave at the time of his death as well as provide an income for himself for life.' This paper, labeled a trust, but providing for all the substantial purposes of a will, was intended to and did postpone until the settlor's death the right of his relatives to possess and enjoy his property. There may be trust instruments that fall more clearly within the class intended to be treated as substitutes for wills by the 'possession or enjoyment' clause, but we doubt it. 22 The argument for continuing the error of May v. Heiner is not on the merits but is advanced in the alleged interest of tax stability and certainty, stare decisis and a due deference to the just expectations of those who have relied on the May v. Heiner doctrine. Special stress is laid on Treasury regulations which since the Hassett v. Welch holding in 1938 have accepted the May v. Heiner doctrine and have not provided that the value of a trust corpus must be included in the decedent's gross estate where a grantor had reserved the trust income. It is even argued that Congress in some way ratified the May v. Heiner doctrine when it passed the joint resolution and that if not, the decision in the Hassett and Marshall cases set at rest all questions as to the soundness of the May v. Heiner interpretation. We find no merit in these contentions. 23 What was said in the Hallock opinion on the question of stare decisis would appear to be a sufficient answer to that contention here. The Hallock opinion also answers the argument as to recent Treasury regulations, all of which were made by the Treasury under compulsion of this court's cases. Furthermore, the history of the struggle of the Treasury to subject such transfers as this to the estate tax law, a history shown in part in the Hassett v. Welch opinion, has served to spotlight the abiding conviction of the Treasury that the May v. Heiner statutory interpretation should be rejected. In view of the struggle of the Treasury in this tax field, the variant judicial and Tax Court opinions, our opinion in the Hallock case and others which followed, it is not easy to believe that taxpayers who executed trusts prior to the 1931 joint resolution felt secure in a belief that May v. Heiner gave them a vested interest in protection from estate taxes under trust transfers such as this one. And so far as this trust is concerned, Treasury regulations required the value of its corpus to be included in the gross estate when it was made in 1924, and most of the period from then up to the settlor's death in 1939. 24 Moreover, the May v. Heiner doctrine has been repudiated by the Congress and repeatedly challenged by the Treasury. It certainly is not an overstatement to say that this Court's Hallock opinion and holding treated May v. Heiner with scant respect. We said Congress had 'displaced' the May v. Heiner construction of § 811(c); in overruling the St. Louis Union Trust cases we pointed out that those cases had relied in part on the 'Congressionally discarded May v. Heiner doctrine'; we thought Congress 'had in principle already rejected the general attitude underlying' the May v. Heiner and St. Louis Union Trust cases; and finally our Hallock opinion demolished the only reasoning ever advanced to support the May v. Heiner holding. And in the Hallock case, trusts created in 1917, 1919, and 1925 were held subject to the estate tax under the provisions included in § 811(c). What we said and did about May v. Heiner in the Hallock case took place in 1940, two years after Hassett v. Welch had held that the 1931 and 1932 amendments could not be applied to trusts created before 1931. Certainly, May v. Heiner cannot be granted the sanctuary of stare decisis on the ground that it has had a long and tranquil history free from troubles and challenges. 25 Nor does the joint resolution or the opinion in the Hassett v. Welch and Helvering v. Marshall cases, decided together, support an argument that the May v. Heiner doctrine be left undisturbed. It would be impossible to say that Congress in 1931 intended to accept and ratify decisions that hit the Congress like a 'bombshell.'10 And in Hassett v. Welch the Government did not ask this Court to reexamine or overrule May v. Heiner or the three per curiam cases that relied on May v. Heiner. In fact, the government brief argued that May v. Heiner on its facts was distinguishable from Hassett v. Welch. The government brief also pointedly insisted that its position in Hassett v. Welch did 'not require a reexamination of the three per curiam decisions of March 2, 1931.' It was the Government's sole contention in the Hassett and Marshall cases that the 1932 reenactment of the joint resolution was not limited in application to trusts thereafter created, but was intended to make the new 1932 amendment applicable to past trust agreements. That contention was rejected. The holding was limited to that single question. 26 The plain implications of the Hallock opinion recognize that the Hassett and Marshall cases did not reaffirm the May v. Heiner doctrine. In the Marshall case the trust, created in 1920, contained a provision that should the settlor outlive the trust beneficiary, the trust corpus would revert to the settlor. That is the very type of provision which we held in Hallock would require inclusion of its value in the settlor's estate. Since the Hallock case did not overrule the Marshall case involving a trust created in 1920, it must have accepted the Marshall and Hassett cases as deciding no more than that the value of the trust properties there could not be included in the decedent's gross estate where the government's sole reliance was on a retroactive application of the 1931 and 1932 amendments to the estate tax law. 27 That the Hallock opinion did not treat the Hassett and Marshall cases as having reaffirmed this court's interpretation of the pre-1931 possession or enjoyment clause is further emphasized by the effect of the Hallock case on the type of trust in McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413, a trust created before 1931. The United States Court of Appeals in that case had held that the trust property should be included in the decedent's estate chiefly because of the trust provision that the corpus should revert to the settlor in the event that she outlived her three children. Commissioner v. McCormick, 7 Cir., 43 F.2d 277. This Court in its per curiam opinion reversed the Court of Appeals and held that the McCormick corpus need not be included in the decedent's estate. Our Hallock case held directly the contrary, for since Hallock, the McCormick corpus would have to be taxed under the pre-1931 language of § 811(c). In so interpreting the pre-1931 language in the Hallock case, we necessarily rejected the contention made there that th Congress by passage of the resolution and this Court by the Hassett and Marshall opinions had accepted as correct the May v. Heiner restrictive interpretation of § 811(c). It is plain that this Court in the Hallock case considered that the Hassett and Marshall cases held no more than that the 1931 and 1932 amendments were prospective, and that neither the congressional resolution nor the Hassett and Marshall cases were designed to give new life and vigor to the May v. Heiner doctrine.11 28 The reliance of respondent here on the Hassett and Marshall cases is misplaced. We hold that this trust agreement, because it reserved a life income in the trust property, was intended to take effect in possession or enjoyment at the settlor's death and that the Commissioner therefore properly included the value of its corpus in the estate. 29 Reversed. 30 Mr. Justice JACKSON concurs in the result. 31 For dissenting opinions of Mr. Justice REED and Mr. Justice FRANKFURTER, see 335 U.S. 632, 69 S.Ct. 337. 32 Mr. Justice REED, concurring in No. 3, Spiegel v. Commissioner, and dissenting in No. 5, Commissioner v. Church. 33 As these tax decisions may have an influence on subsequent decisions beyond the limited area of the issues decided, I have thought it advisable to state my position for whatever light it may throw. I agree with the judgment directed by the Court in Spiegel v. Commissioner and with so much of the opinion as rests solely upon the controlling effect of the possibility of reverter under the law of Illinois. As I disagree with Church v. Commissioner, decided today, I cannot accept so much of the opinion in the Spiegel case, 335 U.S. 701, 69 S.Ct. 301, as seems to put reliance upon the fact that the settlor as trustee retains any 'possession or enjoyment' of the trust, other than a possibility of reverter. I am opposed to the view expressed in the dissent written by Mr. Justice Burton that the settlor's intent rather than the effect of his acts is the touchstone to determine the taxability of his property for estate tax purposes. 34 So far as Commissioner v. Church is concerned, I do not believe that May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244, should be overruled. The Joint Resolution of March 3, 1931, therefore, stands as the determinative factor in reaching a conclusion as to the taxability of the Church estate. Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858, decided that the Resolution was not retroactive. Consequently, the Church estate is not subject to an estate tax because of the reservation of a life estate. 35 We are asked to accept an overruling of May v. Heiner, supra, and also, I think, of Reinecke v. Northern Trust Co., 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397, not to mention the incidental fall of Hassett v. Welch, supra, on the one side, or, on the other hand, to limit the rul as to the possibility of reverter in Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368, and the numerous cases that follow its teaching, to reverters expressly reserved in the documents. Legislation indicates a purpose to promote gifts as a desirable means for early distribution of property benefits. In reliance upon a long settled course of legislative and judicial construction, donors have made property arrangements that should not now be upset summarily with no stronger reasons for doing so than that former courts and the Congress did not interpret the legislation in the same way as this Court now does. Judicial efforts to mold tax policy by isolated decisions make a national tax system difficult to develop, administer or observe. For more than thirty years Congress has legislated upon this problem and this Court has interpreted the enactments so that now what seems to me a reasonably fair interpretation of tax liability under § 811(c) of the Internal Revenue Code, 26 U.S.C.A. § 811(c), as now written, has been worked out. Relying upon the desirability of stare decisis under the decisions concerning § 811(c), I would leave such changes as may seem desirable to the Congress, where general authority for that purpose rests. 36 (1) A provision including in a decedent's estate the value at time of death of interest in any transfer by trust 'in contemplation of or intended to take effect in possession or enjoyment at or after his death' has been in the federal estate tax law since the Income Tax Act of 1916.1 It will be noted that the phrase relating to a transfer 'in contemplation of or intended to take effect in possession or enjoyment at or after his [settlor's] death' has not changed. It was construed by this Court, at first, to apply to those circumstances where something passed from the 'possession, enjoyment or control of the donor at his death.' Reinecke v. Northern Trust Co., 278 U.S. 339, 348, 49 S.Ct. 123, 126, 73 L.Ed. 410, 66 A.L.R. 397. 'Of course it was not argued that every vested interest that manifestly would take effect in actual enjoyment after the grantor's death was within the statute.' Shukert v. Allen, 273 U.S. 545, 547, 47 S.Ct. 461, 71 L.Ed. 764, 49 A.L.R. 855. When, after the execution of a trust, the settlor 'held no right in the trust estate which in any sense was the subject of testamentary disposition,' this Court was of the opinion that the gift was not intended to take effect in possession or enjoyment at the donor's death. Helvering v. St. Louis Union Trust Co., 296 U.S. 39, 43, 56 S.Ct. 74, 76, 80 L.Ed. 29, 100 A.L.R. 1239; Helvering v. City Bank Farmers Trust Co., 296 U.S. 85, 88, 56 S.Ct. 70, 72, 80 L.Ed. 62; Burnet v. Northern Trust Co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412; McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413; May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244. A reserved power of appointment or change is, in a sense, a testamentary power over the corpus. Reinecke v. Northern Trust Co., supra, 278 U.S. at page 345, 49 S.Ct. 123, 124, 73 L.Ed. 410, 66 A.L.R. 397; Porter v. Commissioner, 288 U.S. 436, 53 S.Ct. 451, 77 L.Ed. 880. 37 Klein v. United States, 283 U.S. 231, 51 S.Ct. 398, 399, 75 L.Ed. 996, brought doubt into the above conception of the meaning of the phrase in question. That trust was to A for life and on condition that A survive the donor to A in fee simple. It was the death of the donor that 'brought the larger estate into being * * * and effected its transmission from the dead to the living,' this Court said in upholding the tax on the trust property. This was construed by four members of the Court to mean that the donor's death 'operating upon his gift inter vivos not complete until his death, is the event which calls the statute into operation.' Mr. Justice Stone, dissenting in the later case of Helvering v. St. Louis Trust Co., supra, 296 U.S. at page 46, 56 S.Ct. at page 77, 80 L.Ed. 29, 100 A.L.R. 1239. The two positions, one that only power in the settlor at the time of death to cause the property to be transferred from him to another by will or by descent or to select beneficiaries through appointment brought the property formerly transferred within the reach of the words 'intended to take effect in possession or enjoyment at or after his death,' the Reinecke concept, and the other than, in addition, every possibility of reversion of the transferred interest to the settlor must be barred by the trust instrument, the dissenter's ground in Helvering v. St. Louis Trust Co., supra, were fully discussed in the majority and dissenting opinions in Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368.2 The latter position was accepted as the sound interpretation by us and I adhere to that view for the reasons stated in the Court's opinion in Helvering v. Hallock. Cf. Eisenstein, Estate Taxes and the Higher Learning of the Supreme Court, 3 Tax Law Rev. 395. That interpretation has gained strength from the fact that Congress has not repudidated it as inconsistent with the legislative purpose and by other judgments by this Court applying the principles of the Hallock case in accordance with this statement. Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 65 S.Ct. 508, 89 L.Ed. 783, 159 A.L.R. 227; Commissioner v. Field's Estate, 324 U.S. 113, 6 S.Ct. 511, 89 L.Ed. 786, 159 A.L.R. 230. Possession or enjoyment of property as heretofore applied has meant from the standpoint of the taxability of the transferor's estate, at least, that the death of the transferor perfects the right of the transferee and cuts off any possibility of reverter to the transferor left by the instruments of transfer. If the transferor reacquired the property by inheritance or by purchase, other factors would enter. Before the Joint Resolution even the reservation of a life estate was insufficient to preserve possession or enjoyment in the transferor as nothing passed at his death. When words such as 'possession or enjoyment' used in a section of a revenue statute with their many possible shades and ambiguities of meaning have been given definition through the course of legislation and litigation, a change by courts should be avoided.3 By the Resolution such a reservation or that of power of appointment was also made the source of an estate tax. 38 Prior cases have involved trust instruments where the settlor specifically reserved remainders, reverters or contingent powers of appointment. In these cases the value at death of the entire corpus of the trusts was taxed. This was because in each case there was a contingency through which completed gifts of the entire corpus to the beneficiaries might fail before the death of the settlor with the result that the settlor would again control the transfer of the corpus.4 In such circumstances, I take it as settled that the property is taxable on the event of the settlor's death under §§ 810 and 811(c). Cf. Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. at page 111, 65 S.Ct. at page 510, 89 L.Ed. 783, 159 A.L.R. 227. 39 The trust instruments in the present cases of the Spiegel and Church estates do not specifically provide for such possibility of reverter or for regaining control of the devolution of the property. The issue raised by these cases is whether a like possibility of reverter springing not from the instrument but by operation of law through the failure of all beneficiaries named in the trust instrument shall have the same effect. All named beneficiaries in these two trusts might die before the settlors without surviving issue. Thus, depending upon the controlling state law, the settlors might repossess the estates.5 40 To lay bare the heart of the problem, it seems helpful to put aside certain phases of possible congressional intention and possible statutory meaning, as not involved or heretofore decided for sound reasons. 41 A. It was not the purpose of Congress at any time in dealing with the inclusion of transfers of property in trust to have the whole value, at the donor's death, of the total of all gifts made during life, included in the settlor's estate for estate tax purposes.6 The words of the statute show this. See note 1, supra. Gifts in trust are taxable only where an interest remains in the donor. Therefore a gift by A to a trust company to hold in trust for B during B's life and at B's death to C, his heirs, devisees or assigns is not taxable under § 811(c). Reinecke v. Northern Trust Co., supra, 278 U.S. at pages 347, 348, 49 S.Ct. at pages 125, 126, 73 L.Ed. 410, 66 A.L.R. 397. Before the amendment of 19317 the retention of an estate for life in the settlor did not subject the trust to estate tax where the remainder was taken by beneficiaries without regard to future action by the settlor.8 42 B. The Joint Resolution of 1931 made no change in the language of the subsection of the estate tax relating to the inclusion in estates of interests in trusts intended to take effect in possession or enjoyment at or after death. Neither the resolution nor the discussion on the floor of either house suggested a change in the words of the section to define what is meant by an interest intended to take effect after death. Congress aimed at the retention of life interests, not at this Court's determinations of the meaning of 'possession or enjoyment.' Those words were left untouched and an addition was made providing for the inclusion in the estate of interests where the settlor had retained the possession or enjoyment of the property or a right to income or the power to designate the beneficiaries. See note 1, supra. Therefore the words relating to intention, death, possession or enjoyment have the same meaning now as they did before the 1931 amendment was adopted.9 The doctrine of May v. Heiner that the state, as written when that case was handed down, did not cover reservations of life interests and powers of designation was legislatively changed by adding the words of the Joint Resolution. See in accord Helvering v. Hallock, supra. When Hallock there refers to the doctrine of May v. Heiner discarded by Congress, it is the doctrine of May v. Heiner that a settlor might reserve a life interest that was meant. Hallock did not say or imply, as I read it, that the May v. Heiner doctrine, which is supported by Reinecke and Shukert v. Allen, as to when 'possession or enjoyment' passes from a donor was changed by the Resolution. These cases had held that something must pass from the settlor. The only difference wrought by Hallock on this concept of possession and enjoyment was to apply the Klein rule that the enlargement of the remainder estate did effect a transmission from the dead to the living. 43 Assuming that Congress might have legislated so that the added words would apply to the estates of all who died after the passage of the Joint Resolution, Congress definitely manifested an intention that the amendments were not to apply to trusts created prior to the Resolution though the settlor might die subsequently thereto. This whole matter is discussed thoroughly and, I think, unanswerably in Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858, and I can add nothing to the argument. Attention, however, should be called to the statements on the floor of the House by members of the Committee on Ways and Means at the time of the passage of the Joint Resolution.10 Mr. Hawley, Chairman of the Committee, answering a question as to the nature of the Resolution said, 'It provides that hereafter no such method shall be used to evade the tax.' Mr. Garner of the same Committee stated: 44 'The Committee on Ways and Means this afternoon had a meeting and unanimously reported the resolution just passed. We did not make it retroactive for the reason that we were afraid that the Senate would not agree to it. But I do hope that when this matter is considered in the Seventy second Congress we may be able to pass a bill that will make it retroactive.' 45 And in answer to a question, he reiterated, 'I have strong hopes that the next Congress will make it retroactive.' Congress never took any subsequent action and this Court § interpretation of the meaning of 'intended to take effect in possession or enjoyment' remained the same. The addition to the section made by the Joint Resolution made certain future gifts inter vivos, which would theretofore have beer free of estate tax, subject to such a tax. 46 C. As a corollary to the foregoing section B, it is clear to me also that Congress by the Joint Resolution made no change in the statute for the purpose of bringing trusts into an estate merely because the actual use of the estate or its income by the cestui que trust was postponed until the death of the donor. Shukert v. Allen, supra. 47 D. It is impossible for me to look upon the Spiegel or Church trusts as closely akin to a will. The decisive difference is that a will may be changed at any time during life while these trusts obliterated any power in the settlors to change or modify the devolution. Only the chances of death, wholly beyond their control, might put the disposition again in their hands. Further, during life the settlors must handle the trusts for the benefit of all beneficiaries. They were not free to do as they pleased as would have been the case of a will. Of course, if the settlor had made similar provision for the objects of his bounty by will, in effect at death, the result to the takers would have been the same or, if in the Spiegel case, the father had annually given his children the same sums that the trust earned, their economic position would have been the same for that year but the children could not look forward with certainty to their annual income from the trust. Without the trust, the benficiaries' income would have been subject to the wish of the settlor. It needs no argument or illustration to show that a father's gift from his income is a very different thing from an irrevocable gift of principal to a child. 48 Returning to the issue in these present cases, the difference between them and Helvering v. Hallock and its progeny is that here the possibility of reverter arises by operation of law where as in them the possibility arises out of the terms of the trust. That difference I do not think is material as to taxability under § 810 and § 811(c). Granting that in early interpretations of the sections this Court might logically have determined that remote possibilities of reverter did not interfere with the beneficiaries' complete possession and enjoyment of the gift during the lifetime of the donor, the balance of experience and precedent, since Helvering v. Hallock, tips the scale the other way in my judgment. It is important, though not decisive, since we are not justified in pushing every rule to its logical extreme, that this conclusion is a logical outgrowth of the Hallock rule. Since we know it is the purpose of Congress to put an estate tax on gifts intended to take effect at or after death, the interpretation of those words should be broad enough to accomplish the purpose effectually. 'Intended to take effect,' in that view, has for me the meaning of an intention to abide by the legal result of the terms of the trust. 49 I recognize that this interpretation has possibilities of variation in result through the employment of technicalities of property law. The addition of a phrase may make the difference between a completed or an incompleted gift. To make the intention of the settlor the determinative factor creates equal difficulties. Nor am I unmindful of this Court's effort, in which I joined, in the Hallock case to find a harmonizing principle for the difficulties engendered by § 811(c). In that case the principle applied was that a tax lies against an estate when the death of the grantor brings a larger estate into being for the beneficiary. This does accomplish uniformity in the interpretation of the section of federal law. Hallock attempted nothing more. It leaves its application to particular trusts dependent upon state determination of when a settlor has divested himself of every possible interest in the res of a trust11 We are dealing with a statute and Congress is fully competent to correct any misunderstanding we may have of the congressional intention. 50 (2) The foregoing leads to the conclusion in the Spiegel case that this estate must pay a federal estate tax on the trust res unless that res, under the law of Illinois, would have passed to the heirs at law or the legatees of the last descendant of the settlor. If under Illinois law the estate returned to the settlor on his surviving all his descendants, the tax is due. The possibilities of this happening in this case are extremely remote but a trust might have been created by a young son for an aged mother to pay her the income for life and at the settlor's death to pay her the principal. 51 The Court of Appeals concluded Commissioner v. Spiegel's Estate, 2 Cir., 159 F.2d 257, at page 259, that 'If none of the beneficiaries survived the settlor, and that was a possibility, then the trust failed, and the trustees would hold the bare naked title to the corpus as resulting trustees for the settlor.' There is no Illinois case holding squarely on this point, and in the absence of such a determination by a state court we do not interfere with a reasonable decision of the circuit which embraces Illinois. Helvering v. Stuart, 317 U.S. 154, 164, 63 S.Ct. 140, 146, 87 L.Ed. 154; MacGregor v. State Mutual Life Assurance Co., 315 U.S. 280, 62 S.Ct. 607, 86 L.Ed.2d 864. The rule followed by the court of appeals accords with that generally accepted. Restatement, Trusts § 411; 3 Scott, Trusts § 411; 2 Bogert on Trusts and Trustees § 468; Harris Trust & Savings Bank v. Morse, 238 Ill.App. 232; Lill v. Brant, 6 Ill.App. 366, 376.12 52 The taxpayer relies upon cases wherein the language of wills was construed in order to create vested remainders. These cases, however, do not overturn the firmly settled principle that where an express trust fails for lack of a beneficiary, a resulting trust in favor of the settlor arises by operation of law.13 To vest property under a will or deed is desirable. To vest property u der a trust may not be. It is more reasonable to return trust property to the settlor on failure of the trust than to have it go to the heirs of the beneficiary. 53 From a reading of the trust instrument involved in the instant case, it is manifest that the settlor did not intend to grant his children the power to dispose of their respective shares should they predecease the settlor without issue. The settlor specifically named as beneficiaries of the trust his children and grandchildren. That he intended to restrict the trust to these two classes of beneficiaries is evidenced by the provision of the instrument that in the event of the death of a child without issue that child's share was to be added to the shares of the settlor's surviving children. His retention of the trusteeship and failure to grant the power of disposition to his children in his lifetime negative any intention of the settlor to exclude the possibility of a reversion of the trust property to himself. 54 No error appears in the conclusion of the Court of Appeals on this point. 55 (3) Finally, the situation in the Church case must be dealt with. The trust was created in New York by a resident of New York who died a resident of New Jersey. Two of three trustees were at all times residents of New York where the stocks and accounts of the trust were kept. From what is before me, I would assume that the New York law would control as to the possibility of the retention of an interest by the settlor. This produces a variant from the Spiegel case. The determination of New York law will be made by a circuit that does not include that state. This, I think, is not significant in determining the course to be followed. 56 As the Court of Appeals for the Third Circuit, 161 F.2d 11, made its decision on the authority of the Dobson rule (Dobson v. Commissioner), 320 U.S. 489, 64 S.Ct. 239, 88 L.Ed. 248, it did not consider the effect of Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858. As May v. Heiner stands, in my opinion, trusts, like the Church trust, created prior to the passage of the Joint Resolution of March 3, 1931, are not includable in the gross estate of a settlor for federal estate tax purposes unless there is a possibility of reverter to the settlor by operation of the controlling state law. To determine this question, I would vacate the judgment of the Third Circuit and remand the case to the court to determine the state law. 57 I would affirm No. 3, Spiegel v. Commissioner; I would vacate No. 5, Commissioner v. Church. Mr. Justice FRANKFURTER (dissenting.) 58 By fitting together my agreement with portions of the dissenting concurrence and my disagreement with a part of the comprehensive dissenting opinions of my brother BURTON, I could indicate, substantially, my views of these cases. But such piecing together would make a Joseph's coat. Therefore, even at the risk of some repetition of what has been said by others, a self-contained statement on the basic issues of these cases will make for clarity. Particularly is this desirable where disharmony of views supports a common result—a result the upsetting of which by Congre § is almost invited. 59 I. In the Spiegel case, No. 3, the decedent made a settlement by the terms of which he reserved no interest for himself, and it is not suggested that the form of the settlement disguised an attempted evasion of the estate-tax law. The corpus of the decedent's estate is found to be subject to the estate tax on the basis of Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368, as supplemented by Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 65 S.Ct. 508, 89 L.Ed. 783, 159 A.L.R. 227; Commissioner v. Field's Estate, 324 U.S. 113, 65 S.Ct. 511, 89 L.Ed. 786, 159 A.L.R. 230, and Goldstone v. United States, 325 U. S. 687, 65 S.Ct. 1323, 89 L.Ed. 1871, 159 A.L.R. 1330. On that basis it is now decided that if there is a possibility, due to the terms of the instrument or by operation of law, however remote, that settled property may return to the settlor, the entire trust property must be included in the gross estate for purposes of the federal estate tax. Thus, under the Court's decision tax liability may be incurred by the discovery of a gossamer thread of possession or enjoyment, which has no value. Nevertheless the entire trust corpus is included in the gross estate and taxed as if the settlor really had possession or enjoyment of the property. Such a result not only creates unanticipated hardship for taxpayers; it is also an unrealistic interpretation of § 811(c) of the Internal Revenue Code. Since such an unrealistic interpretation is not a judicial duty whereas its avoidance is, I am compelled to conclude that Spiegel did not transfer an interest in property 'intended to take effect in possession or enjoyment at or after * * * death' within the meaning of § 811(c) and that the trust corpus settled by him in his lifetime was no part of his gross estate. 60 This case is brought under the decisions of Hallock and the three subsequent cases only by a disregard of the vital differences between the interest created by the Spiegel indenture and the arrangements before this Court in the four cases upon which reliance is placed. 61 1. In 1920, Spiegel transferred securities to himself and another person as co-trustees, the income to be paid equally to Spiegel's three named children during his lifetime. If any of the children died before the settlor, the share of that child was to go to his issue, if any, otherwise to the settlor's other children. The instrument provided further that upon the settlor's death the corpus, together with any accumulated income, should be divided 'equally among my said three (3) children; and if any of my said children shall have died, leaving any child or children surviving, then the child or children of such deceased child of mine shall receive the share' of the trust to which his or her parent would have been entitled. If any of the settlor's three children died without leaving surviving children, that share was to go to the two remaining children. When the trust was established Spiegel was 47 years old, and his three children were aged 25, 15, and 13. At his death twenty years later the children were still living and there were three grandchildren. Upon the assumption that there would have been a reverter to Spiegel by operation of Illinois law in the event that all his children predeceased him without leaving 'surviving children,' the value of this remote contingency was determined mathematically to be worth $4,000.1 62 2. In the Helvering v. Hallock series, supra, each of the several donors created a trust giving an estate to another but providing that the property would revert to the donor if the donee predeceased him. The donor's death in each case was the operative fact which established final and complete dominion as between the donor and t e donee according to the terms of the instruments. Until the former's death the donor was, as it were, competing with the donee for the ultimate use and enjoyment of the property. We there held that the particular form of conveyancing words is immaterial if the net effect is that transferred property will revest in a donor who survives the donee. Except on a contingency of Illinois law so remote as to be nonexistent in the practical affairs of life, the property would never revert to Spiegel. His death no doubt would finally determine which children or grandchildren would have the ultimate enjoyment of the trust corpus settled upon his children, but in the real world the property could never come back to him as a windfall. His death did not determine contingencies from which he could benefit. His death merely definitively closed the class of beneficiaries and fixed the quantum of each child's share. 63 Contrary to the suggestion in the concurring opinion in this case—a suggestion accepted by the majority opinion—the Court of Appeals did not find that Spiegel retained an interest because he had not provided for all contingencies. It included the settled property in the gross estate on the theory that every trust carries as it were the seed of its own destruction through failure of the trust, thereby genrating a resulting trust. It said, 'If none of the beneficiaries survived the settlor, and that was a possibility, then the trust failed, and the trustees would hold the bare naked title to the corpus as resulting trustees for the settlor.' Commissioner v. Spiegel's Estate, 7 Cir., 159 F.2d 257, at page 259. But this mode of argument would have swept into the gross estate a conveyance in trust in fee to any of Spiegel's children in 1920 since the failure of the trust for any conceivable reason presumably would not turn the trust property into an outright gift to the trustees. 64 The trust indenture is a comprehensive arrangement for the children and their offspring to take care of the contingencies of mortality among the children and their offspring. Provisions such as were made in the Spiegel case are precisely the kind of arrangement made by an ancestor for his children and children's children by which he settles property upon them with a view to the contingencies of successive generations and reserves no interest in himself. Nothing was reserved in the settlor except what feudal notions about seisin may have reserved. But feudal notions of seisin are no more pertinent in tax cases when they lead to imposition of an estate tax than when they lead away from it. At the very basis of the decision of the Hallock case was the insistence that these 'unwitty diversities of the law of property derive[d] from medieval concepts as to the necessity of a continuous seisin. * * * are peculiarly irrelevant in the application of tax measures now so largely directed towards intangible wealth.' Helvering v. Hallock, supra, 309 U.S. at page 118, 60 S.Ct. at page 450, 84 L.Ed. 604, 125 A.L.R. 1368. The metaphysical remoteness of the present settlor's interest at the time the trust was created is clearly shown by the fact that it depended upon the highly unlikely event that all the children in existence at the time of the conveyance would die and would die childless. Even this remote possibility evaporated long before the settlor died. And certainly the only tenable construction of the statute is that not only must there have been a transfer of the sort designated in § 811(c) but the settlor's interest must also persist up to the time of his death. Cf. Estate of Miller, 40 B.T.A. 138; see Griswold, Cases and Materials on Federal Taxation 145 (1940). 65 3. The three later decisions invoked by the Court bear no resemblance to the situation presented by the Spiegel case and give no justification for the ruling now made. In Fidelity-Philadelphia Trust Co. v. Rothensies, supra, the settlement provided for a life estate in the settlor, life estates in the two daughters, and a eversion in the settlor unless the daughters had issue. See Brief for Respondent, p. 8, Fidelity-Philadelphia Trust Co. v. Rothensies, supra; Goldstone v. United States, 325 U.S. 687, 693, n. 3, 65 S.Ct. 1323, 1326, 89 L.Ed. 1871, 159 A.L.R. 1330. The birth of the grandchildren which cut off the settlor's interest did not occur until after the death of the settlor. Since, therefore, the taxability is to be determined at death, it followed that the value of the trust property was to be included in the gross estate. The sole controversy was whether deduction should be allowed for the mother's and daughters' life interests and for a contingent gift to unborn children.2 Likewise in the Estate of Field case it was conceded that the settlor retained until death a substantial interest—the right to reduce or cancel the interest of life tenants and a reversion of the corpus to himself if he survived these tenants. In the Estate of Field case too the controversy concerned the basis on which the estate was to be assessed—whether the value of the life tenancies was to be deducted from the corpus. The Goldstone case was in effect another Hallock case, the insurance being payable upon the donor's death to the wife but with a reserved right in the donor if she predeceased him. 66 The birth of grandchildren in Spiegel's lifetime destroys all resemblance between his case and the cases just discussed. On the least favorable reading of the trust instrument—whereby the grandchildren would have to survive not only their parents but also the settlor—the possibility that the settlor would regain the property was extremely tenuous. Reading the trust instrument in a customary and not in a hostile spirit, the grandchildren would merely have to survive their parents and not the settlor for their interest to become indefeasible. Thus the remote contingency of reacquisition by the settlor vanishes.3 67 To be sure, in both the Fidelity-Philadelphia Trust Co. and the Estate of Field cases there is generality of language about indifference regarding the remoteness or uncertainty of the decedent's 'reversionary interest.' But in both cases as we have seen there was no question that the trust instrument itself purposely reserved in the settlor an interest which in its context was substantial. The talk of uncertainty and remoteness was merely a way of indicating that where the settlor himself had reserved an interest terminable only by his death, it was not for the law to make nice calculations as to the chance he was giving himself to regain the property. In these two cases the settlor thought the reserved interest had significance and of course the law gave that significance onetary value. Spiegel contrariwise designed to retain nothing and his estate should not be held to include property of which he divested himself many years before his death. 68 4. But even the gossamer thread which binds the majority together in subjecting the Spiegel trust corpus to an estate tax is visible only to their mind's eye. The gossamer thread is the remote possibility that at the time of Spiegel's death there would be a reverter of the trust property to him. But that possibility depends entirely upon its recognition by the law of Illinois. It is at best a dubious assumption that such a reverter exists under Illinois law. My brother BURTON'S argument in disproof is not lightly to be dismissed. At best, however, this Court's guess that Illinois law would enforce such a reverter may be displaced the day after tomorrow by the Illinois Supreme Court's authoritative rejection of the guess. If tax liability is to hang by a gossamer thread, the Court ought to be sure that the thread is there. Since only the courts of Illinois can definitively inform us about this; it would seem to me common sense to secure an adjudication from them if some appropriate procedure of Illinois, like the Declaratory Judgment Act, is available.4 To justify at all the Court's theory, the rational mode of disposing of the case would be to remand it to the Court of Appeals for the Seventh Circuit in order to allow that court to decide whether in fact a procedure is available under Illinois law for a ruling upon the point of Illinois law which is made the basis of this Court's decision, since the correctness of this Court's assumption is at best doubtful. Cf. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 483, 484, 60 S.Ct. 628, 630, 631, 84 L.Ed. 876; Spector Motor Service, Inc., v. McLaughlin, 323 U.S. 101, 65 S.Ct. 152, 89 L.Ed. 101. A determination so made would conclusively fix the interests actually held by the parties to the instrument and at the same time leave to the federal courts the tax consequences of these interests. Blair v. Commissioner, 300 U.S. 5, 9-14, 57 S.Ct. 330, 331-334, 81 L.Ed. 465; Freuler v. Helvering, 291 U.S. 35, 54 S.Ct. 308, 78 L.Ed. 634. 69 II. The reach of the Church case, No. 5, extends far beyond the proper construction of the tax statute.5 It concerns the appropriate attitude of this Court toward a series of long-standing unanimous decisions by this Court. More than that, it involves the respect owed by this Court to the expressed intention of Congress. 70 The short of the matter is this. More than eighteen years ago this Court by a unanimous ruling found that Congress did not mean to subject a trust corpus transferred by a decedent in his lifetime to the estate tax imposed by the Revenue Act of 1918 merely because the settlor had reserved the income to himself for life. May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244. At the earliest opportunity, in three cases having minor variations but presenting the same issue, the Treasury invited the Court's reconsideration of its decision. But the Court after having had the benefit of comprehensive briefs and arguments by counsel specially competent in fiscal matters, unanimously adhered to its ruling in May v. Heiner. Burnet v. Northern Trust Co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412; McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413. These decisions, now cast aside, were shared in by judges of whom it must be said without invidiousness that they were most alert in recognizing the public interest and resourceful in protecting it. There were brave men before Agamemnon. If such a series of decisions, viewed in all their circumstances, as that which established the rule in May v. Heiner, is to have only contemporaneous value, the wisest decisions of the present Court are assured no greater permanence. 71 In fairness, attention should be called to the fact that in joining the Court's decisions laying down, and adhering to, the May v. Heiner ruling, Mr. Chief Justice Hughes, Mr. Justice Holmes, Mr. Justice Brandeis, and Mr. Justice Stone were not denied argument which the Government has now urged upon us. But it is also fair to the Government to point out that it has not of its own accord asked this Court to overrule the four decisions rendered eighteen years ago. It was only after the case was ordered for reargument and a series of questions was formulated by the Court which shed doubt upon the continued vitality of May v. Heiner, that the Government suggested that the decision be cast into limbo. No doubt stare decisis is not 'a universal, inexorable command.' Brandeis, J., dissenting in State of Washington v. Dawson & Co., 264 U.S. 219, 238, 44 S.Ct. 302, 309, 68 L.Ed. 646. But neither is it a doctrine of the dead hand. In the very Hallock case relied upon so heavily in these cases the Court said, 'We recognize that stare decisis embodies an important social policy. It represents an element of continuity in law, and is rooted in the psychologic need to satisfy reasonable expectations.' 309 U.S. at page 119, 60 S.Ct. at page 451, 84 L.Ed. 604, 125 A.L.R. 1368. And one of the most recent reliances on stare decisis for decision was expressed with such firmness as to manifest allegiance to principle, not utilization of an ad hoc argument.6 We are not dealing here with a ruling which cramps the power of Government; we are not dealing with a constitutional adjudication which time and experience have proved a parochial instead of a spacious view of the Constitution and which thus calls for self-correction by the Court without waiting for the leadenfooted process of constitutional amendment. We are dealing with an exercise of this Court's duty to construe what Congress has enacted with ample powers on its part quickly and completely to correct misconstruction. 72 Those powe § were promptly invoked in this case. Because the Treasury was dissatisfied with the meaning given by this Court to the estate-tax provision, the very next day after the three decisions reaffirming May v. Heiner were handed down, the Treasury appealed to Congress for relief and Congress gave relief. The true significance of today's decision in the Church case is not to be found in the Court's failure to respect stare decisis. The extent to which judges should feel in duty bound not to innovate is a perennial problem, and the pull of the past is different among different judges as it is in the same judge about different aspects of the past. We are obligated, however, to enforce what is within the power of Congress to declare. Inevitable difficulties arise when Congress has not made clear its purpose, but when that purpose is made manifest in a manner that leaves no doubt according to the ordinary meaning of English speech, this Court in disregarding it is disregarding the limits of the judicial function which we all profess to observe. 73 The Treasury no doubt was deeply concerned over the emphatic reaffirmation of May v. Heiner. The relief sought from Congress was formulated by the fiscal and legal expert who had that very day failed in persuading this Court to overrule May v. Heiner. What relief did the Treasury seek from Congress? Did the Secretary of the Treasury ask Congress to rewrite § 302(c) of the Revenue Act of 1926, now § 811(c) of the Internal Revenue Code, so as to sterilize May v. Heiner? Certainly not. Not one word was altered of the language of the provision which this Court felt compelled to construe as it did in May v. Heiner. What the Treasury proposed and what Congress granted was a qualifying addition to the statute as construed in May v. Heiner, whereby trust settlements reserving a life interest in the settlor were to be included in a decedent's gross estate, but only in the case of settlements made after this qualification became operative, that is, after March 3, 1931. Such, in the light of the legislative history, was the inescapable meaning of what Congress did, and the only thing it did, to qualify the reading which this Court four times felt constrained to place upon the mandate of Congress in the imposition of the estate tax. The history is recounted in Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858, again without a dissenting voice. This history is so crucial to the exercise of the judicial process in this case, that it bears repetition. 74 When the Joint Resolution of March 3, 1931, was adopted, it was clear that it was to be only of prospective effect. Its sponsors specifically declared: 75 'Entirely apart from the refunds that may be expected to result, it is to be anticipated that many persons will proceed to execute trusts or other varieties of transfers under which they will be enabled to escape the estate tax upon their property. It is of the greatest importance therefore that this situation be corrected and that this obvious opportunity for tax avoidance be removed. It is for that purpose that the joint resolution is proposed.' 74 Cong.Rec. 7198 and 7078. 76 And there was good reason for not making it retroactive: 77 'We did not make it retroactive for the reason that we were afraid that the Senate would not agree to it. But I do hope that when this matter is considered in the Seventy-Second Congress we may be able to pass a bill that will make it retroactive.' 74 Cong.Rec. 7199. 78 These statements on the floor by those in charge of the Resolution are controlling, as much as though they had been submitted in a Committee Report, for they were the authoritative explanation of the Resolution's purpose and meaning. In fact, Representative Schafer of Wisconsin had stated that unless the sponsors explained the bill he would object, thus preventing its acceptance as a resolution. 74 Cong.Rev. 7198. 79 When the section was reenacted by the 72d Congress as § 803(a) of the Revenue Act of 1932, it remained n the pre-May v. Heiner language with the Joint Resolution of March 3, 1931, added in slightly different phrasing. 47 Stat. 279. This section was interpreted in 1938 by a unanimous Court as not applying to a reserved life estate created in 1924. Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858. The briefs filed by the Government in that case again contained much of the same data now found to demand a contrary result.7 On the same day this Court also decided Helvering v. Bullard, 303 U.S. 297, 58 S.Ct. 565, 82 L.Ed. 852, which held the Joint Resolution applicable to reserved life estates created after the passage of the Resolution. It quoted the same language from Matter of Keeney's Estate, 194 N.Y. 281, 287, 87 N.E. 428, now quoted by the majority, thus indicating that it appreciated the tax-avoidance problem and would have interpreted § 803(a) retroactively had Congress indicated that it intended to tax reserved life estates created before March 3, 1931.8 It is especially difficult to say that in Hassett v. Welch, supra, the Court considered only the language added by the Joint Resolution and not the section in its entirety, since it phrased the issue before it in this way: 80 'The petitioners ask us to hold that section 302(c) of the Revenue Act of 1926 as amended by the Joint Resolution of Congress of March 3, 1931, and section 803(a) of the Revenue Act of 1932, includes in the gross estate of a decedent, for estate tax, property which, before the adoption of the amendments, was irrevocably ransferred with reservation of a life estate to the transferor * * *.' 303 U.S. at page 304, 58 S.Ct. at page 560, 82 L.Ed. 858. 81 If May v. Heiner, supra, had not been accepted as authoritative, it would have been pointless to decide that the amendment to § 302(c) of the revenue Act of 1926 did not operate retroactively. See Learned Hand, J., in Helvering v. Proctor, 2 Cir., 140 F.2d 87, 89, 155 A.L.R. 845. 82 Of course the Government did not attack May v. Heiner in Hassett v. Welch, supra. Having been rebuffed three times by this Court in its efforts to secure its overruling and having resorted to Congress to nullify its effect, the whole claim of the Government in Hassett v. Welch was that Congress had, as it were, overruled May v. Heiner by the Resolution of March 3, 1931, not only prospectively, but retrospectively. That construction of the Resolution of 1931 had to be rejected in the light of the legislative history of the Resolution. The unanimity of the Court's decision in Hassett v. Welch confirms the inevitability of the decision. A d the considerations that led the Government not to attack May v. Heiner in Hassett v. Welch, supra, likewise led the Government not to ask the Court to overrule May v. Heiner in this litigation until propelled to do so by this Court's order for reargument. These considerations were of the same nature, except reenforced by another decade's respect for May v. Heiner by the Treasury in the actual administration of the revenue law. 83 Congress has made no change in this section since 1932 and the identical language was carried over as § 811(c) of the Internal Revenue Code in 1939. There has been no amendment to this language in the Code. Although the sponsors of the Joint Resolution in the House expressed the hope that the next Congress would make the Resolution's provisions retroactive, nothing of the sort was done. See 74 Cong.Rec. 7199, partially quoted ante at p. 13. Nor did the Treasury remind any subsequent Congress of this unfinished business, despite the fact that it urged amendment of other provisions of the estate-tax law.9 84 The Court during the past decade, in an impressive body of decisions, has given effect to legislative history under circumstances far less compelling than the story here summarized. See the massive body of cases collected in Appendix A. 69 S.Ct. 355. Moreover, in the face of the legislative history set out above, even an overruling of the five cases in which this precise issue was decided would not give this Court a free hand. For the subsequent actions of Congress make the meaning announced in May v. Heiner and reaffirmed four times as much a part of the wording of the statute as if it had been written in express terms. See Note, 59 Harv.L.Rev. 1277, 1285. An interpretation that 'came like a bombshell' certainly had the attention of the Congress. Its failure to alter the language indicates that it accepted that interpretation. See the cases collected in Appendix B. 69 S.Ct. 358. Due regard for this Court's function precludes it from ignoring explicit legislative intention even to 'yield results more consonant with fairness and reason.' Anderson v. Wilson, 289 U.S. 20, 27, 53 S.Ct. 417, 420, 77 L.Ed. 1004; see Cardozo, The Nature of the Judicial Process 14 (1921). What the Treasury could not induce the House to do because the Senate would not vote for it we should not now, eighteen years later, bring to pass simply because our action in this case does not depend upon that body's concurrence. 85 No comparable legislative history was flouted in Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368. It is one thing to hold that Congress is not charged either with seeking out and reading decisions which reach conflicting views in the application of a sound principle or with taking steps to meet such decisions. This is the meaning of our holding in the Hallock case.10 It is quite a different thing to say that a statute does not acquire authoritative content when a decision interpreting it has been called to the attention of the public and of Congress and has engendered professional controversy, and when Congress, after full debate, has not merely refused to undo the effect of the decision but has seen fit to modify it only partially. Helvering v. Griffiths, 318 U.S. 371, 63 S.Ct. 636, 87 L.Ed. 843; United States v. South Buffalo R. Co., 333 U.S. 771, 773-785, 68 S.Ct. 868, 869-875; cf. Apex Hosiery Co. v. Leader, 310 U.S. 469, 487-489, 60 S.Ct. 982, 988, 989, 84 L.Ed. 1311, 128 A.L.R. 1044. That is this case.11 86 The opinion of the majority in the Hallock case did not, either explicitly or by implication, declare that May v. Heiner was no longer the accepted interpretation of the pre-1931 part of the language in § 811(c). When we spoke of what had been 'Congressionally discarded'—a reference, incidentally, made to answer the argument that Congress had legislatively recognized the distinction between the Klein12 and the St. Louis Trust13 cases—we meant just what Congress meant that where a settlor created a trust after May 3, 1931, in which he reserved a life estate, the property transferred would be included in the gross estate. It is significant that only one14 of the many circuit judges who have dealt with the Hallock opinion has thought that it overruled May v. Heiner or that the interpretation there announced was to be changed. Commissioner v. Hall's Estate, 2 Cir., 153 F.2d 172; Helvering v. Proctor, 2 Cir., 140 F.2d 87, 155 A.L.R. 845; Commissioner v. Church's Estate, 3 Cir., 161 F.2d 11; United States v. Brown, 9 Cir., 134 F.2d 372. The contention that the Hallock case overruled May v. Heiner was, one would have supposed, conclusively answered by Judge Learned Hand in Helvering v. Proctor, supra, 140 F.2d at pages 88, 89: 87 'The opinion of the majority in Helvering v. Hallock, supra, did not explicitly, or by inference from anything siad, declare that May v. Heiner, supra * * * was no longer law. We do not forget that in a note on page 120 of 309 U. S., page 452 of 60 S.Ct., 84 L.Ed. 604, 125 A.L.R. 1368. Frankfurter, J., spoke of the 'Congressionally discarded May v. Heiner doctrine; but it would be quite unwarranted from that to infer that the court meant to overrule that 'doctrine,' and the note was added for quite another purpose. * * * it cannot properly be interpreted as holding that the amendment was a legislative interpretation that May v. Heiner, supra, had been wrongly decided. Perhaps it was wrongly decided; perhaps the amendment is evidence that it was; but the Supreme Court did not say so, or indicate that it thought so. It is true that Roberts, J. in his dissent found no difference (309 U.S. at page 127, 60 S.Ct. at page 455 * * *) between that decision and Helvering v. St. Louis Union Trust Co., supra, 296 U.S. 39, 56 S.Ct. 74, 80 L.Ed. 29, 100 A.L.R. 1239, and apparently thought that consistently, May v. Heiner, supra, must also fall, but the majority did not share his opinion. 88 'Helvering v. Hallock, supra, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368, was concerned with quite another situation. The settlor had provided that, if he survived his wife who had a life estate—the remainder went to him; but if she survived him, the remainder went to her. All that was decided was that, when that was the intent, it made no difference what was the form of words used. It was enough that the settlor's death cut off an interest which he had reserved to himself upon a condition then determined; that made the remainder a part of his estate. * * * If therefore May v. Heiner, supra, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244, is to be overruled, we do not see how Helvering v. Hallock, supra, can be thought to contribute to that result; it must be overruled by a new and altogether independent lift of power, which is clearly not ours to exercise. Furthermore, if the Commissioner is right, Helvering v. Hallock, supra, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368 also overruled Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858, sub silentio. That decision had held that the amendment to § 302(c) did not operate retroactively; and it would not have been necessary to discuss that question, nor would the actual result have been the same, if May v. Heiner, supra, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244, had not been law.' 89 I would reverse Spiegel v. Commissioner, No. 3, and affirm Commissioner v. Estate of Church, No. 5. APPENDIX A 90 Decisions During the Past Decade in Which Legislative History Was Decisive of Construction of a Particular Statutory Provision 91 United States v. Durkee Famous Foods, Inc., 306 U.S. 68, 59 S.Ct. 456, 83 L.Ed. 492; United States v. Towery, 306 U.S. 324, 59 S.Ct. 522, 83 L.Ed. 678; Kessler v. Strecher, 307 U.S. 22, 59 S.Ct. 694, 83 L.Ed. 1082; United States v. Maher, 307 U.S. 148, 59 S.Ct. 768, 83 L.Ed. 1162; United States v. One 1936 Model Ford, 307 U.S. 219, 59 S.Ct. 861, 83 L.Ed. 1249; Sanford's Estate v. Commissioner, 308 U.S. 39, 60 S.Ct. 51, 84 L.Ed. 20; Palmer v. Massachusetts, 308 U.S. 79, 60 S.Ct. 34, 84 L.Ed. 93; Valvoline Oil Co. v. United States, 308 U.S. 141, 60 S.Ct. 160, 84 L.Ed. 151; Haggar Co. v. Helvering, 308 U.S. 389, 60 S.Ct. 337, 84 L.Ed. 340; American Federation of Labor v. National Labor Relations Board, 308 U.S. 401, 60 S.Ct. 300, 84 L.Ed. 347; Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370; Morgan v. Commissioner, 309 U.S. 78, 626, 60 S.Ct. 424, 84 L.Ed. 585, 1035; South Chicago Coal & Dock Co. v. Bassett, 309 U.S. 251, 60 S.Ct. 544, 84 L.Ed. 732; Amalgamated Utility Workers v. Consolidated Edison Co. of New York, 309 U.S. 261, 60 S.Ct. 261, 84 L.Ed. 738; Germantown Trust Co. v. Commissioner, 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770; Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825; United States v. City and County of San Francisco, 310 U.S. 16, 60 S.Ct. 749, 84 L.Ed. 1050; Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263; United States v. American Trucking Ass'n, 310 U.S. 534, 60 S.Ct. 1059, 84 L.Ed. 1345; United States v. Dickerson, 310 U.S. 554, 60 S.Ct. 1034, 84 L.Ed. 1356; Helvering v. Northwest Steel Rolling Mills, Inc., 311 U.S. 46, 61 S.Ct. 109, 85 L.Ed. 29; Neuberger v. Commissioner, 311 U.S. 83, 61 S.Ct. 97, 85 L.Ed. 58; Milk Wagon Drivers' Union, Local No. 753 v. Lake Valley Farm Products, 311 U.S. 91, 61 S.Ct. 122, 85 L.Ed. 63; Helvering v. Janney, 311 U.S. 189, 61 S.Ct. 241, 85 L.Ed. 118, 131 A.L.R. 980; Taft v. Helvering, 311 U.S. 195, 61 S.Ct. 244, 85 L.Ed. 122; Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581; United States v. Gilliland, 312 U.S. 86, 61 S.Ct. 518, 85 L.Ed. 598; Palmer v. Webster & Atlas National Bank of Boston, 312 U.S. 156, 61 S.Ct. 542, 85 L.Ed. 642; United States v. Cooper Corp., 312 U.S. 600, 61 S.Ct. 742, 85 L.Ed. 1071; Helvering v. Enright's Estate, 312 U.S. 636, 61 S.Ct. 777, 85 L.Ed. 1093; Maguire v. Commissioner, 313 U.S. 1, 61 S.C . 789, 85 L.Ed. 1149; Helvering v. Campbell, 313 U.S. 15, 61 S.Ct. 798, 85 L.Ed. 1159; Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214; Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S.Ct. 845, 85 L.Ed. 1271, 133 A.L.R. 1217; Helvering v. William Flaccus Oak Leather Co., 313 U.S. 247, 61 S.Ct. 878, 85 L.Ed. 1310; Benitez Sampayo v. Bank of Nova Scotia, 313 U.S. 270, 61 S.Ct. 953, 85 L.Ed. 1324; Baltimore & Ohio R. Co. v. Kepner, 314 U.S. 44, 62 S.Ct. 6, 86 L.Ed. 28, 136 A.L.R. 1222; Parker v. Motor Boat Sales Inc., 314 U.S. 244, 62 S.Ct. 221, 86 L.Ed. 184; Textile Mills Securities Corp. v. Commissioner, 314 U.S. 326, 62 S.Ct. 272, 86 L.Ed. 249; Gray v. Powell, 314 U.S. 402, 62 S.Ct. 326, 86 L.Ed. 301; District of Columbia v. Murphy, 314 U.S. 441, 62 S.Ct. 303, 86 L.Ed. 329; Illinois Natural Gas Co. v. Central Illinois Public Service, 314 U.S. 498, 510, 62 S.Ct. 384, 389, 86 L.Ed. 371; Duncan v. Thompson, 315 U.S. 1, 62 S.Ct. 422, 86 L.Ed. 575; Cudahy Packing Co. v. Holland, 315 U.S. 357, 788, 62 S.Ct. 651, 86 L.Ed. 895; United States v. Local 807 of International Brotherhood of Teamsters, 315 U.S. 521, 62 S.Ct. 642, 86 L.Ed. 1004; Stonite Product Co. v. Melvin Lloyd Co., 315 U.S. 561, 62 S.Ct. 780, 86 L.Ed. 1026; National Labor Relations Board v. Electric Vacuum Cleaner Co., 315 U.S. 685, 62 S.Ct. 846, 86 L.Ed. 1120; Miles v. Illinois Central R. Co., 315 U.S. 698, 62 S.Ct. 827, 86 L.Ed. 1129, 146 A.L.R. 1104; United States, to Use of Noland Co. v. Irwin, 316 U.S. 23, 62 S.Ct. 899, 86 L.Ed. 1241; Mishawaka Rubber & Woolen Manufacturing Co. v. S. S. Kresge Co., 316 U.S. 203, 62 S.Ct. 1022, 86 L.Ed. 1381; Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638; Helvering v. Cement Investors, Inc., 316 U.S. 527, 62 S.Ct. 1125, 86 L.Ed. 1649; Marine Harbor Properties, Inc., v. Manufacturers' Trust Co., 17 U.S. 78, 63 S.Ct. 93, 87 L.Ed. 64; Braverman v. United States, 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23; Riggs v. Del Drago, 317 U.S. 95, 63 S.Ct. 109, 87 L.Ed. 106, 142 A.L.R. 1131; Ex parte Kumezo Kawato, 317 U.S. 69, 63 S.Ct. 115, 87 L.Ed. 58; State Bank of Hardinsburg v. Brown, 317 U.S. 135, 63 S.Ct. 128, 87 L.Ed. 140; Pfister v. Northern Illinois Finance Corp., 317 U.S. 144, 63 S.Ct. 133, 87 L.Ed. 146; United States v. Wayne Pump Co., 317 U.S. 200, 63 S.Ct. 191, 87 L.Ed. 184; Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315; Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Harrison v. Northern Trust Co., 317 U.S. 476, 63 S.Ct. 361, 87 L.Ed. 407; United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443; United States v. Monia, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376; Ziffrin, Inc., v. United States, 318 U.S. 73, 63 S.Ct. 465, 87 L.Ed. 621; Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645, 144 A.L.R. 719; Overstreet v. North Shore Corp., 318 U.S. 125, 63 S.Ct. 494, 87 L.Ed. 656; Robinette v. Helvering, 318 U.S. 184, 63 S.Ct. 540, 87 L.Ed. 700; Smith v. Shaughnessy, 318 U.S. 176, 63 S.Ct. 545, 87 L.Ed. 690; Helvering v. Sabine Transp. Co., 318 U.S. 306, 63 S.Ct. 569, 87 L.Ed. 773; Federal Security Adm'r v. Quaker Oats Co., 318 U.S. 218, 63 S.Ct. 589, 87 L.Ed. 724, 158 A.L.R. 832; United States v. Swift & Co., 318 U.S. 442, 63 S.Ct. 684, 87 L.Ed. 889; Ecker v. Western Pac. R. R. Corp., 318 U.S. 448, 63 S.Ct. 692, 87 L.Ed. 892; Fred Fisher Music Co. v. M. Witmark & Sons, 318 U.S. 643, 63 S.Ct. 773, 87 L.Ed. 1055; Jersey Central Power & Light Co. v. Federal Power Commission, 319 U.S. 61, 63 S.Ct. 953, 87 L.Ed. 1258; National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344; Boone v. Lightner, 319 U.S. 561, 63 S.Ct. 1223, 87 L.Ed. 1587; Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 87 L.Ed. 1796; Hirabayashi v. United States, 320 U.S. 81, 63 S.Ct. 1375, 87 L.Ed. 1774; Roberts v. United States, 320 U.S. 264, 64 S.Ct. 113, 88 L.Ed. 41; United States v. Dotterweich, 320 U.S. 277, 64 S.Ct. 134, 88 L.Ed. 48; Crescent Express Lines v. U ited States, 320 U.S. 401, 64 S.Ct. 167, 88 L.Ed. 127; Colgate-Palmolive-Peet Co. v. United States, 320 U.S. 422, 64 S.Ct. 227, 88 L.Ed. 143; United States v. Laudani, 320 U.S. 543, 64 S.Ct. 315, 88 L.Ed. 300, 149 A.L.R. 492; United States v. Myers, 320 U.S. 561, 64 S.Ct. 337, 88 L.Ed. 312; McLean Trucking Co. v. United States, 321 U.S. 67, 64 S.Ct. 370, 88 L.Ed. 544; Brotherhood of Railroad Trainmen, Enterprise Lodge, No. 27 v. Toledo, P. & W. R. R., 321 U.S. 50, 64 S.Ct. 413, 88 L.Ed. 534, 150 A.L.R. 810; B. F. Goodrich Co. v. United States, 321 U.S. 126, 64 S.Ct. 471, 88 L.Ed. 602; Davies Warehouse Co. v. Bowles, 321 U.S. 144, 64 S.Ct. 474, 88 L.Ed. 635; Hecht Co. v. Bowles, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754; Cornell Steamboat Co. v. United States, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978; National Labor Relations Board v. Hearst Publication, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170; Carolene Product Co. v. United States, 323 U.S. 18, 65 S.Ct. 1, 89 L.Ed. 15, 155 A.L.R. 1371; Smith v. Davis, 323 U.S. 111, 65 S.Ct. 157, 89 L.Ed. 107; United States v. Rosenwasser, 323 U.S. 360, 65 S.Ct. 295, 89 L.Ed. 301; Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, 65 S.Ct. 335, 89 L.Ed. 414; Hartford-Empire Co. v. United States, 323 U.S. 386, 65 S.Ct. 373, 89 L.Ed. 322; Central States Electric Co. v. City of Muscatine, 324 U.S. 138, 65 S.Ct. 565, 89 L.Ed. 801; Gemsco, Inc., v. Walling, 324 U.S. 244, 65 S.Ct. 605, 89 L.Ed. 921; Canadian Aviator v. United States, 324 U.S. 215, 65 S.Ct. 639, 89 L.Ed. 901; Connecticut Light & Power Co. v. Federal Power Commission, 324 U.S. 515, 65 S.Ct. 749, 89 L.Ed. 1150; A. H. Phillips, Inc., v. Walling, 324 U.S. 490, 65 S.Ct. 807, 89 L.Ed. 1095, 157 A.L.R. 876; Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296; Federal Trade Commission v. A. E. Staley Mfg. Co., 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338; Jewell Ridge Coal Corp. v. Local No. 6167, United Mine Workers of America, 325 U.S. 161, 65 S.Ct. 1063, 89 L.Ed. 1534; Elgin, J. & E. R. Co. v. Burley, 325 U.S. 711, 65 S.Ct. 1282, 89 L.Ed. 1886; Interstate Commerce Commission v. Parker, 326 U.S. 60, 65 S.Ct. 1490, 89 L.Ed. 2051; Markham v. Cabell, 326 U.S. 404, 66 S.Ct. 193, 90 L.Ed. 165; John Kelley Co. v. Commissioner, 326 U.S. 521, 66 S.Ct. 299, 90 L.Ed. 278; Roland Electrical Co. v. Walling, 326 U.S. 657, 66 S.Ct. 413, 90 L.Ed. 383; Mabee v. White Plains Pub. Co., 327 U.S. 178, 66 S.Ct. 511, 90 L.Ed. 607; Duggan v. Sansberry, 327 U.S. 499, 66 S.Ct. 657, 90 L.Ed. 809; United States v. Carbone, 327 U.S. 633, 66 S.Ct. 734, 90 L.Ed. 904; Williams v. United States, 327 U.S. 711, 66 S.Ct. 778, 90 L.Ed. 962; Federal Trade Commission v. A. P. W. Paper Co., 328 U.S. 193, 66 S.Ct. 932, 90 L.Ed. 1165; Hust v. Moore-McCormack, 328 U.S. 707, 66 S.Ct. 1218, 90 L.Ed. 1534; United States v. Sheridan, 329 U.S. 379, 67 S.Ct. 332, 91 L.Ed. 359; Oklahoma v. United States Civil Service Commission, 330 U.S. 127, 67 S.Ct. 544, 91 L.Ed. 794; United States v. United Mine Workers of America, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884; United Brotherhood of Carpenters & Joiners of America v. United States, 330 U.S. 395, 67 S.Ct. 775, 91 L.Ed. 973; American Stevedores Inc. v. Porello, 330 U.S. 446, 67 S.Ct. 847, 91 L.Ed. 1011; Interstate Commerce Commission v. Mechling, 330 U.S. 567, 67 S.Ct. 894, 91 L.Ed. 1102; United States v. Ogilvie Hardware Co., 330 U.S. 709, 67 S.Ct. 997, 91 L.Ed. 1192; McCullough v. Kammerer Corp., 331 U.S. 96, 67 S.Ct. 1165, 91 L.Ed. 1365; Ayrshire Collieries Corp. v. United States, 331 U.S. 132, 67 S.Ct. 1168, 91 L.Ed. 1391; Williams v. Austrian, 331 U.S. 642, 67 S.Ct. 1443, 91 L.Ed. 1718; Jones v. Liberty Glass Co., 332 U.S. 524, 68 S.Ct. 229; Fong Haw Tan v. Phelan, 333 U.S. 6, 68 S.Ct. 374; Hilton v. Sullivan, 334 U.S. 323, 68 S.Ct. 1020; United States v. National City Lines, 334 U.S. 573, 68 S.Ct. 1169; United States v. Zazove, 334 U.S. 602, 68 S.Ct. 1284; United States v. Congress of Industrial Organizations, 335 U.S. 106, 68 S.Ct. 1349; Shapiro v. United States, 335 U.S. 1, 68 S.Ct. 375; Ahrens v. Clark, 335 U.S. 188, 68 S.Ct. 1443. APPENDIX B 92 Opinions During the Past Decade Resting Upon the Rule That the Reenactment of a Statute Carries Gloss of Construction Placed Upon It by This Court 93 Electric Storage Battery Co. v. Shimadzu, 307 U.S. 5, 14, 613, 616, 59 S.Ct. 675, 681, 83 L.Ed. 1071; Rasquin v. Humphreys, 308 U.S. 54, 60 S.Ct. 60, 84 L.Ed. 77; Apex Hosiery Co., v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311, 128 A.L.R. 1044; Brooks v. Dewar, 313 U.S. 354, 61 S.Ct. 979, 85 L.Ed. 1399; Helvering v. Griffiths, 318 U.S. 371, 63 S.Ct. 636, 87 L.Ed. 843; Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17, 67 S.Ct. 1056, 91 L.Ed. 1312; Commissioner v. Munter, 331 U.S. 210, 67 S.Ct. 1175, 91 L.Ed. 1441; Francis v. Southern Packing Co., 333 U.S. 445, 68 S.Ct. 611; United States v. South Buffalo R. Co., 333 U.S. 771, 68 S.Ct. 868; cf. Federal Communications Comm. v. Columbia Broadcasting System of California, 311 U.S. 132, 133, 61 S.Ct. 152, 85 L.Ed. 87, see Mr. Justice Black dissenting in Washingtonian Publishing Co. v. Drew Pearson, 306 U.S. 30, 42, 59 S.Ct. 397, 403, 83 L.Ed. 470; See Mr. Chief Justice Stone dissenting in Girouard v. United States, 328 U.S. 61, 70, 66 S.Ct. 826, 830, 90 L.Ed. 1084. 94 Mr. Justice BURTON, dissenting. 95 Except for its important reservation to the settlor of a right to the net income of the trust during the settlor's life, the deed of trust in this case1 is largely comparable to the trust instrument in the Spiegel case, 335 U.S. 701, 69 S.Ct. 301. Both speak for themselves as complete transfers in praesenti. Neither was made in contemplation of death. 96 The evidence of the factual intent of this settlor, likewise, is comparable to that of the settlor in the Spiegel case. In fact, the affirmative evidence that the settlor intended to make a transfer complete and absolute in praesenti is stronger here than in the Spiegel case. This settlor avowedly sought to protect not only his family but also himself against the possibility of his further disposal of his interest in the corpus of the trust. The remoteness of any possibility of a reverter, arising by operation of law, is comparable here to the remoteness of the alleged possibility of a reverter in the Spiegel case. Two other features of this case, however, require separate consideration. 97 First. It is the law of New York that must determine here whether the possibility of a reverter, either to the settlor or to his estate, arose by operation of law from the deed of trust. As this case came up from New Jersey, in the Third Circuit, we have no announcement of the law of New York from the United States Court of Appeals for the Second Circuit which includes New York. Furthermore, when the United States Court of Appeals for the Third Circuit rendered its judgment in favor of the taxpayer, it did so in express reliance upon the opinion of the Tax Court and the Tax Court, in turn, did not elucidate the law of New York. 98 While I rest my conclusion in favor of affirmance upon the absence of the factual intent which, as stated in my dissent in the Spiegel case, I believe is required by s 811(c) of the Internal Revenue Code, a substantial argument might be made for affirmance on the ground that, under the law of New York, no possibility of a reverter arose from this trust by operation of law.2 A substantial argument might also be made for affirmance on the ground that the alleged possibility of a reverter, here and also in the Spiegel case, should be disregarded on the doctrine of de minimis non curat lex. 99 Second. In the opinion of the Court in the instant case, the judgment below is reversed, however, without facing any of the above grounds for its affirmance. This i done by overruling May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244, and that action has carried with it the foundation for this Court's opinion in Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858. The effect of such reversal is to place this trust, which was executed in 1924, in the same position as though it had been executed after the Joint Resolution of March 3, 1931, 46 Stat. 1516, 1517. That Resolution made the federal estate tax applicable to property transferred thereafter by any deed of trust that reserved to the transferor a right to the possession or enjoyment of or the income from the trust property during his life. There is no doubt but that the transfer in the instant case would have been subject to the estate tax if the deed of trust had been executed after, instead of before, the Resolution of March 3, 1931. The legislative history of that Resolution demonstrates, however, that it was not intended to be retroactive. Its prospective character also carried with it at least a congressional recognition of the existence of some basis for making a distinction between prior and future transfers of the type described. 100 After the execution of the instant trust in 1924—and certainly between March 3, 1931 and the death of the settlor on December 11, 1939—there was little, if any, reason for him to consider making further disposition of his reserved rights in order to protect his estate from the federal estate tax. Between 1924 and 1939, there were handed down by this Court its decisions in May v. Heiner, supra, on April 14, 1930; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412, and its two companion cases, on March 2, 1931; and Hassett v. Welch, supra, on February 28, 1938. In those of the above decisions which were rendered before March 3, 1931, this Court unanimously and unequivocally held that the federal estate tax was not to be applied to a trust merely because of the retention thereunder of a right in the settlor to receive the income of the trust during his life. The entry made by this Court in each of the companion cases decided March 2, 1931, expressly stated a doubt as to the constitutional authority of Congress to enact a law which would apply the estate tax retroactively to transfers that already had been made. The action of Congress on March 3, 1931, reflected that doubt. The seven Justices who participated in the case of Hassett v. Welch, supra, in 1938, refrained from expressing doubt as to the state of the law before March 3, 1931. In that case the Court reviewed carefully the legislative history that was material to the case and also the administrative interpretation which had been given to the statute. The Court concluded as follows (303 U.S. at pages 314, 315, 58 S.Ct. page 565, 82 L.Ed. 858): 101 'In view of other settled rules of statutory construction, which teach that a law is presumed, in the absence of clear expression to the contrary, to operate prospectively; that, if doubt exists as to the construction of a taxing statute, the doubt should be resolved in favor of the taxpayer, we feel bound to hold that the Joint Resolution of 1931 and section 803(a) of the Act of 1932 apply only to transfers with reservation of life income made subsequent to the dates of their adoption respectively. 102 'Holding this view, we need not consider the contention that the statutes as applied to the transfers under consideration deprive the respondents of their property without due process in violation of the Fifth Amendment.' 103 Thus, up to the time of the settlor's death in 1939, he never was given reason, at least by this Court, to suspect that the property which he had included in his 1924 deed of trust would be added to his gross estate for federal estate tax purposes.3 104 The issue as originally presented in May v. Heiner was solely one of statutory interpretation and there were persuasive arguments for deciding the case either way. However, the unanimous decision of this Court in that case changed the status of that issue. Thereafter, the statute carried the meaning ascribed to it by this Court. Such an acceptance of the effect of May v. Heiner was expressly stated in the three per curiam companion decisions of March 2, 1931. This acceptance also has been evidenced in some degree by the failure of Congress, at any time, to set forth a contrary view on its part as to the meaning of its original language. Congress merely added new language to change the effect of that interpretation for the future. The Treasury Department conformed its regulations and practices to the reasoning of May v. Heiner. This Court further acceded to this view in 1938 in Hassett v. Welch and in the companion case of Helvering v. Marshall, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858, when it affirmed the respective lower court judgments in those cases. The lower courts had held that certain pre-1931 comparable trusts, executed in 1920 and 1924, were not subject to the federal estate tax.4 Today, with ten additional years of administrative practice in conformity with it, the rule of May v. Heiner should be substantially less subject to reversal than in 1938. The doctrine of stare decisis, with full recognition of its appropriate limitations as expressed in Helvering v. Hallock, 309 U.S. 106, 119—122, 60 S.Ct. 444, 451 453, 84 L.Ed. 604, 125 A.L.R. 1368, weighs strongly against a reversal of May v. Heiner now. The problem presented here is just such a one as was said not to exist in the Hallock case. The problem here is one of rejecting a settled statutory construction. This Court's reversal of the May v. Heiner construction of the estate tax statute as to pre-March 3, 1931-trusts does retroactively, in 1948, what this Court and Congress respectively, declined to attempt in 1931. Since 1931, countless taxpayers doubtless have relied upon and benefited by the interpretation announced in May v. Heiner. They had no more right to such benefits than has the taxpayer in this case. If the Government, after this reversal, issues regulations to relieve, in all fairness, settlors who, in demonstrated reliance upon the decisions of this Court and upon the practice of the Treasury Department, have not disposed of their reserved rights under pre-March 3, 1931-trusts like the present one, such special regulations will further emphasize the unique unfairness of enforcing the present decision against the taxpayer in the instant case. 105 By reversing May v. Heiner this Court repudiates the finality of its 1930 and 1931 decisions interpreting the pre-1931 legislation. It holds that the statutory interpretation then announced by this Court of final resort is not final, except as to the parties to the respective cases in which the original judgments are res judicata. After reliance by the Judicial, Legislative and Executive branches of the Government for 18 years upon this authoritative statutory construction, a reversal of it can be justified only by extraordinary circumstances. I fail to find such circumstances, either in the merits of the decision, in the nature of the issue or in the relative importance to the general public of a reversal as against an affirmance of the original interpretation of this tax statute. The statutory interpretation established in May v. Heiner has a peculiarly limited application because its interpretation of the statute in relation to future trusts was cut off on March 3, 1931. Passage of time will soon eliminate transfers made prior to that date by settlors who are yet to die or who have died and whose estates may still be forced to include such transfers for federal estate tax purposes. The 1931 legislation plus the passage of time would thus have disposed of May v. Heiner without the injustices that will now arise from its reversal. 106 Value is added to the fully considered decisions of this Court by our own respect for them. Faith is justifiable that this Court will exercise extreme self-restraint in using its power of self-reversal. While that power is essential in appropriate cases and is an inherent part of this Court's finality of jurisdiction, each case that suggests its use should be scrutinized with the utmost care. In the instant case I find arguments to suggest and support, but not to require, a construction of the statute contrary to that originally given in May v. Heiner. I find nothing sufficient to justify the reversal of this Court's original construction 18 years after this Court approved it unanimously and 17 years after this Court unanimously reaffirmed that approval. Likewise, I find nothing in the intervening decisions of this Court that force this reversal upon us.5 For these reasons, I believe that the judgment of the Court of Appeals should have been affirmed on the authority of May v. Heiner and Hassett v. Welch, and upon the principles stated in my dissent in the Spiegel case. 1 The Hallock case considered the 'possession or enjoyment' language of § 811(c) which appeared in § 302(c) of the 1926 Revenue Act, 44 Stat. 9, 70, as amended by § 803(a) of the Revenue Act of 1932, 47 Stat. 169, 279, 26 U.S.C. § 811(c), 26 U.S.C.A. § 811(c). 2 Estate of Cass, 3 T.C. 562; Commissioner v. Kellogg, 3 Cir., 119 F.2d 54, affirming 40 B.T.A. 916; Estate of Downe, 2 T.C. 967; Estate of Houghton, 2 T.C. 871; Estate of Goodyear, 2 T.C. 885; Estate of Delany, 1 T.C. 781. 3 Commissioner v. Bayne's Estate, 2 Cir., 155 F.2d 475, 167 A.L.R. 436; Commissioner v. Bank of California, 9 Cir., 155 F.2d 1 Thomas v. Graham, 5 Cir., 158 F.2d 561; Beach v. Busey, 6 Cir., 156 F.2d 496. 4 Cf. Estate of Hughes, 44 B.T.A. 1196, with Estate of Bradley, 1 T.C. 518, affirmed sub. nom. Helvering v. Washington Trust Co., 2 Cir., 140 F.2d 87, 155 A.L.R. 845. See New York Trust Co. v. United States, 51 F.Supp. 733, 100 Ct.Cl. 311. Cf. Montgomery, Federal Taxes—Estates, Trusts and Gifts, 461—462, 480 482 (1946) with Paul, Federal Estate and Gift Taxation, 1946 Supp. §§ 7.15, 7.23. See also note, Inter Vivos Transfers and the Federal Estate Tax, 49 Yale L.J. 1118 (1940); Eisenstein, Estate Taxes and the Higher Learning of the Supreme Court, 3 Tax L.Rev. 395 (1948). 5 Note, Origin of the Phrase, 'Intended To Take Effect in Possession or Enjoyment At or After * * * Death' (§ 811(c), Internal Revenue Code), 56 Yale L.J. 176 (1946). 6 See cases collected in 49 A.L.R. 878—892; 67 A.L.R. 1250 1254; 100 A.L.R. 1246—1254. See also Rottschaefer, Taxation of Transfers Taking Effect in Possession at Grantor's Death, 26 Iowa L.Rev. 514 (1941); Oliver, Property Rationalism and Tax Pragmatism, 20 Tex.L.Rev. 675, 704—709 (1942). 7 '(c) To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, including a transfer under which the transferor has retained for his life or any period not ending before his death (1) the possession or enjoyment of, or the income from, the property or (2) the right to designate the persons who shall possess or enjoy the property or the income therefrom * * *.' The italics are added to indicate the additions made by the amendments to § 302(c) of the Revenue Act of 1926. Joint Resolution of March 3, 1931, 46 Stat. 1516, 1517. 8 The May v. Heiner trust provided for the income to go to Barney May during his lifetime, after his death to his wife, Pauline May, the grantor, and upon her death the corpus was to be distributed to the grantor's four children. The Court said that the record failed clearly to disclose whether Mrs. May survived her husband, but held this was of no special importance. 9 The Court also quoted from and relied heavily on Reinecke v. Northern Trust Co., 278 U.S. 339, 345, 49 S.Ct. 123, 124, 73 L.Ed. 410, 66 A.L.R. 397. This Court there held that the corpus of two trusts that reserved a life income to the grantor plus a power to revoke should have been included in the decedent's estate. The corpus of five other trusts were held not includable. These five trusts did not reserve a power in the grantor alone to revoke, nor did they reserve a life estate to the grantor, but they provided for accumulation of that income during the settlor's life, and at his death it was to go to the beneficiaries, subject to prior use by the beneficiaries as directed by the settlor. Thus, this case did not directly support the May v. Heiner holding. Nor is May v. Heiner supported by Shukert v. Allen, 273 U.S. 545, 47 S.Ct. 461, 71 L.Ed. 764, 49 A.L.R. 855, as shown by reference to Shukert v. Allen in the Reinecke opinion, 278 U.S. at page 347, 49 S.Ct. at page 125. 10 A May 22, 1931, bulletin of the Treasury Department indicates a strong reason for the Treasury Department's construction of the resolution as inapplicable to pre-1931 trust transfers. T.D. 4314, X—1, Cum. Bull. 450—451 (1931). That reason was obviously a fear that this Court might hold that the tax could not constitutionally be applied to trusts previously created under the Nichols v. Coolidge, 274 U.S. 531, 47 S.Ct. 710, 71 L.Ed. 1184, 52 A.L.R. 1081, line of cases. This same apprehension may well have been the underlying reason for a statement, relied on by the dissent, made on the floor of the House that the resolution was not made 'retroactive for the reason that we were afraid that the Senate would not agree to it.' 74 Cong.Rec. 7199 (1931). Recent cases have indicated that the fear of such a constitutional interpretation is not a valid one. Central Hanover Bank & Trust Co. v. Kelly, 319 U.S. 94, 97, 98, 63 S.Ct. 645, 947, 87 L.Ed. 1282; Fernandez v. Wiener, 326 U.S. 340, 355, 66 S.Ct. 178, 186, 90 L.Ed. 116. 11 A dissent filed in this case has an appendix citing 'Decisions During the Past Decade in Which Legislative History Was Decisive of Construction of a Particular Statutory Provision.' Many other decisions of less recent date could also be cited to establish this well known fact which nobody disputes. But we think here, in the language of our opinion in the Hallock case, which opinion was written by the author of today's dissent, that the actions of Congress relied on in the dissent have not 'under any rational canons of legislative significance * * * impliedly enacted into law a particular decision which, in the light of later experience, is seen to create confusion and conflict in the application of a settled principle of internal revenue legislation.' Helvering v. Hallock, 309 U.S. 106, 120, 121, Note 7, 60 S.Ct. 444, 451, 452, 84 L.Ed. 604, 125 A.L.R. 1368. The basic 'settled principle' now as when Hallock was written is that where a trust agreement reserves the settlor's possession or enjoyment of part or all of the trust property until death, the value of the trust should be included in the settlor's gross estate. The arguments in dissent here based on stare decisis, legislative history, and possible consequences of this Court's holding, are strikingly like the forceful arguments made in the Hallock dissent. But the persuasive and sound arguments advanced by the Court's spokesman in Hallock were there considered by the majority of this Court to be a sufficient answer to what was said in the Hallock dissent. Particularly forceful was this Court's statement in the Hallock opinion that 'we walk on quicksand when we try to find in the absence of corrective legislation a controlling legal principle.' 1 This provision first appeared in § 202(b) of the Revenue Act of 1916, 39 Stat. 756, 777, 778, and read as follows: 'That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated: * * * '(b) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which he has created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death, except in case of a bona fide sale for a fair consideration in money or money's worth. * * *' With small changes it was included in § 402(c) of the Revenue Acts of 1918 and 1921, 40 Stat. 1057, 1097; 42 Stat. 227, 278, and in § 302(c) of the Revenue Acts of 1924 and 1926, 43 Stat. 253, 304; 44 Stat. 9, 70. In 1931 the provision was amended by H. J. Res. No. 529, 46 Stat. 1516, and assumed its present form in the Revenue Act of 1932, 47 Stat. 169, 279. It now reads as follows: 'The value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated, except real property situated outside of the United States—— * * * '(c) Transfers in contemplation of, or taking effect at death. 'To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise, in contemplation of or intended to take effect in possession or enjoyment at or after his death, or of which he has at any time made a transfer, by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death (1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction wity any person, to designate the persons who shall possess or enjoy the property or the income therefrom; except in case of a bona fide sale for an adequate and full consideration in money or money's worth. * * *' The italicized words are the additions made by the amendments of 1931 and 1932 to § 302(c) of the Revenue Act of 1926. See Hassett v. Welch, 303 U.S. at pages 307, 308, 58 S.Ct. at pages 561, 562, 82 L.Ed. 858. The underscored phrase at the end of the first paragraph was added by the Revenue Act of 1934, § 404, 48 Stat. 680, 754. There has been no further change. 2 Whether the taxable event is the 'trnasfer inter vivos,' as we suggested in Helvering v. Hallock, 309 U.S. 106, 111, 60 S.Ct. 444, 447, see Shukert v. Allen, 273 U.S. 545, 546, 47 S.Ct. 461, 71 L.Ed. 764, 49 A.L.R. 855, and Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 110, 111, 65 S.Ct. 508, 509, 510, 89 L.Ed. 783, 159 A.L.R. 227, or the transfer at death, as now seems to me more precise, seems immaterial. See Int.Rev. Code § 810, 26 U.S.C.A. § 810; dissent in Helvering v. St. Louis Trust Co., 296 U.S. 39, 46, 47, 56 S.Ct. 74, 77, 80 L.Ed. 29, 100 A.L.R. 1239; Reinecke v. Northern Trust Co., 278 U.S. 339, 347, 49 S.Ct. 123, 125, 73 L.Ed. 410, 66 A.L.R. 397. It was said of a transfer in contemplation of death, 'It is thus an enactment in aid of, and an integral part of, the legislative scheme of taxation of transfers at death.' Milliken v. United States, 283 U.S. 15, 23, 51 S.Ct. 324, 327, 75 L.Ed. 809; Heiner v. Donnan, 285 U.S. 312, 330, cf. dissent at page 334, 52 S.Ct. 358, 362, 364, 76 L.Ed. 772. In either case transfer of an interest in property intended to take effect in possession or enjoyment at or after death is taxed. If taxed as an excise on the privilege of transfer at death, the transferee has taken subject to the tax. Int. Rev. Code § 827(b), 26 U.S.C.A. § 827(b). It is a means of checking tax avoidance. Cf. Milliken v. United States, 283 U.S. 15, 20, 51 S.Ct. 324, 326, 75 L.Ed. 809. See Helvering v. Bullard, 303 U.S. 297, 58 S.Ct. 565, 82 L.Ed. 852, an estate tax on a trust that retained a life estate. We there said, 303 U.S. at pages 301, 302, 58 S.Ct. at page 567, 'A further vindication of the exaction is the authority of Congress to treat as testamentary transfers with reservation of a power or an interest in the donor.' See Fernandez v. Wiener, 326 U.S. 340, 352, 66 S.Ct. 178, 184, 90 L.Ed. 116; cf. Heiner v. Donnan, 285 U.S. 312, 331, 332, 52 S.Ct. 358, 362, 363, 76 L.Ed. 772. 3 National Safe Deposit Co. v. Stead, 232 U.S. 58, 67, 34 S.Ct. 209, 211, 58 L.Ed. 504. 4 Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368; Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 65 S.Ct. 508, 89 L.Ed. 783, 159 A.L.R. 227; Commissioner v. Field's Estate, 324 U.S. 113, 65 S.Ct. 511, 89 L.Ed. 786, 159 A L.R. 230; Goldstone v. United States, 325 U.S. 687, 65 S.Ct. 1323, 89 L.Ed. 1871, 159 A.L.R. 1330. 5 Since the state law defines and creates rights and interests in property and the federal taxing statutes only say which of these rights and interests created by state law shall be taxed, the law of Illinois controls the construction of this trust. Helvering v. Stuart, 317 U.S. 154, 161-163, 63 S.Ct. 140, 144, 145, 87 L.Ed. 154; Blair v. Commissioner, 300 U.S. 5, 9, 10, 57 S.Ct. 330, 331, 332, 81 L.Ed. 465. The trustee in the Spiegel case could act only in the interest of the beneficiaries of the trust. It is well established in Illinois as in other jurisdictions that a trustee in the absence of express authority cannot deal on his own behalf with any part of the trust property. Doner v. Phoenix Joint Stock Land Bank of Kansas City, 381 Ill. 106, 45 N.E.2d 20; Kinney v. Lindgren, 373 Ill. 415, 26 N.E.2d 471; City of Chicago v. Tribune Co., 248 Ill. 242, 93 N.E. 757; and in determining the powers of the trustee reference must be had to the intention of the grantor as manifested in the whole trust instrument. Crow v. Crow, 348 Ill. 241, 180 N.E. 877; Bear v. Millikin Trust Co., 336 Ill. 366, 168 N.E. 349, 73 A.L.R. 173; Harris Trust & Savings Bank v. Wanner, 326 Ill.App. 307, 61 N.E.2d 860. Even though a trustee has been vested with full power and discretion as to the management of the trust he is still subject to the control of the equity court, and this discretion cannot be exercised by the trustee so as to defeat the trust or to deprive the cestui que trust of its benefits. Maguire v. City of Macomb, 293 Ill. 441, 127 N.E. 682; Jones v. Jones, 124 Ill. 254, 15 N.E. 751. This rule that the trustee must administer the trust solely in the interest of the cestui que trust has the support of both reason and authority. See Helvering v. Stuart, 317 U.S. 154, 162-166, 63 S.Ct. 140, 144-146, 87 L.Ed. 154; Restatement, Trusts § 170; 2 Scott, Trusts § 187. 6 This statement does not refer to the items of deduction or exemption covered by Int. Rev. Code § 812, 26 U.S.C.A. § 812, but to the value of gifts not covered by § 812 that also are not covered by § 811. 7 46 Stat. 1516. 8 May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244; Burn t v. Northern Trust Co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412; McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413. 9 Why 'possession or enjoyment of * * * the property' was put in the amendment to the section I do not know. It reads as if Congress intended to make it clear that the possession or enjoyment of the property was a basis for taxation. Such result would have followed from the original language. That is probably why no cases have been called to our attention that have turned on the use of these words in the amendment. 10 74 Cong.Rec. 7198-99. 11 Helvering v. Stuart, 317 U.S. 154, 161, 162, 63 S.Ct. 140, 144, 87 L.Ed. 154: 'When Congress fixes a tax on the possibility of the revesting of property or the distribution of income, the 'necessary implication,' we think, is that the possibility is to be determined by the state law. Grantees under deeds, wills and trusts, alike, take according to the rule of the state law. The power to transfer or distribute assets of a trust is essentially a matter of local law. * * * Congress has selected an event, that is the receipt or distributions of trust funds by or to a grantor, normally brought about by local law, and has directed a tax to be levied if that event may occur. Whether that event may or may not occur depends upon the interpretation placed upon the terms of the instrument by state law. Once rights are obtained by local law, whatever they may be called, these rights are subject to the federal definition of taxability.' 12 The Illinois Annotations to the Restatement of the Law of Trusts, § 411, says that the rule of the Restatement 'states the law,' but no case has been found where the trustee holds the corpus upon a resulting trust for the settlor because of the failure of the inter vivos trust. See Restatement, Trusts, Ill. Anno. § 411, comment (b). In view of the uncertainties surrounding the theory that the burden of proof is on the taxpayer to show that the Commissioner of Internal Revenue is in error as to the law applicable to an assessment of a deficiency, I do not depend upon that theory to support the judgment of the Court of Appeals. See Helvering v. Leonard, 310 U.S. 80, 60 S.Ct. 780, 84 L.Ed. 1087; Helvering v. Fitch, 309 U.S. 149, 60 S.Ct. 427, 84 L.Ed. 665; cf. Helvering v. Stuart, 317 U.S. 154, dissent, 172, 63 S.Ct. 140, 149, 87 L.Ed. 154; 2 Paul, Federal Estate and Gift Taxation, § 14.47, n. 4 and 1946 Supp.; 9 Mertens, Law of Federal Income Taxation 285-86. 13 In Chater v. Carter, 238 U.S. 572, 35 S.Ct. 859, 862, 59 L.Ed. 1462, this Court considered the following language whereby an inter vivos trust was created. 'The trust for Lottie Lee is to cause the dividends to be paid to her during the three years from January 1st next and if she shall then be living to transfer the shares to her'. The cestui que trust died before the expiration of the three-year period and the question arose as to whether the heir of the cestui que trust or the estate of the settlor was to receive the corpus. The Supreme Court considered it unnecessary 'to strain the meaning of words, as is sometimes done to avoid intestacy when wills are to be construed.' It concluded that the trust having failed, the trustee must redeliver the corpus 'to him from whom it came. In other words, there is a resulting trust for the donor.' 1 The Court of Appeals for the Seventh Circuit did not determine whether a grandchild who survived his parent also had to survive the settlor-decedent to have the right to his share of the principal go to his estate. 2 The grant of certiorari was 'limited to the question of whether the entire value of the corpus of the trust at the time of decedent's death should have been included in the decedent's gross estate.' Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 110, 65 S.Ct. 508, 509, 89 L.Ed. 783, 159 A.L.R. 227. The same is true in Commissioner v. Field's Estate, 324 U.S. 113, 114, 65 S.Ct. 511, 89 L.Ed. 786, 159 A.L.R. 230. 3 In No. 5, Commissioner v. Church, it is even clearer that events subsequent to the creation of the trust removed whatever possibility of reverter had previously existed even if one assumes that when the trust was created the settlor would regain the property if children or his brothers and sisters did not survive him. The trust indenture provided that the corpus was to go to the issue of deceased brothers and sisters if he survived his brothers and sisters, but there was no requirement that the children survive anyone to take. Unless we are going to import notions of tortious conveyances into modern trust arrangements, the subsequent birth of the children of his brothers and sisters removed any possibility that the property would come back to the settlor. Since I do not reject May v. Heiner, I do not regard the retention of the life estate as causing the estate to be taxed. 4 See Smith-Hurd, Ill.Stat.Ann., Title 110, § 181.1. Added May 16, 1945. 5 The portion of § 811(c) with which we are now concerned has been continuously on the statute books since 1916, when the first federal estate-tax law was enacted. Revenue Act of 1916, § 202(b), 39 Stat. 777; Revenue Act of 1918, § 402(c), 40 Stat. 1097; Revenue Act of 1921, § 402(c), 42 Stat. 278; Revenue Act of 1924, § 302(c), 43 Stat. 304; Revenue Act of 1926, § 302(c), 44 Stat. 70, amended by Joint Resolution of March 3, 1931, 46 Stat. 1516; Revenue Act of 1932, § 803(a), 47 Stat. 278; Int. Rev. Code § 811(c). 6 See Screws v. United States, 325 U.S. 91, 112, 113, 65 S.Ct. 1031, 1040, 89 L.Ed. 1495, 162 A.L.R. 1330. 'But beyond that is the problem of stare decisis. The construction given § 20 [now 18 U.S.C.A. § 242] in the Classic case [United States v. Classic, 313 U.S. 299, 61 S.Ct. 1031, 85 L.Ed. 1368] formulated a rule of law which has become the basis of federal enforcement in this important field. The rule adopted in that case was formulated after mature consideration. It should be good for more than one day only. We do not have here a situation comparable to Mahnich v. Southern S. S. Co., 321 U.S. 96, 64 S.Ct. 455, 88 L.Ed. 561, where we overruled a decision demonstrated to be a sport in the law and inconsistent with what preceded and what followed. The Classic case was not the product of hasty action or inadvertence. It was not out of line with the cases which preceded. It was designed to fashion the governing rule of law in this important field. We are not dealing with constitutional interpretations which throughout the history of the Court have wisely remained flexible and subject to frequent re-examination. The meaning which the Classic case gave to the phrase 'under color of any law' involved only a construction of the statute. Hence if it states a rule undesirable in its consequences, Congress can change it. We add only to the instability and uncertainty of the law if we revise the meaning of § 20 to meet the exigencies of each case coming before us.' 7 See Brief for Petitioner, pp. 20 et seq., in Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858. 8 The Court made it clear in May v. Heiner, supra, and the three cases following it that it was resolving a statutory, rather than a constitutional, question. May v. Heiner, 281 U.S. 238, 244, 245, 50 S.Ct. 286, 287, 288, 74 L.Ed. 826, 67 A.L.R. 1244; Burnet v. Northern Trust Co., 283 U.S. 782, 783, 51 S.Ct. 342, 75 L.Ed. 1412; Morsman v. Burnet, 283 U.S. 783, 784, 51 S.Ct. 343, 75 L.Ed. 1412; McCormick v. Burnet, 283 U.S. 784, 785, 51 S.Ct. 343, 75 L.Ed. 1413. Nor was Congress left in doubt that the Court had merely construed the statute which Congress was then being asked to qualify. In the House, Mr. Black of New York asked, 'Was the Supreme Court decision based on a constitutional question, or a discussion of the statute?' To which a sponsor of the legislation, Mr. Garner of Texas, replied, 'It was on the statute itself, and was not constitutional. 74 Cong.Rec. 7199. Indeed it is diffcult to assume that the Court was affected by notions of constitutionality in view of the fact that when the courts of the State of New York held similar words to apply to a reserved life estate, this Court rejected the contention that the law offended the due progress clause of the Fourteenth Amendment. Keeney v. Comptroller of State of New York, 222 U.S. 525, 32 S.Ct. 105, 56 L.Ed. 299, 38 L.R.A., N.S., 1139. 9 See, e. g., Hearings before Committee on Ways and Means on Revenue Revision, 1932, 72d Cong., 1st Sess. 7, 42-43; Hearings before Committee on Finance on the Revenue Act of 1932, 72d Cong., 1st Sess. 33, 51; 75 Cong.Rec. 5787; Hearings before Committee on Ways and Means on the Revenue Act, 1936, 74th Cong., 2d Sess. 624; Hearings before the Committee on Ways and Means on Revision of Revenue Laws, 1938, 75th Cong., 3d Sess. 108; Hearings before the Finance Committee on the Revenue Act of 1938, 75th Cong., 3d Sess. 692-93; Hearings before the Committee on Ways and Means, 77th Cong., 1st Sess. 74-75; Hearings before the Finance Committee on the Revenue Act of 1941, 77th Cong., 1st Sess. 37; Data on Proposed Revenue Bill of 1942 Submitted to the Committee on Ways and Means by the Treasury Department and the Staff of the Joint Committee on Internal Revenue 363-65 (1942), and Hearings before the Committee on Ways and Means, 77th Cong., 2d Sess. 7, 91-92, 94; Revised Hearings before the Committee on Ways and Means on Revenue Revision of 1943, 78th Cong., 1st Sess. 7; Revised Hearings before the Finance Committee on the Revenue Act of 1943, 78th Cong., 1st Sess. 46; Federal Estate and Gift Taxes, A Proposal for Integration and for Correlation with the Income Tax, A Joint Study prepared by an Advisory Committee to the Treasury Department and by the Office of the Tax Legislative Counsel, with the cooperation of the Division of Tax Research and the Bureau of Internal Revenue (1948); Letter from the Under Secretary of the Treasury to the Chairman, Committee on Ways and Means, February 26, 1948, pp. 3, 5, 8 (mimeographed copy furnished by the Department of the Treasury). 10 The entire text of the Hallock opinion insofar as here relevant makes clear why the situation in the Hallock case is not at all similar to that involved in the Church case. 'Nor does not want of specific Congressional repudiations of the St. Louis Trust cases serve as an implied instruction by Congress to us not to reconsider, in the light of new experience, whether those decisions in conjunction with the Klein case, make for dissonance of doctrine. It would require very persuasive circumstances enveloping Congressional silence to debar this Court from re-examining its own doctrines. To explain the cause of non-action by Congress when Congress itself sheds no light is to venture into speculative unrealities. Congress may not have had its attention directed to an undesirable decision; and there is no indication that as to the St. Louis Trust cases it had, even by any bill that found its way into a committee pigeon-hole. Congress may not have had its attention so directed for any number of reasons that may have moved the Treasury to stay its hand. But certainly such inaction by the Treasury can hardly operate as a controlling administrative practice, through acquiescence, tantamount to an estoppel barring re-examination by this Court of distinctions which it had drawn. Various considerations of parliamentary tactics and strategy might be suggested as reasons for the inaction of the Treasury and of Congress, but they would only be sufficient to indicate that we walk on quicksand when we try to find in the absence of corrective legislation a controlling legal principle.' Footnote 7 of the Hallock opinion recognized the doctrine of reenactment but stated that it 'has no relevance to the present problem' because (1) 'the fact of Congressional action in dealing with one problem while silent on the different problems created by the St. Louis Trust cases, does not imply controlling acceptance by Congress of those cases'; (2) 'since the decisions in the St. Louis Trust cases, Congress has not re-enacted § 302(c)'; (3) there was '* * * no * * * long, uniform administrative construction and subsequent re-enactments of an ambiguous statute to give ground for implying legislative adoption of such construction.' As indicated in the text of this dissent, the footnote also pointed out that Congress by the Joint Resolution of March 3, 1931, could plausibly have been said to reject the attitude underlying the St. Louis Trust cases. The table in the next note shows just how inapposite are these observations to the story of the legislative history of the Treasury's attempt to undo this Court's ruling in May v. Heiner and the cases which followed it. 11 Bearing of legislation subsequent to Helvering v. St. Louis Union Trust Co., 296 U.S. 39, 56 S.Ct. 74, 80 L.Ed. 29, 100 A.L.R. 1239, compared with that in response to May v Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244. St. Louis Trust Relevant factors cases May v. Heiner series 1. Age of questioned Five years Eighteen years interpretation when abandoned 2. Weight of adjudication (a) Court's division 5-4 Unanimous (b) Times decided Once Five times 3. Evidence of Congressional None (a) The exact holding acquiescence explained to Congress (b) Change expressly made prospective 4. Apparent reason for None Difficulty of getting necessary Congressional adherence Senate votes to questioned case 12 Klein v. United States, 283 U.S. 231, 51 S.Ct. 398, 75 L.Ed. 996. 13 Helvering v. St. Louis Union Trust Co., 296 U.S. 39, 56 S.Ct. 74, 80 L.Ed. 29, 100 A.L.R. 1239; Becker v. St. Louis Union Trust Co., 296 U.S. 48, 56 S.Ct. 78, 80 L.Ed. 35. 14 And even the judge who found May v. Heiner inconsistent with the Hallock case suggested that the Tax Court determine whether the grantor failed to relinquish his life estate in reliance on May v. Heiner. See Frank, J., dissenting in Commissioner v. Hall's Estate, 2 Cir., 153 F.2d 172, 174, 175. The Government at the bar of this Court suggested that hardships could be alleviated by a regulation relieving of a tax those estates which could show such reliance. The very suggestion involves a confession that the decision urged upon the Court would be unfair. 1 This Indenture made the 17th day of May, 1924, between Francois L. Church, of the Borough of Brooklyn, City and State of New York (hereinafter sometimes called the 'Settlor'), party of the first part, and Francois L. Church and E. Dwight Church, of the Borough of Brooklyn, city and State of New York, and Charles T. Church of New Rochelle, New York (hereinafter sometimes called the 'Trustees'), parties of the second part. 'Whereas the said Francois L. Church is desirous of making provision for any lawful issue which he may leave at the time of his death as well as provide an income for himself for life in the manner hereinafter set forth, 'Now, therefore, the said Francois L. Church, in consideration of the sum of One Dollar to him in hand paid, the receipt whereof is hereby acknowledged, and the acceptance by said parties of the second part of the trust herein declared, has simultaneously with the execution and delivery hereof, sold, assigned, transferred and set over and does hereby sell, assign, transfer and set over unto the said Francois L. Church, E. Dwight Church and Charles T. Church as Trustees, and to their successors, the following securities, to wit: 'One thousand (1000) shares of stock of Church & Dwight Co., a corporation organized under the laws of Maine, 'To have and to hold the same, together with the moneys and investments into which in the exercise of any power hereinafter given to the trustees or by law vested in them, the said described securities or the proceeds thereof and such moneys may from time to time be converted in trust nevertheless to hold, manage, invest and reinvest the said trust estate upon the trust herein contained and with the powers herein or by law conferred upon the trustees, and to collect and receive the income accruing therefrom and after paying from said income all charges nd expenses properly chargeable against the income of said trust estate to pay over the net income to the Settlor, Francois L. Church, during the term of his natural life and upon the death of the Settlor this trust shall cease and determine and the trustees are ordered and directed to transfer and pay over the principal amount of said trust estate, with all increase thereof as it shall then exist, to the child or children of the Settlor then surviving the issue of any deceased child or children to take the share per stirpes which their parent would have been entitled to receive if living. 'In the event that the Settlor should die leaving no lawful issue him surviving then and in that event the trustees are ordered and directed to transfer and pay over the principal amount of said trust estate with all increase thereof as it shall then exist in equal shares to the brothers and sisters of the Settlor then surviving, any child or children of a deceased brother or sister to take the share per stirpes which their parent would have been entitled to receive if living. 'The Trustees with respect to such trust are hereby authorized and empowered: '(1) To retain the trust estate during the continuance of the trust in the same investment in which it was received by them without being liable to account for any resulting loss; '(2) To sell at public or private sale upon such terms and for such price or prices and at such time or times and together or in such lots or parcels as the Trustees may think proper the securities held by them in the trust, but no such sale or sales shall be made by the trustees without the consent first obtained of the Settlor; 'Likewise in the event of a sale the proceeds of such sale shall be reinvested by the trustees without unnecessary delay in securities approved by the Settlor or in default of such approval in securities authorized for investment by Trustees by the laws of the State of New York; '(3) To compromise any claim or claims that may at any time arise with reference to the trust estate or any property or security forming a part thereof; '(4) To exchange any of the trust securities for other securities in connection with any reorganization of Church & Dwight Company or any other company or companies issuing securities then belonging to the trust; '(5) To vote upon stock, directly or by proxy, in any manner and to the same extent as if the trustees held the shares in their own right, including the power to vote in favor of consolidating or merging corporations into or with each other or into or with other corporations, for the dissolution or liquidation of corporations, the creating or authorization of indebtedness, mortgages and other liens and for the organization or reorganization of corporations and to deposit securities with any reorganization committee or protection committee of any corporation. '(6) To apportion in their uncontrolled discretion as between income and principal as the trustees may deem proper, any losses or profits resulting from the i crease or decrease in the value of the securities or property which may at any time from a part of the trust estate, and also so to apportion the income of the trust estate, and any loss in said income and any proceeds received upon account of income, whether by way of interest, dividends, stock dividends or by way of the distribution of cash, bonds, debentures, stocks or other securities by corporations whose stocks or securities may at any time form a part of the principal of the trust estate or otherwise, and also similarly to apportion expenses incurred in the administration of said trust or in connection with the realization upon any of said securities or property; '(7) To employ counsel or attorneys at law in connection with the administration of the trust of in their discretion the Trustees deem it necessary or desirable and to pay them reasonable compensation for their services as an expense of the administration of said trust. 'In the event that any of the Trustees should resign or for any other reason cease to be a trustee such vacancy shall be filled by the appointment of a successor trustee in writing by the Settlor. 'In witness whereof the parties hereto have hereunto set their hands and seals the day and year first above written. 'Francois L. Church, Settlor. 'Francois L. Church, 'E. Dwight Church, 'Charles T. Church, Trustees.' 2 The respondent cites particularly Fulton Trust Co. v. Phillips, 218 N.Y. 573, 581, 113 N.E. 558, 559, L.R.A.1918E 1070; and Matter of Bowers' Estate, 195 App.Div. 548, 186 N.Y.S. 912, affirmed 231 N.Y. 613, 132 N.E. 910; and, as presenting analogous situations in testamentary trusts or dispositions, Matter of Elting's Will, 268 App.Div. 74, 48 N.Y.S.2d 892, affirmed 294 N.Y. 941, 63 N.E.2d 123; Matter of McCombs' Estate, 261 App.Div. 449, 25 N.Y.S.2d 894, affirmed 287 N.Y. 557, 38 N.E.2d 226. 3 It appears in the record that the settlor, in 1924, relied upon the advice of his family attorney and, assuming the continuance of such a relationship, such attorney in subsequent consulatations may well have couns led the settlor's further policy in express reliance upon May v. Heiner, 281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244. With comparable situations evidently in mind, it has been suggested in opinions which recently have considered the possibility of overruling May v. Heiner, supra, that no judgment overruling that case should be rendered by this Court without remanding the case to the District Court to ascertain whether or not the parties had in fact placed reliance upon the authority of that case and making special provision to avoid an unfair result if such reliance were found in fact to have existed. See dissenting opinions in Helvering v. Proctor, 2 Cir., 140 F.2d 87, 91, 155 A.L.R. 845; and Commissioner v. Hall's Estate, 2 Cir., 153 F.2d 172, 175. 4 The discussion in the opinion in Hassett v. Welch, supra, was limited to the claimed effect of the 1931 and 1932 Amendments. This Court's judgment in that case and in Helvering v. Marshall, supra, however, affirmed the judgments of the respective Courts of Appeals for the First and Second Circuits. (In Welch v. Hassett, 1 Cir., 90 F.2d 833, the Court of Appeals discussed and relied upon McCormick v. Burnet, 283 U.S. 784, 51 S.Ct. 343, 75 L.Ed. 1413; Morsman v. Burnet, 283 U.S. 783, 51 S.Ct. 343, 75 L.Ed. 1412; Burnet v. Northern Trust Co., 283 U.S. 782, 51 S.Ct. 342, 75 L.Ed. 1412; May v. Heiner, supra, and Reinecke v. Northern Trust Co., 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397. In Commissioner v. Marshall, 2 Cir., 91 F.2d 1010, the Court of Appeals relied primarily upon the Welch decision in the First Circuit.) Those respective Courts of Appeals accordingly had held that the 1931 and 1932 Amendments were inapplicable to a trust which was executed in 1924 (and reaffirmed in 1926) by a settlor who died in 1932, and to another which was executed in 1920 by a settlor who died in 1933. They also held that, under § 302(c) of the Revenue Act of 1926, c. 27, 44 Stat. 9, 70, the Commissioner could not lawfully require the trusteed property to be included for federal estate tax purposes in the gross estates of the respective settlor-decedents. This Court's affirmance of those judgments was, therefore, a confirmation of its original holding that, before the 1931 and 1932 Amendments, this statute did not render trust property subject to the federal estate tax merely because the settlor in transferring the property to his trustees had reserved for himself a right to the income of that property during his life and had provided for the distribution of the corpus of the trust at his death in the manner stated in those cases. The prospective language of the 1931 and 1932 Amendments left the meaning of the statute unchanged as to trusts executed before March 3, 1931. It is that unchanged meaning which is applicable in the instant case. 5 The status of May v. Heiner has been mentioned by this Court from time t time without calling forth any repudiation of its authority by a majority of the Court. See Helvering v. Hallock, 309 U.S. 106, 120, Note 7, and dissenting opinions at pages 123, 126 et seq., 60 S.Ct. 444, 451, 453, 454, 84 L.Ed. 604, 125 A.L.R. 1368; Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, concurring opinion at page 113, 65 S.Ct. 508, at page 510, 89 L.Ed. 783, 159 A.L.R. 227. The effect upon it of the Hallock case has been considered many times by federal courts with a resulting adherence to both cases. 'The opinion of the majority in Helvering v. Hallock, supra, did not explicitly, or by inference from anything said, declare that May v. Heiner, supra, * * * was no longer law.' Circuit Judge L. Hand in Helvering v. Proctor, 2 Cir., 140 F.2d 87, 88, 155 A.L.R. 845. See also, Commissioner v. Hall's Estate, 2 Cir., 153 F.2d 172; Commissioner v. Singer's Estate, 2 Cir., 161 F.2d 15; Commissioner v. Kellogg, 3 Cir., 119 F.2d 54; Schultz v. United States, 8 Cir., 140 F.2d 945; United States v. Brown, 9 Cir., 134 F.2d 372; New York Trust Co. v. United States, 51 F.Supp. 733, 100 Ct.Cl. 311; Estate of Matthews, 3 T.C. 525. While these decisions are not binding upon this Court as precedents, they are decisions which those courts properly reached in determining the binding force, upon them, of our decisions in May v. Heiner and Helvering v. Hallock. They have an appropriate bearing upon the exercise of our discretion to overrule May v. Heiner at this late date.
1112
336 U.S. 18 69 S.Ct. 379 93 L.Ed. 463 LA CROSSE TELEPHONE CORPORATIONv.WISCONSIN EMPLOYMENT RELATIONS BOARD. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL B—953, A.F. OF L v. WISCONSIN EMPLOYMENT RELATIONS BOARD. Nos. 38, 39. Argued Nov. 18, 19, 1948. Decided Jan. 17, 1949. Appeals from the Supreme Court of the State of Wisconsin. Mr. Thomas H. S. Kemp, of La Crosse, Wis., for appellant LaCrosse Telephone Corporation. Mr. Louis Sherman, of Washington, D.C., for appellant International Brotherhood of Electrical Workers, Local B—953, A.F. of L. Beatrice Lampert, of Madison, Wis., for appellees. [Argument of Counsel from page 19 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court. 1 These cases, here on appeal from the Wisconsin Supreme Court, 28 U.S.C. § 344(a), 28 U.S.C.A. § 344(a)* 43 Stat. 937, 45 Stat. 54, present the question whether a certification of a union by the Wisconsin Employment Relations Board, Wis.Stats.1947, ch. 111, as the collective bargaining representative of the employees of appellant company, conflicts with the National Labor Relations Act, 49 Stat. 449, 29 U.S.C. § 151 et seq., 29 U.S.C.A. § 151 et seq. 2 Prior to 1945 the appellant company recognized the appellant union as the collective bargaining representative of its plant and traffic department employees. The company and the union entered into a collective bargaining agreement which by its terms was to continue from year to year unless terminated by either party on a specified notice. At a time when certain provisions of that agreement were being renegotiated a rival union, the Telephone Guild, filed a petition with the National Board asking that it certify the collective bargaining representative of these employees. Before the National Board acted, the Guild withdrew its petition and filed a petition with the Wisconsin Board seeking the same relief. 3 The Wisconsin Board held a hearing and directed that separate elections be held among the employees in the plant, traffic, and office departments of the company to determine whether they desired to be grouped in a single unit or in departmental units and what representative, if any, they desired to elect. After the election the Wisconsin Board certified that the employees in the plant and traffic departments had elected to combine in a single bargaining unit and had chosen the Guild as their collective bargaining representative, and that the employees in the office department had elected to constitute themselves as a separate unit and had chosen not to have any collective bargaining representative. 4 Each appellant brought an action in the Wisconsin courts to have the certification set aside. The Circuit Court, relying on Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234, held that the Wisconsin Board was without jurisdiction to issue the certification. The Supreme Court of Wisconsin reversed. 251 Wis. 583, 30 N.W.2d 241. 5 First. We are met at the outset with a contention that the certification of the Wisconsin Board which has been sustained by the Wisconsin Supreme Court is not a 'final judgment' within the meaning of § 237(a) of the Judicial Code, 28 U.S.C. § 344, 28 U.S.C.A. § 344. The argument is that under Wisconsin law the certification is no more than a report on the results of an investigation made known to the parties for such use as they may desire, that nothing can be done by any state agency to enforce observance of the certification, that the company cannot be required to bargain with the certified union until and unless an unfair practice charge is lodged against it, and that in such p oceeding all the issues involved in the certification proceeding can be relitigated. If that contention is correct, the case is of course not ripe for the intervention of the federal judicial power. See Rochester Telephone Corp. v. United States, 307 U.S. 125, 130, 131, 59 S.Ct. 754, 757, 83 L.Ed. 1147, and cases cited. 6 But it has not been shown that the Wisconsin law gives such slight force to the certification. The statute provides that the representative chosen by the employees shall be the exclusive one for purposes of collective bargaining. § 111.05(1). Provision is made for the board to take a secret ballot of the employees and to certify the results thereof, whenever a question arises concerning the representation of employees in a collective bargaining unit. § 111.05(3). And the statute contains the following direction: 'The board's certification of the results of any election shall be conclusive as to the findings included therein unless reviewed in the same manner as provided by subsection (8) of section 111.07 for review of orders of the board.'1 § 111.05(3). The certification in these cases has been reviewed and sustained by the highest court of Wisconsin. While that certification is not irrevocable for all time,2 it fixes a status to which Wisconsin provides a sanction. For it is an unfair labor practice for an employer to refuse to bargain with the representative of a majority of the employees.3 § 111.06(d). And since § 111.05(3) makes the certification, subject to judicial review, 'conclusive as to the findings included therein', it would seem that the certification cannot be collaterally attacked in that proceeding or heard de novo. We are pointed to no Wisconsin authority to the effect that it can be. 7 On this phase of the case we are, indeed, referred to only one Wisconsin authority and that is United Retail & Wholesale Department Store Employees of America, Local 174 (C.I.O.) v. Wisconsin Employment Relations Board, 245 Wis. 636, 15 N.W.2d 844. But that case merely held that an order of the Wisconsin Board that a referendum of employees by secret ballot be held to determine whether an 'all union' agreement was desired was not reviewable. It did not deal with a certificate which was in fact reviewed and sustained by the same court as in the present cases. It is true that in the opinion below, the Wisconsin Supreme Court said that the 'mere fact-finding procedure' of the Wisconsin Board in ascertaining the facts, in ordering an election, and in certifying the result 'constitutes action in merely its ministerial capacity.' 251 Wis., at page 592, 30 N.W.2d at page 245. But that comment was directed to the lack of discretion which the state statute had left the Wisconsin Board. It had no relevance to the effect of the certification under Wisconsin law. 8 While the Wisconsin Employment Relations Board seems readier than some to reexamine the status of a bargaining representative on the ground that it has lost the support of a majority,4 it nevertheless appears o be Wisconsin law that a certification is binding upon an employer so long as it stands.5 9 We assumed in Allegheny Ludlum Steel Corp. v. Kelley, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234, that the certification of a collective bargaining representative, sustained by the highest court of the state, was a final judgment, although it did not of itself command action but like the certification here was enforcible in law only by another proceeding.6 10 We think that is the correct view. The fact that Wisconsin's certification was not in the form of a command is immaterial. See American Federation of Labor v. National Labor Relations Board, 308 U.S. 401, 408, 60 S.Ct. 300, 303, 84 L.Ed. 347. It was not an abstract determination of status. Nor was it merely an interim adjudication in an uncompleted administrative process. It established legal rights and relationships. It told the employer, subject to judicial review, with whom he could not refuse to negotiate without risk of sanctions. The character of the certification was therefore such as to make it reviewable under the appropriate standards for exercise of the federal judicial power. 11 Second. The Wisconsin Supreme Court concluded that the Wisconsin Board could exercise jurisdiction here until and unless the National Board undertook to determine the appropriate bargaining representative or unit of representation of these employees. That view was urged on us in the like cases coming here under a New York statute. In Bethlehem Steel Co. v. New York State Labor Relations Board, supra, 330 U.S. at page 776, 67 S.Ct. at page 1031, 91 L.Ed. 1234, we rejected that argument, saying: 12 'The State argues for a rule that would enable it to act until the federal board had acted in the same case. But we do not think that a case by case test of federal supremacy is permissible here.' We went on to point out that the National Board had jurisdiction of the industry in which those particular employers were engaged and had asserted control of their labor relations in general. Both the state and the federal statutes had laid hold of the same relationship and had provided different standards for its regulation. Since the employers in question were subject to regulation by the National Board, we thought the situation too fraught with potential conflict to permit the intrusion of the state agency, even though the Nationa Board had not acted in the particular cases before us. 13 Those considerations control the present cases. This employer is concededly engaged in interstate commerce; and the industry is one over which the National Board has consistenly exercised jurisdiction.7 The Wisconsin Act provides that a majority of employees in a single craft, division, department or plant of an employer may elect to constitute that group a separate bargaining unit. § 111.02(6). The federal act leaves that matter to the discretion of the board.8 When under those circumstances the state board puts its imprimatur on a particular group as the collective bargaining agent of employees, it freezes into a pattern that which the federal act has left fluid.9 In practical effect the true measure of conflict between the state and federal scheme of regulation may not be found only in the collision between the formal orders that the two boards may issue. We know that administrative practice also disposes of cases in which no order has been entered. Disposition of controversies on an administrative as distinguished from a formal basis will often reflect the attitudes of the National Board which have not been reduced to orders in those specific cases. A certification by a state board under a different or conflicting theory of representation may therefore be as readily disruptive of the practice under the federal act as if the orders of the two boards made a head-on collision. These are the very real potentials of conflict which lead us to allow supremacy10 to the federal scheme even though it has not yet been applied in any formal way to this particular employer. The problem of employee representation is a sensitive and delicate one in industrial relations. The uncertainty as to which board is master and how long it will remain such can be as disruptive of peace between various industrial factions as actual competition between two boards for supremacy. We are satisfied with the wisdom of the policy underlying the Bethlehem case and adhere to it. 14 The result we have reached is not changed by the Labor Management Relations Act of 1947, 61 Stat. 136, 29 U.S.C.Supp. I, § 141 et seq., 29 U.S.C.A. § 141 et seq. That Act grants the National Board authority under specified conditions to cede its jurisdiction to a state agency.11 But it does not appear that there has been any cession of jurisdiction to Wisconsin by the National Board in representation proceedings.12 15 Reversed. 16 Mr. Justice RUTLEDGE, having joined in the dissent in Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, see p. 777, 67 S.Ct. 1026, 1031, 1032, 91 L.Ed. 1234, acquiesces in the Court's opinion and judgment in this case. * In 1948 Judicial Code, see 28 U.S.C.A. § 1257. 1 That review extends to administrative decisions affecting legal rights, duties, and privileges whether affirmative or negative in form, § 227.15, and is allowed any person aggrieved and directly affected by the administrative decision. § 227.16. 2 Section 111.05(4) provides 'The fact that one election has been held shall not prevent the holding of another election among the same group of employes, provided that it appears to the board that sufficient reason therefor exists.' 3 Section 111.06(d) also provides that where an employer files with the board a petition requesting a determination as to majority representation 'he shall not be deemed to have refused to bargain until an election has been held and the result thereof has been certified to him by the board.' But we are pointed to no authority holding that where a certification has already been made, a recertification can be demanded. Section 111.05(3), indeed, makes the certification 'conclusive.' 4 See § 111.05(4), supra, note 2; Rydahl's Launderers & Cleaners, Wis. E.R.B. Decision No. 677 (1944); UAW-CIO and Four Wheel Drive Auto Co., Wis. E.R.B. Decision No. 687 (1944); cf. AUA and Garton Toy Co., Wis. E.R.B. Decision No. 1238 (1947); Killingsworth, State Labor Relations Act 161—62 (1948). 5 See In re United Brotherhood of Carpenters & Joiners, 2 L.R.R.M. 894 (Wis. County Cir. Ct., 1938); In re Charles Abresch, 3 L.R.R.M. 639 (Wis. E.R.B. Decision No. 744, 1938); cf. Wisconsin Board v. Hall Garage Corp., 18 L.R.R.M. 2419 (Wis. County Cir. Ct., 1946). 6 In Allegheny Ludlum Steel Corp. v. Kelley, supra, suit had been brought in the state court for a declaratory judgment to restrain the state labor board from determining a representative of plaintiff's supervisory employees to bargain collectively with the plaintiff. Under New York law the labor board had authority to hold elections to determine employee representation and to certify the results. 30 McKinney's Consol.Laws, c. 31, Labor Law, § 705. Certification in itself, as in the instant case, did not impose a legal penalty. Suit had to be brought in an unfair labor practice proceeding to accomplish such result. 30 Ibid. § 706. Refusal to bargain with the representative of the employees was an unfair labor practice. 30 Ibid. § 704(6). Even though the New York law did not state, as does the Wisconsin law, that certification by the board was conclusive, we considered a decision of the New York court approving the jurisdiction of the state board to conduct a representative proceeding a final judgment ripe for our consideration. 7 See Elyria Telephone Co., 58 N.L.R.B. 402; Newark Telephone Co., 59 N.L.R.B. 1408; Peoples Telephone Co., 69 N.L.R.B. 540; Ohio Telephone Service Co., 72 N.L.R.B. 488. The appellant company operates a telephone business in La Crosse County, Wisconsin. It is a subsidiary of the Central Telephone Co., whose subsidiaries operate telephone businesses in many states. The concession that the company is engaged in interstate commerce is based on the interstate telephone calls which it handles. 8 'The Board shall decide in each case whether, in order to insure to employees the full benefit of their right to self-organization and to collective bargaining, and otherwise to effectuate the policies of this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof.' 9 Moreover, the Wisconsin Act excludes from the definition of employee those working in a supervisory capacity. § 111.02(3). They were, however, included under the protection of the federal act as then written. Packard Motor Co. v. National Labor Relations Board, 330 U.S. 485, 67 S.Ct. 789, 91 L.Ed. 1040. The definition of employee under the Wisconsin Act also excludes certain strikers and others who have not been at work for certain periods. § 111.02(3). These latter exceptions likewise do not in the main square with the definition of employee contained in § 2(3) of the federal act. 10 U.S.Const. Art. VI. 11 Section 10(a) of the National Labor Relations Act, § amended, now provides in part: 'the Board is empowered by agreement with any agency of any State or Territory to cede to such agency jurisdiction over any cases in any industry (other than mining, manufacturing, communications, and transportation except where predominantly local in character) even though such cases may involve labor disputes affecting commerce, unless the provision of the State or Territorial statute applicable to the determination of such cases by such agency is inconsistent with the corresponding provision of this Act or has received a construction inconsistent therewith.' 12 The agreement of August 27, 1948, between the National Board and the Wisconsin Board is restricted to the implementation of § 14(b) of the federal act. See 22 L.R.R. 268.
910
335 U.S. 701 69 S.Ct. 301 93 L.Ed. 330 SPIEGEL'S ESTATE et al.v.COMMISSIONER OF INTERNAL REVENUE. No. 3. Reargued Oct. 11, 12, 1948. Decided Jan. 17, 1949. Rehearing Denied Feb. 14, 1949. See 336 U.S. 915, 69 S.Ct. 599. Mr. Herbert A. Friedlich, of Chicago, Ill., for petitioner. Mr. Arnold Raum, of Washington, D.C., for respondent. [Argument of Counsel from page 702 intentionally omitted] Mr. Justice BLACK delivered the opinion of the Court. 1 This is a federal estate tax controversy. Here, as in Commissioner v. Church, 335 U.S. 632, 69 S.Ct. 322, we granted certiorari to consider questions dependent upon the meaning and application of a provision of § 811(c) of the Internal Revenue Code. 47 Stat. 169, 279, 26 U.S.C. § 811(c), 26 U.S.C.A. § 811(c). The particular provision requires including in a decedent's gross estate the value at his death of all property 'To the extent of any interest therein of which the decedent has at any time made a transfer, by trust or otherwise * * * intended to take effect in possession or enjoyment at or after his death * * *.' 2 In 1920 Sidney M. Spiegel, a resident of Illinois, made a transfer by trust of certain stocks to himself and another. He died in 1940. During his life the trust income was to be divided among his three children; if they did not survive him, to any of their surviving children. On his death the trust provided that the corpus was to be distributed in the same manner. But no provision was made for distribution of the corpus and its accumulated income should Mr. Spiegel survive all of his children and grandchildren. For this reason the Government has contended that under controlling state law the property would have reverted to Mr. Spiegel had he surv ved his designated beneficiaries. 3 The value of the corpus of this trust was not included in the Spiegel estate tax return. The Commissioner concluded that its value with accumulated income, about $1,140,000 should have been included in the gross estate under § 811(c). The Tax Court held otherwise in an unreported opinion. The Court of Appeals for the Seventh Circuit reversed. 159 F.2d 257. It held that the possession or enjoyment provision of § 811(c) required inclusion of the value of the trust property and accumulated income under the rule declared in Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368, because under state law the trust agreement left the way open for the property to revert to Mr. Spiegel in case he outlived all the beneficiaries. This holding rested on the agreement of parties that whether there was a right of reverter depended on Illinois law, and the court's conclusion that under Illinois law a right of reverter did exist.1 4 The Hallock case on which the Court of Appeals relied held that the value of trust properties should have been included in a settlor's gross estate under the 'possession or enjoyment' provision where trust agreements had expressly provided that the corpus should revert to the settlor in the event he outlived the beneficiaries. The taxpayer has contended here, as in the Tax Court and the Court of Appeals, that the Hallock rule is not applicable to this trust, where the settlor's chance to get back his property depended on state law and not on an express reservation by the settlor. This contention of the taxpayer rests in part on the argument that § 811(c) imposes a tax only where it can be shown that the settlor's intent was to reserve for himself a contingent reversionary interest in the property. Another contention is that the value of this contingent reversionary interest was so small in comparison with the total value of the corpus that the Hallock rule should not be applied. A third contention is that the Court of Appeals holding was erroneous in that under Illinois law the corpus of this trust would not have reverted to the settlor had all the beneficiaries died while the settlor was still living. Petitioners urge that in that event the Illinois courts would have held that the corpus passed to the heirs of the last surviving beneficiary. 5 We hold that the Hallock rule was rightly applied by the Court of Appeals and we accept its holding as to the applicable Illinois law. 6 First. In Commissioner v. Church, 335 U.S. 632, 69 S.Ct. 322, we have discussed the Hallock holding in relation to the scope of the 'possession or enjoyment' provision of § 811(c) and need not elaborate what we said there. What we said demonstrates that the taxability of a trust corpus under this provision of § 811(c) does not hinge on a settlor's motives, but depends on the nature and operative effect of the trust transfer. In the Church case we stated that a trust transaction cannot be held to alienate all of a settlor's 'possession or enjoyment' under § 811(c) unless it effects 'a bona fide transfer in which the settlor, absolutely, unequivocally, irrevocably, and without possible reservations, parts with all of his title and all of his possession and all of his enjoyment of the transferred property. After such a transfer has been made, the settlor must be left with no present legal title in the property, no possible reversionary interest in that title, and no right to possess or to enjoy the property then or thereafter. In other words such a transfer must be immediate and out and out, and must be unaffected by whether the grantor lives or dies.' We add to t at statement, if it can be conceived of as an addition, that it is immaterial whether such a present or future interest, absolute or contingent, remains in the grantor because he deliberately reserves it or because, without considering the consequences, he conveys away less than all of his property ownership and attributes, present or prospective. In either event the settlor has not parted with all of his presently existing or future contingent interests in the property transferred. He has therefore not made that 'complete' kind of trust transfer that § 811(c) commands as a prerequisite to a showing that he has certainly and irrevocably parted with his 'possession or enjoyment.' Any requirement less than that which we have outlined, such as a post-death attempt to probe the settlor's thoughts in regard to the transfer, would partially impair the effectiveness of the 'possession or enjoyment' provision as an instrument to frustrate estate tax evasions. To this extent it would defeat the precise purpose for which the provision was originated and which prompted Congress to include it in § 811(c). 7 Determination of such issues as ownership, possession, enjoyment, whether transfers have been made and the reach of those transfers, may involve many questions of fact. And we have held in many cases that to the extent the determination of such issues depends upon fact finding, many different facts may be relevant. These fact issues in federal tax cases are for the Tax Court to decide in cases brought before it. 8 In this case the Tax Court made findings of fact and then decided against the Government. It did so, however, by holding as a matter of law that those facts did not require inclusion of the value of this corpus in the settlor's estate.2 But the Tax Court's findings of fact showed that the trust contained no provision for disposition of the corpus should the settlor outlive the beneficiaries. This finding of fact, which we accept, plus the Court of Appeals determination of controlling Illinois law, without more, brings this trust transaction within the scope of the possession or enjoyment provision of § 811(c) as we have interpreted that section in the Hallock and Church cases. And petitioner has not contended that it was denied an opportunity to present any relevant evidence concerning ownership, possession, or enjoyment. It is therefore not necessary to remand the case to the Tax Court for any further findings of facts. See Hormel v. Helvering, 312 U.S. 552, 559, 560, 61 S.Ct. 719, 722, 723, 85 L.Ed. 1037. 9 Second. It is contended that since the monetary value of the settlor's contingent reversionary interest is small in comparison with the total value of the corpus, the possession or enjoyment provision of § 811(c) should not be applied. But inclusion of a trust corpus under that provision is not dependent upon the value of the reversionary interest. Fidelity-Philadelphia Trust Co. v. Rothensies, 324 U.S. 108, 112, 65 S.Ct. 508, 510, 89 L.Ed. 782, 159 A.L.R. 227; Commissioner v. Estate of Field, 324 U.S. 113, 116, 65 S.Ct. 511, 512, 89 L.Ed. 786, 159 A.L.R. 230; see Goldstone v. United States, 325 U.S. 687, 691, 65 S.Ct. 1323, 132 , 89 L.Ed. 1871, 159 A.L.R. 1330. The question is not how much is the value of a reservation, but whether after a trust transfer, considered by Congress to be a potentially dangerous tax evasion transaction, some present or contingent right or interest in the property still remains in the settlor so that full and complete title, possession or enjoyment does not absolutely pass to the beneficiaries until at or after the settlor's death. See Smith v. Shaughnessy, 318 U.S. 176, 181, 63 S.Ct. 545, 547, 87 L.Ed. 690. 10 Third. It is contended that under Illinois law the corpus of this trust would not have reverted to the settlor had he outlived the beneficiaries. The record reveals that the state law problem here is not an easy one, but under this Court's decision in Meredith v. Winter Haven, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9, the difficulty involved did not relieve the Court of Appeals of its duty to make a decision. The questioned ruling was made by three judges who are constantly required to pass upon Illinois law questions. One of the three judges has long been a resident and lawyer of Illinois. Examination of the Illinois state court opinions pressed upon us leaves us unable to say with any degree of certainty that the Court of Appeals holding was wrong. It is certainly neither novel nor unreasonable for state law to provide that when all trust beneficiaries die the trust corpus should revert to the donor. It would be wholly unprofitable for us to analyze Illinois cases on the point here urged. It is sufficient for us to say that we think reasonable arguments can be made based on Illinois cases to support a determination of this question either for or against the petitioner's contention. Under these circumstances we will follow our general policy and leave undisturbed this Court of Appeals holding on a question of state law.3 11 All other arguments of the petitioners have been noted and we find them without merit. 12 Affirmed. 13 Mr. Justice JACKSON dissents. 14 For concurring opinion of Mr. Justice REED, see 335 U.S. 632, 69 S.Ct. 337. 15 For dissenting opinion of Mr. Justice FRANKFURTER, see 335 U.S. 632, 69 S.Ct. 337. 16 Mr. Justice BURTON, dissenting. 17 Today's decision adds to the difficulties in this troubled field of estate tax law. It may, however, serve a good purpose if it leads to a sumultaneous consideration by Congress of the related fields of income, gift and estate taxation in connection with the creation or transfer of future interests. 18 FIVE ALTERNATIVES. 19 At least five alternative proposals have been presented to us for the solution of this case. The first calls for the reversal of Reinecke v. Northern Trust Co., 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397, and a decision against the taxpayers. The second calls for the extension to this case of the doctrine of Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788, and a remand to determine further facts. The third, fourth and fifth follow existing precedents more closely. Each recognizes that, if no possibility of a reverter1 arose in favor of the settlor, by operation of law, under the trust instrument before us, the property thereby placed in trust is not required by § 811(c) of the Internal Revenue Code to be included in the gross estate of the settlor for federal estate tax purposes. The third proposal finds that the law to be applied, for the above purpose, is that of Illinois. It calls for a decision in favor of the taxpayers because, under a correct application of that law, the required reverter could not arise. The fourth proposal claims or assumes that a possibility of a reverter did arise under this trust by operation of the law of Illinois in favor of the settlor. It, however, declines to apply the rule of de minimis non curat lex and, by declining to look urther, it reaches a decision against the taxpayers. This is the alternative which has been adopted in the opinion of the Court. The fifth proposal is like the fourth except that it does look further and it recognizes that § 811(c) requires a finding of the settlor's actual intent in order to make that Section applicable. It then concludes that in the instant case the required intent is absent. The fifth proposal, therefore, calls for a decision in favor of the taxpayers or at least calls for a remand to determine the existence, if any, of the settlor's required intent. I believe that only the third and fifth proposals present a sound solution. Each of those two is founded upon existing precedents, reaches an equitable result and contributes to the cetainty rather than to the uncertainty of the application of the tax, pending legislative reconsideration of the entire subject. I prefer the fifth because it avoids complete dependence upon the law of a state. If the fifth proposal is not accepted, I believe that the present status of the law of Illinois requires acceptance of the third. 20 I. THE FIRST PROPOSAL IS THAT THE REINECKE CASE BE OVERRULED. 21 The lack of judicial support for overruling Reinecke v. Northern Trust Co., supra, at this late day, makes it unnecessary to consider this proposal at length. It has been, however, strongly urged upon us. The Spiegel trust instrument is so simple and complete in its terms2 that to apply the federal estate tax to its corpus merely on the strength of those terms would require a reversal of the Reinecke case. Accordingly, on the reargument of this case, we asked the following question: '1 Assuming that, under the applicable state law, there was no possibility of reverter and no interest of any other kind retained or arising in favor of the settlor or his estate under the transfer made in trust, inter vivos, did section 811(c) of the Internal Revenue Code require that the value of the corpus of the trust be included in the settlor's gross estate for federal estate-tax purposes? That is, did section 811(c) require the inclusion in the gross estate of the settlor of the value of the corpus of a trust, created inter vivos, merely because the settlor had provided in it that, upon his death, the trust should terminate and the corpus be distributed to designated beneficiaries then surviving?' Journal Supreme Court, Oct. Term, 1947, pp. 296—297. 22 In response, counsel for the Commissioner argued in the affirmative and counsel for the petitioners in the negative. The interpretation of the statute urged on behalf of the Commissioner, however, had been long ago rejected unanimously by this Court in passing upon the so-called 'five trusts' in the Reinecke case. Accordingly, if that precedent stands, the answer to the above question remains 'No' and that issue should be at rest. 23 The reasoning of the Reinecke case requires that, for a transfer to be taxable in a case like this, the settlor must have intended that the transfer come from the sett or and that it take effect in possession or enjoyment at or after the settlor's death. It must be from the dead to the living. That requirement calls for the existence of an interest, right or control in the settlor, or at least the existence of some possibility of a reverters to the settlor or to his estate, amounting to a string or tie to the trust property, in order to make § 811(c) applicable. Such interest, string or tie must also be one that was transferred, cut off or obliterated by the terms of the trust at or after the death of the settlor. 24 Accordingly, there now should be said about § 811 of the Internal Revenue Code, 53 Stat. 120, 26 U.S.C. (1940 Ed.), § 811, 26 U.S.C.A. § 811, what Mr. Justice Stone, in 1929, said in the Reinecke case about the corresponding § 402 of the Revenue Act of 1921, c. 136, 42 Stat. 227, 278: 'In its plan and scope the tax is one imposed on transfers at death or made in contemplation of death and is measured by the value at death of the interest which is transferred. Cf. Y.M.C.A. v. Davis, 264 U.S. 47, 50, 44 S.Ct. 291, 68 L.Ed. 558; Edwards v. Slocum, 264 U.S. 61, 62, 44 S.Ct. 293, 68 L.Ed. 564; New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963, 16 A.L.R. 660. It is not a gift tax and the tax on gifts once imposed by the Revenue Act of 1924, c. 234, 43 Stat. 313, has been repealed, 44 Stat. 126. One may freely give his property to another by absolute gift without subjecting himself or his estate to a tax, but we are asked to say that this statute means that he may not make a gift inter vivos, equally absolute and complete, without subjecting it to a tax if the gift takes the form of a life estate in one with remainder over to another at or after the donor's death. It would require plain and compelling language to justify so incongruous a result and we think it is wanting in the present statute.' Id., 278 U.S. at pages 347, 348, 49 S.Ct. at page 125, 73 L.Ed. 410, 66 A.L.R. 397. 25 See also, Helvering v. Hallock, 309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368; dissenting opinion in Becker v. St. Louis Union Trust Co., 296 U.S. 48, 53, 56 S.Ct. 78, 80, 80 L.Ed. 35, and Helvering v. St. Louis Union Trust Co., 296 U.S. 39, 46, 56 S.Ct. 74, 77, 80 L.Ed. 29, 100 A.L.R. 1239; Klein v. United States, 283 U.S. 231, 51 S.Ct. 398, 75 L.Ed. 996; and Shukert 26 v. Allen, 273 U.S. 545, 47 S.Ct. 461, 71 L.Ed. 764, 49 A.L.R. 855. II. THE SECOND PROPOSAL IS FOR THE APPLICATION OF THE DOCTRINE OF THE CLIFFORD CASE. 27 To apply the doctrine of Helvering v. Clifford, supra, to the case before us is, in effect, to substitute that doctrine for the doctrine of the Reinecke case. Heretofore, this Court has made no application of the doctrine of the Clifford case to § 811(c) or to any of its predecessor Sections. That doctrine has been reserved largely for income tax cases. All the facts appropriate for a decision in this case under the doctrine of the Clifford case have not been presented. The absence of those facts from the record and the absence of this issue from the arguments made below emphasize the inappropriateness of a remand to introduce such facts at this late point in this proceeding. Nothing suggests that this trustee has practiced fraud, or tax evasion, or has violated his obligations as a trustee. The trust became irrevocable at its inception. It thus contrasts sharply with any testamentary instrument which the settlor might have executed. There is nothing in it to suggest that the settlor, even as a sole surviving trustee, would be free from strict accountability to the beneficiaries of the trust or from an obligation to use his discretion in their interest rather than in his own. There is no more of an express provision in this trust for the possobility of a reverter to the settlor than there was in the Reinecke case. The countless uncertainties which would arise in other cases from a retroactive application to this statute of the doctrine of the Clifford case might be nearly as gr at as those which would flow from a reversal of the Reinecke case. 28 Furthermore, there is a sharp contrast between § 22(a)3 and § 811(c) of the Internal Revenue Code as a starting point for the application of the doctrine of the Clifford case. Section 22(a), upon which the Clifford case rests its expansion of the traditionally taxable income of the taxpayer, invites or at least permits the broad interpretation given to it. Section 811, on the other hand, contains no sweeping inclusions. Whatever breadth of language it contains is in § 811(a), whereas § 811(c) is in the nature of a special exception from the broad field of transfers inter vivos. Section 811(c) seeks to apply the estate tax to certain identifiable classifications of such transfers where experience has indicated that, in spite of their form, Congress believes they should be subjected to estate tax. The historical development of § 811(c) bears out this interpretation. It has been extended only by the addition of specifically described classifications. The same is true of the revocable transfer described in § 811(d), of joint and community interests in § 811(e), of powers of appointment in § 811(f), of proceeds of life insurance in § 811(g), of transfers of prior interests in § 811(h) and of transfers for insufficient consideration in § 811(i). If Congress had intended to sweep into the gross estate of the decedent broad classifications of transfers inter vivos, contrary to the limitations upheld in Reinecke v. Northern Trust Co., supra, or as would result from the application of the doctrine of Helvering v. Clifford, many of the foregoing specific extensions would not have been necessary. The very specificity of the terms of § 811(c) and of its related subsections emphatically negative any broad interpretation of their language. No language of a breadth comparable to that used in § 22(a) appears anywhere in the Section. 29 To apply the doctrine of the Clifford case to the Spiegel trust because of the powers which the Spiegel trust vested in the settlor as a trustee conflicts with the position taken by this Court as to the 'five trusts' in the Reinecke case, supra. For example, the powers reserved directly to the settlor under Trust No. 4477 in the Reinecke case not only are equal to but, in some ways, are broader than those vested in the settlor, as a trustee, in the Spiegel trust. The very fact that in Trust No. 4477 the reservations were made directly to the settlor in his personal capacity, rather than to him as a trustee, removes from them the traditional limitations which equity places upon a trustee in the exercise of powers which he holds for the benefit of his cestui que trust. In Appendix II, infra, Trust No. 4477 is quoted in full from the record in the Reinecke case and a number of the especially material clauses have been italicized. While the terms of that trust were not quoted verbatim in the opinion of this Court in the Reinecke case, this Court there summarized several of them4 and said: 'Nor did the reserved powers of management of the trusts save to decedent any control over the economic benefits or the enjoyment of the property. He would equally have reserved all these powers and others had he made himself the trustee, but the transfer would not for that reason have been incomplete. The shifting of the economic nterest in the trust property which was the subject of the tax was thus complete as soon as the trust was made. His power to recall the property and of control over it for his own benefit then ceased and as the trusts were not made in contemplation of death, the reserved powers do not serve to distinguish them from any other gift inter vivos not subject to the tax.' 278 U.S. at pages 346, 347, 49 S.Ct. at page 125, 73 L.Ed. 410, 66 A.L.R. 397. 30 This Court thus showed that all of the powers reserved directly to the settlor, even if coupled with the 'others' of the trustee, would not subject that trust to the estate tax. This is especially significant because the issue now presented had been brought squarely before this Court in the Reinecke case by the following question in the Government's brief: 31 '1. Do the words of Section 402(c) of the Revenue Act of 1921, which provide that, for the purpose of measuring the estate tax, there shall be included in the value of decedent's gross estate trusts intended to 'take effect in possession or enjoyment at or after his death,' embrace: 32 '(b) Trusts created after the effective date of a similar and earlier Act, where the settlor reserved the power to sell and reinvest the trust property; vote the stock; control leases; reappoint trustees; and, jointly with the beneficiaries, to alter, amend, or modify the trust. (This applies to Trusts Nos. 4477, 4478, 4479, 4480, and 4481, respectively, appearing in the record at pp. 3, 17, 25, 32, 40.)'5 33 For us to hold that § 811(c) applies here because of the powers which have been vested in the settlor-trustee under the Spiegel trust would, therefore, amount to overruling the decision of this Court in the Reinecke case which held that the corresponding language of § 402(c) of the Revenue Act of 1921 did not apply in that case.6 34 The failure to remand this case for the determination of further facts which would be material under the tests of the Clifford case does not settle the question that has been argued as to the application of those tests under § 811(c). It does, however, show that this Court has not been willing to rest its decision upon the application of the doctrine of the Clifford case on the basis of the terms of this trust and of the facts shown by the present record. 35 COMMON BASIS FOR THE THIRD, FOURTH AND FIFTH PROPOSALS. 36 The Material Facts. 37 The important facts in this case are the terms of the trust instrument and the intent of the settlor. The terms of the instrument are those to which the law of Illinois must be applied to determine whether there arose, by operation of law, any possibility of a reverter in favor of the settlor which might have been transferred, cut off or obliterated by the settlor's death. In 1920 the settlor made an irrevocable transfer, in Illinois, by trust, of certain corporate securities with directions to the trustees to pay the income of the trust, during the life of the settlor, to his three named children, but, if any of such children predeceased the settlor, the payments were to go to the children of such deceased child or children per stirpes. If there were no surviving child of a deceased child of the ettlor, the payments were to go to the other children of the settlor and to their descendants per stirpes. Similarly, upon the settlor's death, the trust fund and any accumulated income thereon were to be divided among the settlor's three children. It was provided, with obvious care, that, if any of the settlor's children had by that time died, leaving any child or children surviving, then the child or children of such deceased child of the settlor was or were to receive the share of the trust fund to which its or their parent would have been entitled. Furthermore, if any of the settlor's three children died without leaving any child or children surviving, then the share of such deceased child was to go to the settlor's remaining children, and to the descendants of any deceased child of the settlor per stirpes. No further express provision was made for the disposition of the income or of the corpus of the trust in the event, for example, that none of the settlor's three children and no descendants of such children survived the settlor. The instrument contained no further intimation of any intent or even thought on the part of the settlor that in any manner there might arise in favor of the settlor or of his estate, any beneficial interest, or right to, or control over the possession or enjoyment of the income or corpus of the trust. 38 The gift was not made in contemplation of death. At that date there was no law prescribing a federal gift tax applicable to it. The trustees named in the trust were the settlor himself and one other person whose relationship, if any, to the settlor does not appear in the record. Both were residents of Illinois. Their powers of management were comparable to those commonly granted to trustees to handle a trust estate consisting originally of such securities as were transferred here. The trust mentioned no power of appointment and no power to alter, amend, revoke or terminate the trust. At the creation of the trust, the age of the settlor was 47 and he was a widower. His three only children were, respectively, about 22, 15 and 12 years old. He then had no grandchildren. In 1940, when he died, he was 68 and his children were, respectively, 43, 36 and 33. He then had three grandchildren, aged, respectively, ten, four and two. Throughout his life the income of the trust was distributed to and for the benefit of his three children and upon his death the entire fund was distributed equally among them. 39 THE POSSIBILITY OF A REVERTER TO THE SETTLOR. 40 In addition to his broader claims discussed under the first and second proposals, the Commissioner has presented a narrow claim. This is a claim that if, by operation of law, there arises from the trust a reversionary interest in the settlor or in his estate, or if there exists even a gossamer thread of a possibility of a reverter to the settlor or to his estate, and if such interest, 'string or tie' were, by the terms of the trust, to be transferred, cut off or obliterated by his death, then, under existing precedents, the entire trust property should be included in the gross estate of the settlor for federal estate tax purposes. There is no issue made here as to the amount of the tax if any is due. The petitioners' claim is simply that no estate tax is applicable to the trust fund. III. THE THIRD PROPOSAL. 41 Illinois Law Precludes the Possibility of A Reverter. 42 On this branch of the case the first inquiry must be as to the law of Illinois and the second as to its application to this trust. A determination of the Illinois law and of its application adversely to the taxpayers would be conclusive against them, unless relieved by the rule of de minimis under the fourth proposal, or by a finding favorable to them on the issue of the settlor's factual intent under the fifth proposal. On the other hand, a finding favorable to the taxpayers upon either the principle or the application of the law of Illinois would dispose of this case in their favor. This very conclusiveness of t e state law under this proposal is a weighty consideration in favor of the interpretation of the statute presented by the fifth proposal. A federal policy of complete dependence upon state laws for the application of any nationwide tax cannot fairly be attributed to Congress without a much clearer expression of such a policy than appears in § 811(c). The inherent difficulty of administration and the resulting inequality of taxation as between instruments governed by the laws of different states argue strongly against such a policy. 43 This Court, as a settled practice, places much reliance upon announcements by Courts of Appeals as to the law of the states within their respective Circuits.7 The weight to which such announcements are entitled will vary with the circumstances under which they are made. In this case we have an announcement by the Court of Appeals for the Seventh Circuit on the law of Illinois as to the effect of contingent remainders contained in a trust and pointing out that, under the law of Illinois, they create reversionary interests in the settlor. Our difficulty here is not with the law as thus stated but with the application made of it to this case. The trouble is that the trust in this case contains not contingent remainders but vested remainders, and it is clear that, under the law of Illinois, no reversions, reversionary interests, resulting trusts or 'possibilities of a reverter' of any kind can arise by operation of law from a vested remainder. This is due to the essential difference between a contingent remainder and a vested remainder. If the law of Illinois is to control the situation, there is no escape from the determination of this clear-cut issue under the law of that State. 44 The failure of a condition precedent upon which a contingent remainder depends under a trust results naturally enough in a reversion of the undisposed-of beneficial interest to the settlor of the trust. On the other hand, the failure of a condition subsequent attached to a vested remainder under a trust results equally naturally only in a failure of the divestiture contemplated by the condition. The effect of such a failure of a condition subsequent attached to a vested remainder is not a reversion of an undisposed-of beneficial interest to the settlor of the trust. It merely relieves the holder of the vested remainder and his legatees and next of kin from the possibility of the divestiture to which the remainder originally had been subjected. 45 The Court of Appeals in the instant case has made no announcement of Illinois law contrary to that just stated. In fact, it made no announcement whatever on the subject of vested remainders because it treated the Spiegel remainders as contingent.8 The foregoing elemental statement as to the legal effect of contingent remainders and of vested remainders subject to conditions subsequent conforms to the generally accepted law of trusts9 and to the law of Illinois.10 46 This brings us near to the decisive question whether the remainder interests written into the Spiegel trust were contingent or vested. The Commissioner has suggested that it makes little substantial difference whether a condition is a condition precedent or a condition subsequent, as long as it is a condition. That is so for many purposes but where, as here, a tax, by hypothesis, can attach only if some possibility of a reverter can arise in favor of the settlor before his death, then it is inescapably necessary to determine whether or not, by operation of the law of Illinois, such a possibility of reverter can arise under this trust. To say in such a situation that the language of the conveyance makes no difference is to beg the question. The possibility is not expressly spelled out or denied. Its existence, like the existence of any other beneficial interest in the trust, must depend upon the effect given by Illinois law to the words of art in the conveyance. In the last analysis the problem is to determine whether or not the settlor intended by his language that the possession and enjoyment of his property were to return to him upon failure of the express dispositions of the beneficial interests in it. If the settlor had wished to express himself in detail he could have done so. Here, however, he used only the customary language of conveyancing and it remains to see what effect the Illinois law gives to that language. 47 In the helpful light of Lachenmyer v. Gehlbach, 266 Ill. 11, 107 N.E. 202, the remainders in the Spiegel trust are shown to be vested remainders, carrying conditions subsequent. See also, Stombaugh v. Morey, 388 Ill. 392, 58 N.E.2d 545, 157 A.L.R. 254; Murphy v. Westhoff, 836 Ill. 136, 53 N.E.2d 931; Danz v. Danz, 373 Ill. 482, 26 N.E.2d 872; Smith v. Shepard, 370 Ill. 491, 19 N.E.2d 368; Hoblit v. Howser, 338 Ill. 328, 170 N.E. 257, 71 A.L.R. 1046; Boye v. Boye, 300 Ill. 508, 133 N.E. 382; McBride v. Clemons, 294 Ill. 251, 128 N.E. 383; Hickox v. Klaholt, 291 Ill. 544, 126 N.E. 166; Welch v. Crowe, 278 Ill. 244, 115 N.E. 859. Cf. Freudenstein v. Braden, 397 Ill. 29, 72 N.E.2d 832. No distinction has been drawn in the Illinois cases between interests created by inter vivos deeds and like interests created by testamentary documents. See Smith v. Dugger, 310 Ill. 624, 625, 142 N.E. 243, 244, where the Illinois Supreme Court relied upon Lachenmyer v. Gehlbach, supra, in construing an inter vivos deed. See also, Harder v. Matthews, 309 Ill. 548, 141 N.E. 442.11 48 For these reasons, by operation of the law of Illinois, there here existed no possibility of a reverter to the settlor and, therefore, the federal estate tax cannot attach to it. To the extent that the Commissioner relies upon the law of Illinois to establish in this case the possibility of a reverter to the settlor, by operation of the Illinois law, he has been 'hoist with his own 49 petard.' IV. THE FOURTH PROPOSAL ASSUMES THAT A POSSIBILITY OF A REVERTER EXISTS AND THAT THE FACTUAL INTENT OF THE SETTLOR MAY BE DISREGARDED. 50 This proposal is reached only if the foregoing conclusions as to the law of Illinois are disregarded. It is the solution adopted in the opinion of the Court. If it is assumed that he possibility of reverter in favor of the settlor may be said to have arisen under the law of Illinois, then under existing precedents, if we look no further, the federal estate tax would be applicable here and a decision is called for against the taxpayers. The fifth proposal presents the view that the statute requires us to look further and to determine the issue in reliance upon the factual intent of the settlor. However, even without going that far, a substantial case can be made in favor of the taxpayers even under this fourth proposal. That case is based upon the extreme remoteness of the possibility of reverter which is relied upon by the Commissioner. The remoteness of it is obvious from the fact that, even at the time of the execution of the trust when the chances of its realization were at their highest point, the possible reverter to the settlor was conceivable only if all three of the children of the settlor were to die before he did and were to die without descendants of their own. Disregarding the possibility of descendants of his children, the record shows an actuarial computation of the likelihood that the settlor would survive all three of his children of only about 1 1/2 chances out of 100. On the basis of such a chance of realization, the computation gave a value of about $4,000 to a trust corpus of $1,000,000. To tax the settlor's estate more than $450,000, as is here proposed, because of the existence of this $4,000 worth of a possible reverter is not the kind of taxation that a court can readily imagine that Congress meant to impose. A proportion of 1 1/2 to 100 suggests the appropriate application here of the maximum of de minimis non curat lex. The difficulty of applying that test as the sole basis of exemption is, however, obvious. On the other hand, this element of remoteness provides a thoroughly reasonable consideration which may be combined with other evidence to determine the presence or absence of the factual intent on the part of the settlor which is discussed in the fifth and final proposal. V. THE FIFTH PROPOSAL. 51 The Statutory Intent of the Settlor Required to Make the Estate Tax applicableis Absent and a Contrary Intent is Present. 52 The undisputed evidence shows that, at the time of the transfer by trust, there was an absence of conscious intent on the part of the settlor that the trust property, or any part of it, should ever return to him or to his estate. In fact, there is strong evidence showing that he intended affirmatively to make a complete and irrevocable transfer which would exclude all possibility of a reverter to him. The trust recited as complete a transfer as any outright deed of gift would have recited if made directly to his children, except for the natural feature that, at their immature age, the transfer was made to trustees and these trustees were required by the irrevocable terms of the trust to deliver complete title to the settlor's children, or to their descendants, at a future date. The settlor's intent and the completeness of the transfer would have been no more complete if, instead of fixing the date for the future distribution of the trust property at the date of his own death, he had fixed it arbitrarily at December 19, 1940, which later proved to be the date of his death. The intent and completeness of the transfer, similarly, would have been no more complete if he had fixed the date of termination of the trust to coincide with the death of a third person instead of with his own death. 53 THE STATUTE REQUIRES A FINDING OF THE SETTLOR'S INTENT. 54 Section 811(c) requires us to find the settlor's intent as a condition of the application of that Section to this case. Accordingly, if the settlor had used language in his trust instrument which expressly, or even impliedly, had created or recognized a possible reverter in favor of the settlor, that language in itself would have been evidence that the settlor had intended the trust to include a reverter in his fav r and that he had intended the trust property, in the event of a realization of that reverter, to pass from him to his estate, under the 1920 trust, upon the expiration of that trust at his death. 55 It is, however, in the complete absence of such language in the trust instrument that the Government now claims that a possible reverter has arisen by operation of law. The existence of such a reverter, accordingly, may or may not have been intended in fact, and may not have been even thought about by the settlor. To say that the settlor must have intended all the legal consequences of his acts begs the question. So construed, the Section would have the same meaning as if the word 'intended' had been omitted. 56 'Intended' should be given its normal, factual meaning. To intend means to 'have in mind as a design or purpose.'12 The question of intent is one of fact, difficult to determine, but determinable, nevertheless. Section 811(c) involves more than merely determining whether a transfer took effect, as a matter of law, at or after death or whether a 'string or tie,' as a matter of law, was retained until death. There remains for determination the fact whether the settlor did actually intend that the 1920 transfer take effect in possession or enjoyment upon the expiration of the trust at his death. 57 Section 811(c) expressly covers transfers either 'in contemplation of or intended to take effect in possession or enjoyment at or after * * * death.' (Italics supplied.) We have held that the settlordecedent's motive must be determined before it can be held that a transfer was in contemplation of death. United States v. Wells, 283 U.S. 102, 51 S.Ct. 446, 75 L.Ed. 867. That case included a transfer in trust, inter vivos, which was held not to have been made in 'contemplation of * * * death.' Similarly, factual intent should be found in order to determine whether a transfer was 'intended to take effect in possession or enjoyment at or after * * * death'. In United States v. Wells, Chief Justice Hughes, speaking for the Court, said 283 U.S. at pages 116, 117, 51 S.Ct. at page 451, 75 L.Ed. 867: 'The quality which brings the transfer within the statute is indicated by the context and manifest purpose. Transfers in contemplation of death are included within the same category, for the purpose of taxation, with transfers intended to take effect at or after the death of the transferor. The dominant purpose is to reach substitutes for testamentary dispositions and thus to prevent the evasion of the estate tax. * * * As the transfer may otherwise have all the indicia of a valid gift inter vivos, the differentiating factor must be found in the transferor's motive.' 58 In cases involving 'contemplation of * * * death' under § 811(c) the required motive impelling a transfer 'is a question of fact in each case.' (Italics supplied.) See Allen v. Trust Co. of Georgia, 326 U.S. 630, 636, 66 S.Ct. 389, 392, 90 L.Ed. 367. So also, in each case under § 811(c), the question whether 'the decedent has at any time made a transfer, by trust or otherwise, * * * intended to take effect in possession or enjoyment at or after his death, * * *' should be one of fact. 59 In determining the issue as to the settlor's intent in making his 1920 transfer, inter vivos, in the present case, the following considerations are material and persuasive: 60 1. Language of the trust instrument.—There was no language in this instrument which expressed or even affirmatively implied an intent to make a transfer to take effect in possession or enjoyment at or after the death of the settlor rather than in praesenti. If the trust instrument had contained such an express or affirmatively implied declaration of the settlor's intent, it might have been conclusive of the issue. If there had been even a description of, or reference to, a possible reverter to the settlor, that would have been strong evidence of the intent required by § 811(c). The a sence of any such description or reference was consistent with a lack of intent that there be such a reverter. It was negative evidence to the effect that such a reverter was not intended and not desired by the settlor. 61 In an instrument of this kind it is natural for the settlor to give affirmative expression to each beneficial use to which he intends or desires the trust property to be put. It cannot be argued effectively in this case that the complete silence of the trust instrument on the subject of a possible reverter of the trust property to the settlor or to his estate amounted to an expression of intent by the settlor that such a reverter be permitted to arise by operation of law. As a matter of fact, the extrinsic evidence presented in this case tended to establish an opposite intent and desire. 62 In the present case, the overwhelming improbability of a complete failure of beneficiaries was so complete that it supplied a natural reason for omitting further provisions for distribution of the trust property. The likelihood that a 47-year-old settlor would outlive his three children and also his prospective grandchildren obviously was small. As it turned out, none of the settlor's three children predeceased him, and the distribution of the trust property was made to them without reaching his grandchildren. The facts of this case as they existed in 1920 presented to the settlor quite a different problem from that which would have been presented if, at that time, he had named as the only beneficiary of the trust a person with a life expectancy obviously shorter than his own. 63 Standing alone, the instrument evidences a simple transfer in praesenti, comparable to that in Reinecke v. Northern Trust Co., supra. The language of the instrument, therefore, certainly did not, in itself, require the property which was transferred, in 1920, to be included, in 1940, in the setlor's gross estate for federal estate tax purposes. If anything, the language itself, read in the light of Illinois law as stated above in the discussion of the third proposal and as regarded by the settlor in the light of the advice of his legal counsel, is expressive of an intent that there be no possibility of a reverter, and of an intent to make an absolute and complete transfer to the trustees in praesenti. 64 2. Remoteness of the possible reverter.—The remoteness of the possible realization of a suggested reverter (whether arising from express provision of a trust or by operation of law) is an important factor in establishing the probable intent of the settlor of any trust to make, thereby, a transfer to take effect in possession or enjoyment at or after his death. If the 1920 trust instrument had named as its sole beneficiary a person having a comparatively short life expectancy, then, assuming a reversion in favor of the settlor under Illinois law, the possibility of its occurrence would have been substantial. It would have been so great that, if the settlor had expressly mentioned such a reversion in the trust instrument, that mention of it would have substantially demonstrated the existence of the intent required by § 811(c). Even if the settlor had made no express mention of such a reversion and thus had left its effectiveness wholly to the operation of the law of Illinois, the circumstances themselves, including the high probability of the realization of the reversion, would have supplied important evidence upon which to base a finding of the required intent on the part of the settlor. However, with the inclusion of each additional youthful beneficiary of the trust, the basis for a conclusion that the settlor intended to establish a reversion to himself or to his estate and to postpone the transfer of the possession or enjoyment of the property until at or after his death was weakened. 65 The Tax Court, upon undisputed evidence, reduced to a mathematical basis the possibility presented by the suggested reverter in this case. The computations were stated to have been bas d upon a mortality table and an assumed rate of interest prescribed in Treasury Regulations as applicable to federal estate taxes. The computations also were stated to have been based upon assumed ages of a settlor and of beneficiaries corresponding substantially with those stated in the facts of this case. The computations showed that the probability that a person of the age of this settlor would survive three persons of the respective ages of the primary beneficiaries who were living at the date of the creation of this trust was only 0.01612, or about 1 1/2 chances out of 100. Similarly, the value of the right of a person, of the age of the settlor in 1920, to receive $1 on the death of the last of three persons of the ages of the primary beneficiaries was $0.00390. 66 In 1920, the most favorable computation would thus have placed a value of less than $4,000 upon the settlor's interest in the suggested reverter relating to a $1,000,000 trust fund. These computations do not take into consideration the additional possibility that many grandchildren might have been born in time to qualify as beneficiaries of this trust, and thus further reduce the possibility of reverter. In fact, three such grandchildren were born in time to qualify—thus reducing the value to the settlor, in 1940, of the suggested reverter, on a $1,000,000 trust fund, to about $70. The relation of $70 to $1,000,000 ordinarily would be de minimis and certainly not one which would induce Congress to permit the assessment of a tax of over $450,000 because of its existence. 67 This demonstration of the remoteness of the possible reverter, if any, in this case is persuasive at least in showing the fact to have been that the settlor, in establishing this trust, probably intended it to be nothing other than a completed gift to those of his children or their descendants who might survive him. 68 In 1920 the gift, as such, was tax-free. Such a gift today would be subject to a gift tax. The assessment of a gift tax upon such a transaction emphasizes the impropriety, rather than the propriety, of also applying to it an estate tax at the death of the settlor. In 1920 the character of the gift was the same as it would be today and the fact that it was not subject to a gift tax then does not make it any more subject to the 1940 estate tax than if a gift tax had been paid upon it. 69 3. Direct evidence of the intent of the settlor.—Substantial evidence confirmed the absence of the factual intent necessary in order to make § 811(c) applicable. There was no direct evidence indicating the existence of an actual intent on the part of the settlor to provide for a reverter to himself or to his estate or, in any other manner, to cause his 1920 transfer to trustees for the benefit of his descendants to take effect in possession or enjoyment at or after his death. 70 On the other hand, there was undisputed evidence indicating the absence of such an intent. In fact, it indicated the probable existence of a contrary intent. The Illinois attorney who drew the trust instrument testified that, prior to the drafting of the instrument, the settlor had stated that he desired and intended the trust property to be transferred to trustees for the benefit of his children and that he wanted at no time to retain any interest in it. The attorney added that, in drafting the trust, he had endeavored to carry out the instructions of his client and that he believed he had done so. That attorney is a member of the firm representing the estate of the settlordecedent in the instant case. As attorneys for the estate of the 1940 decedent, they argue that, under the law of Illinois, as they understood it and as they advised their client in 1920, there has not arisen any possibility of a reverter to the settlor under this trust by operation of law or otherwise. The receipt of that opinion by the settlor at the time of executing the trust instrument supports the petitioners' contention that the settlor then intended to translate into his Illinois trust his purpose to make an absolute and complete transfer of the subject matter of the trust, and thereby to make irrevocable provision for its future distribution. 71 In view of the uncontroverted and convincing evidence of the absence of any such factual intent on the part of the settlor as is required to bring his 1920 transfer within the terms of § 811(c), and in view of the judgment of the Tax Court in favor of the settlor-decedent's executors, there is no need to remand the case to that court for a further finding in support of its judgment. 72 For the reasons stated in the foregoing discussion of the fifth proposal, and also for the reasons stated in the discussion of the third proposal to the effect that no possibility of a reverter arose in favor of the settlor by operation of the law of Illinois, I believe that the judgment of the United States Court of Appeals should have been reversed. 73 Appendixes to Mr. Justice BURTON'S dissent. 74 Appendix I. 75 The trust instrument which is the subject of the decision in Spiegel v. Commissioner, ante, 335 U.S. 701, 69 S.Ct. 301, is as follows: 76 'Know All Men By These Presents, that I, Sidney M. Spiegel, of the City of Chicago, County of Cook and State of Illinois, in consideration of One Dollar (1.00) and other good and valuable considerations, have sold, transferred, assigned, set over and delivered, and by these presents do sell, transfer, assign, set over and deliver to Modie J. Spiegel and Sidney M. Spiegel, and the survivor of them, as Trustees, six hundred twenty-five (625) shares of the capital stock of Spiegel's House Furnishing Company and seven hundred fifty (750) shares of the capital stock of Spiegel May Stern Company, In Trust, nevertheless, for the following uses and purposes, and upon the following terms and conditions:— 77 '1: The said Trustees, and the survivor of them, or any successor trustee, shall have full, absolute and complete power to hold, manage and control said shares and every part thereof; to sell, exchange, transfer or otherwise dispose of the same, or any part thereof, and to invest and reinvest the proceeds derived from any such sale or sales, or other disposition of said shares, or any part thereof, during the continuance of this trust. While said shares of stock, or any substitutes therefor, are held by said Trustees, or the survivor of them, or any successor Trustee, if any corporation whose stock or other securities are held by said Trustees should require any action of any kind to be taken, said Trustees, and the survivor and any successor trustee, shall have the same right to take any action which may be required of any stockholder or holder of any securities of any such corporation as if said Trustees, and the survivor and any successor held such shares or said securities in their own individual names and were the sole owners thereof. 78 '2: The Trustees, and the survivor of them, and any successor trustee, shall collect and receive all income derived therefrom, or from any substitutes, therefor, and shall during the life of myself, said Sidney M. Spiegel, divide said net income into three (3) equal parts, and pay or use one of said parts of said income to or for the maintenance, support and education of my three (3) children, Katherine J. Spiegel, Sidney M. Spiegel, Jr. and Julia K. Spiegel,—such income to be distributed at convenient intervals each year. In the event that any of my said three (3) children shall die prior to my death, then the share of such income to which such deceased one of said three (3) children would have been entitled shall go the the child or children of such deceased child of mine, in equal parts, and if there be no such child or children of any such deceased child of mine, then such income shall be divided equally among the survivors of said three (3) children of mine, and their descendants, per stirpes and not per capita. 79 '3: Upon my death, the said Trustees, and the survivor of them, or any successor Trustee, shall divide said trust fund, and any accumulated income thereon then in the hands of said Trustees, equally among my said three (3) children, and if any of my said children shall have died, leaving any child or children surviving, then the child or children of such deceased child of mine shall receive the share of said trust fund to which its or their parent would have been entitled, and if any of my said three (3) children shall have died without leaving any child or children him or her surviving, then the share to which such deceased child of mine would have been entitled shall go to my remaining children, and the descendants of any deceased child of mine per stirpes and not per capita. 80 '4: If during the continuance of this trust there shall be any increase in the principal of said trust estate by reason of the declaration of any stock dividends or other increases or emoluments all such increases shall be and remain a part of said trust estate and shall be held by said Trustees upon the same terms and conditions as are herein set forth. 81 '5: In the event of the death, refusal, inability, or failure for any reason to act of both said Trustees at any time during the continuance of this trust, then The Chicago Title & Trust Company shall become the successor, Trustee, with the same rights, powers, duties and obligations as are herein vested in and imposed upon the Trustees, and the survivor thereof, hereinbefore named. 82 '6: None of the beneficiaries of the trust estate shall at any time be permitted to anticipate the payments to which any of them may be entitled hereunder by any order, assignment or otherwise. 83 'In Witness Whereof I have hereunto set my hand and seal, at Chicago, Illinois, as of the 2nd day of January, 1920. 84 'Sidney M. Spiegel. (Seal) 85 'We hereby accept the above-named shares of stock and agree to hold the same subject to the terms above-mentioned, as of the 2nd day of January, 1920. 86 'Modie J. Spiegel. (Seal) 87 'Sidney M. Spiegel. (Seal)' 88 Appendix II. 89 The Northern Trust Company trust instrument No. 4477, which is one of the 'five trusts' considered in Reinecke v. Northern Trust Co., 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397, is as follows (italics supplied): 90 'This indenture, made this first day of March, in the year of our Lord one thousand nine hundred and nineteen (A.D. 1919), by and between Adolphus C. Bartlett, of the city of Chicago, county of Cook, and State of Illinois, the party of the first part, and the Northern Company (hereinafter termed the 'trustee'), of Chicago, a corporation organized and doing business under the laws of the State of Illinois, the party of the second part, witnesseth: 91 'Article First. 92 'That the party of the first part, being desirous of establishing and creating the trust hereinafter mentioned, for the purposes and upon the terms set forth, in consideration of the premises and influenced by love and affection for the beneficiaries hereinafter named, does hereby sell, assign, transfer, and set over unto the trustee the following securities, to wit: 93 1,000 shares of the stock of the Northern Trust Company. 94 784 shares of the stock of the Commonwealth Edison Company. 95 300 shares of the stock of the Illinois Central Railroad Company. 96 300 shares of the common stock of the Chicago & Northwestern Railroad Company. 97 200 shares of the preferred stock of the Chicago & Northwestern Railroad Company. 98 100 shares of the stock of the Pullman Company. 99 5 bonds of Armour & Company, for $1,000 each. 100 15 bonds of Morris & Company, for s1,000 each. 101 'Also the following-described notes secured by mortgage on real estate in Phoenix, Arizona: Maker: Amount Rollin S. Howard......... $5,000.00 W. S. Dorman.............. 5,000.00 Edgar O. Faucett......... 22,500.00 Elisha T. Waters.......... 5,000.00 Roy S. Goodrich.......... 40,000.00 Wilson W. Dobson.......... 7,000.00 Redwell Music Company.... 20,000.00 Pauline M. O'Neil........ 25,000.00 Pauline M. O'Neil......... 5,000.00 102 to be held and disposed of unde and in pursuance of this indenture. 103 'Article Second. 104 'The trustee shall have power and authority at any time, and from time to time— 105 '(1) To receive and collect all dividends declared and paid upon any shares of stock at any time subject to the terms of this agreement, and the interest upon all moneys, bonds, and obligations at any time held by it hereunder, and also all rents and other income which shall accrue or become due and payable on or from any of the trust estate hereunder. 106 '(2) To sell, transfer, assign, and convey any or all of the stocks, bonds, obligations, securities, real estate Or other property held at any time by said trustee under this instrument, and to invest and reinvest the proceeds thereof in either real or personal property, including dividend-paying stocks of corporations; provided, however, that during the life of said party of the first part said trustee shall be governed by any instructions or directions in writing given to it by said party of the first part in regard to the management, sale or investment of any part of the said trust estate, and said trustee shall be free from any liability or responsibility for any action by it done under or in pursuance of any such written direction or instruction. In no event shall any purchaser from the trustee, or any person or corporation dealing with the trustee, be required to ascertain the authority and power of the trustee to make any sale, conveyance, or transfer of any part of the trust estate held hereunder, but every such purchaser and all other parties shall be entitled to rely upon the delivery of the transfer, assignment, or conveyance by the trustee of any or all of said trust estate as having been in all respects fully authorized, and shall not be affected by any notice to the contrary, or be required to see to the application of the purchase money. 107 '(3) To exercise the voting power upon all shares of stock held by the trustee hereunder, and to exercise every power, election, and discretion, give every notice, make every demand, and do every act and thing in respect of any shares of stock or bonds, or other obligations and securities held by the trustee hereunder, which it might or could do if it were the absolute owner thereof; provided, however, that upon the written request of said first party it shall be the duty of the trustee to execute, or cause to be executed, to the person or persons named in such requests a proxy, entitling him or them (with full power of substitution) to vote in respect of any shares of stock in such written request or proxy defined and mentioned, any meeting or meetings of the stockholders of any corporation or corporations specified in such request and proxy. 108 '(4) To receive any and all stock dividends declared, and any other distribution which may be made by any corporation, any of whose shares of stock at the time constitute a part of the principal of the trust estate, and also all proceeds which may be paid on or in respect of any such shares of stock on the liquidation of the company issuing the same, or upon the sale (whether voluntary or involuntary) of its assets, or any part thereof, or which may be otherwise paid out of capital or on account of the principal of any bond, stock, or other security; and may in its discretion join in any plan of reorganization or of readjustment of any corporation, any of whose shares of stocks, bonds, or other securities or obligations may at any time constitute a part of the principal of the trust estate, and accept the substituted securities in and by said plan allotted in respect to the securities and obligations so held by the trustee. 109 '(5) To execute leases of any real estate which shall form a part of the said trust at any time, at such rental, and upon such terms, and for such length of time (not exceeding two hundred (200) years) as it may deem best; to erect buildings, or to change, alter, or make additions to any existing buildings upon any real estate which may form a art of said trust estate; and to do all other acts in relation to the said real estate which in the judgment of said trustee shall be needful or desirable to the proper and advantageous management thereof, so as to protect the same and make the same productive; provided, however, that in every case the said trustee shall observe and be governed by any instructions or requests in relation thereto made by an instrument in writing, signed by said first party. 110 'Article Third—Distribution and application of income. 111 '(1) During the joint lives of the said party of the first part and his wife, Abby H. Bartlett, the said trustee shall pay to the said Abby H. Bartlett the sum of two thousand dollars ($2,000.00) on the last day of each month, and the residue of said net income shall be accumulated in the hands of the said trustee and kept invested in the same manner as said trustee is authorized to invest the principal of said trust. 112 'The said payments to the said Abby H. Bartlett are in lieu of the monthly payments now being made to her under an existing agreement(s), and not in addition thereto. 113 '(2) From and after the death of the said party of the first part, the said payment of two thousand dollars ($2,000.00) in each month shall continue to be made to the said Abby H. Bartlett, until she shall either die or become entitled to a share of said first party's estate otherwise than under his will, bearing even date herewith; and the residue of said net income shall in each year be paid by said trustee to the four (4) children of said party of the first part, viz., Maie Bartlett Heard, Frederic Clay Bartlett, Florence Dibell Bartlett, and Eleanor Bartlett Perdue, or the survivors of them, in equal shares; provided, however, that in the event of the death of either of said children of said party of the first part leaving issue surviving, such surviving issue shall stand in the place of such deceased child and receive the share of said net income which such deceased child would have received if living; it being the intention of said party of the first part that all payments to his wife, Abby H. Bartlett, under this trust shall cease and be at an end upon her becoming entitled to any share or portion of his estate otherwise than under his will, bearing even date herewith, and that, subject to the payments hereinbefore directed to be made to said Abby H. Bartlett, the net income of said trust estate shall be paid to the children of said party of the first part (and the issue of any deceased child) in the shares above specified during the continuance of the trust hereby created. 114 'Article Fourth—Distribution of principal of trut estate. 115 'The trust hereby created shall terminate at the expiration of five (5) years from the death of the party of the first part unless the said Abby H. Bartlett shall then be living and be entitled to receive monthly payments out of the net income of said trust estate under the provisions of this indenture, in which case this trust shall continue until the death of said Abby H. Bartlett, and shal then terminate. 116 'Upon the termination or expiration of the trust hereby created, the trust estate then in the hands of said trustee shall be paid over and distributed as follows: 117 '(a) One-fourth (1/4) thereof to each of the four (4) children of said party of the first part hereinbefore named, viz, Maie Bartlett Heard, Frederic Clay Bartlett, Florence Dibell Bartlett, and Eleanor Bartlett Perdue; 118 '(b) If either of said four (4) children shall not then be living, his or her one-fourth (1/4) of said trust estate shall be paid over and distributed to the then surviving issue of such deceased child per stirpes; and in default of such surviving issue, then to the surviving issue of said party of the first part per stirpes. 'Article Fifth—Concerning the trustee. 119 'The trustee hereby accepts the trust created by this indenture, and agrees to act in accordance with its terms and provisions. The trustee may consult with counsel and shall be fully rotected in any action or nonaction taken, permitted or suffered by it in good faith and in accordance with the opinion of counsel selected or provided by it; and in case of legal proceedings involving the trustee or the principal of the trust estate, the trustee may defend such proceedings or may, upon being advised by such counsel that such action is necessary or advisable for the protection of the interests of the trustee, or of the beneficiaries, institute any legal proceedings. 120 'The trustee shall be reimbursed and indemnified against any and all liability, loss, or expense because of the holding of any shares of stock or other properties constituting a part of the principal of the trust estate, either in its own name or in the name of a nominee, and shall have a lien upon the principal of the trust estate and the income therefrom for the amount of any liability, loss, or expense which may be so incurred by it, including the expense of defending any action or proceeding instituted against it or such nominee by reason of any such holding. 121 'Out of the income of the principal of the trust estate the trustee shall pay all taxes, assessments, or other governmental charges which it may be required to pay or to retain because or in respect of any part of the principal of the trust estate or the income therefrom or the interest of the trustee therein, or the interest of any beneficiary or other person therein, under any present or future law of the United States, or of any State, county, municipality, or other taxing authority therein, any and all such taxes, assessments, or other governmental charges lawfully imposed being charged as a lien upon the said income, and in case of deficiency of said income upon the principal of the trust estate. 122 'All payments or distribution of income to beneficiaries in this indenture provided for shall be made out of net income, current or accumulated, then in the hands of the trustee. 123 'The said trustee, or any successor in trust, may resign at any time by giving notice in writing of such resignation to said first party while he shall live, and after his death by giving notice in writing of such resignation to either one of the beneficiaries hereinbefore named. 124 'In case of the resignation of any trustee acting hereunder, or of its disability or incapacity to further act as trustee, the said party of the first part, if living, and after his death a majority of the five (5) beneficiaries hereinbefore named, viz, the wife and four (4) children of said party of the first part, or a majority of the survivors of them, shall have power to appoint a successor in trust by an instrument in writing duly signed by him or them and delivered to said trustee, and upon the appointment of such successor in trust the said trustee shall convey, assign, transfer, and deliver to such successor in trust all of the trust estate then in its hands, and thereupon and thereafter such successor in trust shall have all the rights, powers, duties, and authority which are granted to or imposed on said original trustee under the provisions of this indenture. 125 'Article Sixth—miscellaneous provisions. 126 '(1) Said grantor has created the foregoing trusts to provide for the support and maintenance of the beneficiaries entitled to share in the income of said trust estate, and the said beneficiaries shall have no power to anticipate, assign, or otherwise dispose of or encumber their respective interests in said trust estate, and the same shall not be subject to be taken from them by process of law. 127 '(2) Any of the provisions of this trust deed may be altered, changed, or modified in any respect and to any extent at any time during the life of said party of the first part by the delivery to said trustee of an instrument in writing signed by said party of the first part and by a majority of the five (5) beneficiaries hereinbefore named, or by a majority of the survivors of said five beneficiaries. 128 '(3) The beneficiaries, or any or either f them, may act through an attorney in fact in signing any and all instruments delivered to the trustee under this indenture, with like effect as though signed in person, and any or either of said beneficiaries may act as such attorney in fact when authorized so to do. 129 'In witness whereof the parties hereto have executed this instrument, under seal, the day and year first above written. 130 'Adolphus C. Bartlett. (seal.) 131 'The Northern Trust Company, 132 'By Solomon A. Smith, President. 133 'Attest: 134 'H. H. Rockwell, 135 'Assistant Secretary.' 1 This Court of Appeals interpretation and application of § 811(c) was in conflict with the holding of the Third Circuit in Commissioner of Internal Revenue v. Church's Estate, 161 F.2d 11. We granted certiorari in both cases, arguments have been heard together, and we have today reversed the Church case, 335 U.S. 632, 69 S.Ct. 322. 2 The Tax Court's conclusion of law that the 'possession or enjoyment' clause of § 811(c) was inapplicable to the facts of this trust rested in part on its belief that Reinecke v. Northern Trust Co., 278 U.S. 339, 49 S.Ct. 123, 73 L.Ed. 410, 66 A.L.R. 397, had decided the issue. But the Hallock case was decided after Reinecke, and the question here involved was not specifically raised in the Reinecke case. Nor did the Court's opinion in that case, written by the late Chief Justice Stone, indicate that a transfer of bare legal title in a transfer must always be accepted as a conclusive showing that the possession and enjoyment provision of § 811(c) cannot be applied to the trust corpus. Cf. Court's opinion in Harrison v. Schaffner, 312 U.S. 579, 61 S.Ct. 759, 85 L.Ed. 1055, written by Chief Justice Stone. 3 Helvering v. Stuart, 317 U.S. 154, 162—165, 63 S.Ct. 140, 144—146, 87 L.Ed. 154; cf. Steele v. General Mills, 329 U.S. 433, 67 S.Ct. 439, 91 L.Ed. 402. 1 The terms 'reverter' and 'the possibility of a reverter' have been used frequently and freely in opinions and discussions of this general subject. They are used here to refer to the return or possible return to the settlor or to his estate, under conditions comparable to those here suggested, of property previously placed in trust by the settlor. They are not used in any strict or technical sense peculiar to the law of property. See also, I Paul, Federal Estate and Gift Taxation § 7.21, n. 1 (1942). They may refer, for example, to a reversionary interest, or a beneficial interest under a resulting trust, or merely some right to or control over a beneficial interest in the trust property and, in that sense, they include the 'string or tie' to the trust property that also has been referred to frequently in discussions of this subject. The term 'reversion' is used in its usual technical meaning in the law of property. 2 The Spiegel trust instrument is set forth in full in Appendix I, infra. 3 'Sec. 22. Gross income '(a) General definition. 'Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. * * *' 53 Stat. 9, 26 U.S.C. (1940 ed.) § 22(a), 26 U.S.C.A. § 22(a). 4 '* * * The settlor reserved to himself power to supervise the reinvestment of trust funds, to require the trustee to execute proxies, to his nominee, to vote any shares of stock held by the trustee, to control all leases executed by the trustee, and to appoint successor trustees. With respect to each of these five trusts a power was also reserved 'to alter, change or modify the trust,' which was to be exercised in the case of four of them by the settlor and the single beneficiary of each trust, acting jointly, and in the case of one of the trusts, by the settlor and a majority of the beneficiaries named, acting jointly.' 278 U.S. at page 344, 49 S.Ct. at page 124, 73 L.Ed. 410, 66 A.L.R. 397. 5 Upon the reargument of the instant case and the Church case, we requested counsel to discuss particularly nine questions insofar as those questions were relevant to the respective cases. The first question has been quoted supra, 335 U.S. at page 711, 69 S.Ct. at page 305. The rest are quoted below and, of these, numbers 2, 6, 8 and 9 bore upon this alternative solution: '2. Assuming that, under the applicable state law, there arose, by operation of law, a possible reverter in favor of the settlor's estate, did section 811(c) require that the value of the corpus, in view of the record in the case, be included in the settlor's gross estate for federal estate-tax purposes. '3. Did section 811(c) of the Internal Revenue Code, in 1939, require the inclusion in the settlor's gross estate of the value of the corpus of a trust because the settlor, by its terms had, in 1924, reserved to himself a right to the income of the trust until his death, the reservation thus being made before the March 3, 1931, amendment of that section? '4. Were the joint congressional resolution of 1931 (46 Stat. 1516—1517), and subsequent related estate-tax statutes, intended to be a repudiation of this Court's May v. Heiner (281 U.S. 238, 50 S.Ct. 286, 74 L.Ed. 826, 67 A.L.R. 1244) interpretation of the estate-tax statutes? '5. Did the May v. Heiner estate-tax interpretation survive the congressional resolution and this Court's holding and opinion in Helvering v. Hallock (309 U.S. 106, 60 S.Ct. 444, 84 L.Ed. 604, 125 A.L.R. 1368)? '6. Under section 811(c) is the 'possession and enjoyment' of the corpus of an inter vivos trust 'intended to take effect * * * at or after' the settlor's death, where he names himself as cotrustee with the broad control and administrative powers over the corpus and income here vested, and where the cor us is withheld from the beneficiaries until the settlor's death? '7. In the light of this Court's opinion in Helvering v. Hallock does the Hassett v. Welch (303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858) interpretation of the 1931 congressional resolution have controlling relevance in determining whether the estate tax shall be applied to the Church properties transferred to beneficiaries under a trust created before 1931 but in which Church retained the net income from the trust properties during his life? '8. Assuming that under the 'refined technicalities of the law of property' the 'possession and enjoyment' of the trust properties here be deemed to have passed to the beneficiaries when the trust was created, are the transfers so much 'akin to testamentary dispositions' as to make them subject to the estate-tax statutes? (See Helvering v. Hallock, 309 U.S. at page 112, 60 S.Ct. at page 448, 84 L.Ed. 604, 125 A.L.R. 1368.) '9. What is the effect of the rulings of Helvering v. Clifford (309 U.S. 331, 60 S.Ct. 554, 84 L.Ed. 788) upon these trusts?' Journal Supreme Court, Oct. Term, 1947, pp. 297—298. 6 A somewhat comparable but less direct conflict is presented by Goldstone v. United States, 325 U.S. 687, 65 S.Ct. 1323, 89 L.Ed. 1871, 159 A.L.R. 1330. There substantially complete control over the disposition of the proceeds of insurance contracts was placed by the insured in the discretion of his wife, who also was the primary beneficiary. A minority of this Court sought to apply the doctrines of the Hallock case and the rationale which inheres in the Clifford case to the extent of recognizing the transaction as, in substance, a completed gift to the wife of the insured, and therefore not subject to the estate tax. This Court, however, did not, in that case, apply the Clifford doctrine to the estate tax. But see Richardson v. Commissioner, 2 Cir., 121 F.2d 1, certiorari denied 314 U.S. 684, 62 S.Ct. 188, 86 L.Ed. 584, where it was held that, under the Clifford case, a trustee, with a broad power of revocation which might at any time be exercised for his own benefit, was himself liable for the income tax on the income of the trust. See also, Bunting v. Commissioner, 6 Cir., 164 F.2d 443, certiorari denied 333 U.S. 856, 68 S.Ct. 735; 47 Mich.L.Rev. 137 (1948). 7 See Helvering v. Stuart, 317 U.S. 154, 163, 164; 63 S.Ct. 140, 145, 146, 87 L.Ed. 154; MacGregor v. State Mutual Life Assur. Co., 315 U.S. 280, 62 S.Ct. 607, 86 L.Ed. 864. 8 'Applying this law to the instant case, we think it follows that the interests under this trust did not vest upon the execution of the trust, as contended by the taxpayer, and could only vest upon the happening of the condition precedent, namely, that the beneficiaries or some of them survive the settlor, and this was the 'event which brought the larger estate into being for the' beneficiaries.' Commissioner v. Spiegel's Estate, 7 Cir., 159 F.2d 257, 259. 9 'Where property is given in trust for one beneficiary for life and to another beneficiary in remainder, and before the termination of the trust the latter beneficiary dies intestate and without heirs or next of kin, it would seem that his interest passes to the state, and that a resulting trust will not arise in favor of the settlor or his estate. In such a case, since the entire beneficial in erest, subject to the preceding life estate in the other beneficiary, vested in the beneficiary entitled in remainder absolutely at the time of the creation of the trust, it would seem that the trust does not fail on his death, so as to give rise to a resulting trust, but his interest passes to the state as ultimus haeres. On the other hand, if the beneficial gift over is contingent, and the contingency does not occur, a resulting trust will arise in favor of the settlor or his estate.' 3 Scott On Trusts, § 411.5 (1939). 10 The Illinois cases establish the rule that, when a vested estate in remainder has been created, the divestment of that estate in favor of some other beneficiary can take place only in literal compliance with the divesting conditions set forth by the settlor. Henderson v. Harness, 176 Ill. 302, 52 N.E. 68. See Illinois Land & Loan Co. v. Bonner, 75 Ill. 315; McFarland v. McFarland, 177 Ill. 208, 217, 52 N.E. 281, 284, and Continental Illinois Nat. Bank & Trust Co. v. Kane, 308 Ill.App. 110, 31 N.E.2d 351. See also, 42 Ill.L.Rev. 561, 564. This does not leave room for reversion to the settlor by operation of law. 11 The basis of distinction necessarily rests with the form of the statement employed. A classic definition of the distinction between contingent and vested remainders is that in Gray, The Rule Against Perpetuities, § 108, quoted as follows in Lachenmyer v. Gehlbach, 266 Ill. 11, 18, 19, 107 N.E. 202, 205: 'A test which is generally reg rded as sufficient to determine the question, and which has been generally adopted, is stated as follows: 'If the conditional element is incorporated into the description of or into the gift to the remainderman, then the remainder is contingent, but if, after words, giving a vested interest, a clause is added divesting it, the remainder is vested. Thus, on a devise to A. for life, remainder to his children, but, if any child dies in the lifetime of A., his share to go to those who survive, the share of each child is vested, subject to be divested by its death. But on a devise to A. for life, remainder to such of his children as survive him, the remainder is contingent.' The language in the Spiegel and the Lachenmyer trusts is closely comparable. In each case the gift to children of the settlor is a vested gift. In the Spiegel trust the children's interest was a vested primary interest (subject to conditions subsequent) and in the Lachenmyer trust the children's interest was a vested remainder following a life interest in favor of the testator's wife (and in turn subject to conditions subsequent). In both cases the language making the gifts over is in the form of a divestiture—comparable to that in the classic example quoted above 'but if any child dies in the lifetime of A his share to go to those who survive, * * *.' (Italics supplied.) The material provision of the Spiegel trust, italics supplied, is as follows: '3. Upon my death, the said Trustees, and the survivor of them, or any successor Trustee, shall divide said trust fund, and any accumulated income thereon then in the hands of said Trustees, equally among my said three (3) children, and if any of my said children shall have died, leaving any child or children surviving, then the child or children of such deceased child of mine shall receive the share of said trust fund to which its or their parent would have been entitled, and if any of my said three (3) children shall have died without leaving any child or children him or her surviving, then the share to which such deceased child of mine would have been entitled shall go to my remaining children, and the descendants of any deceased child of mine per stirpes and not per capita.' The corresponding provision of the Lachenmyer trust, italics supplied, is as follows: 'Third. After the death of my said wife all of said property and estate above mentioned and described to go to my children, share and share alike, and shall any of my children die, then the children of such deceased child, should any children be surviving such deceased child, to take the share of the parent so deceased; and should any of my children die leaving no issue, then the share of such deceased child shall be divided equally among my surviving children.' Lachenmyer v. Gehlbach, supra, 266 Ill. at page 13, 107 N.E. at page 203. Contrasting provisions, specifically recognized by the court below as examples of contingent remainder in an inter vivos trust, are found in Klein v. United States, 283 U.S. 231, 232, 233, 51 S.Ct. 398, 399, 75 L.Ed. 996. The court below also cited Haward v. Peavey, 128 Ill. 430, 21 N.E. 503, 15 Am.St.Rep. 120, and Baley v. Strahan, 314 Ill. 213, 145 N.E. 359, involving wills and recognizing the contingent character of the remainders in the Klein case. 12 Webster's New International Dictionary, 2d Ed. (1938).
1112
335 U.S. 601 69 S.Ct. 384 336 U.S. 942 93 L.Ed. 1099 93 L.Ed. 266 KLAPPROTTv.UNITED STATES. No. 42. Argued Oct. 20, 1948. Decided Jan. 17, 1949. Motion for Clarification Denied April 18, 1949. See 336 U.S. 949, 69 S.Ct. 877. Judgment Amended April 4, 1949. See 69 S.Ct. 398. Mr. P. Bateman Ennis, of Washington, D. C., for petitioner. Mr. Robert L. Stern, of Washington, D. C., for respondent. Mr. Justice BLACK announced the judgment of the Court and delivered the following opinion in which Mr. Justice DOUGLAS joins. 1 This case raises questions concerning the power of federal district courts to enter default judgments depriving naturalized persons of their citizenship without hearings or evidence, and to set aside default judgments under some circumstances four years or more after the default judgments were entered. 2 The petitioner was born in Germany. In 1933 after a hearing a New Jersey state court entered a judgment admitting him to United States citizenship. Petitioner then took an oath renouncing allegiance to Germany and promising to bear true faith and allegiance to the United States, whereupon the court granted him a certificate of naturalization. See 8 U.S.C. § 735, 8 U.S.C.A. § 735. 3 Nine years later, the United States Attorney, acting pursuant to 8 U.S.C. § 738, 8 U.S.C.A. § 738, filed a complaint in the United States District Court of New Jersey to set aside the state court's judgment and cancel petitioner's certificate of naturalization. The complaint alleged generally that petitioner's oath of allegiance, etc., was false, that at the time of taking it petitioner well knew that he was not attached to the principles of the United States Constitution, and that he had not in fact intended thereafter to bear true allegiance to the United States or renounce and discontinue his allegiance and fidelity to Germany. In particular the complaint charged no more than that petitioner subsequent to 1935 had evidenced his loyalty to Germany and his disloyalty to this country by writings and speeches; that he was in 1942 and had been before that time a leader and member of the German American Bund and other organizations, the principles of which were alleged to be inimical to the Constitution of the United States and the happiness of its people; that these organizations were propagated and encouraged by enemies of the United States who believed in the ideology enunciated by Adolph Hitler. For the requirement that allegations of fraud be particularized, see Rule 9(b) of the Rules of Civil Procedure, 28 U.S.C.A. 4 Petitioner, though served with notice May 15, 1942, failed to answer the complaint within sixty days as required by 8 U.S.C. § 738(b), 8 U.S.C.A. § 738(b). But on July 7, 1942, before expiration of the sixty days, petitioner was arrested and confined in a New York jail on criminal charges brought by the United States. On July 17, 1942, the F deral District Court of New Jersey on motion of the United States Attorney, entered a judgment by default against petitioner in the denaturalization proceedings, set aside the 1933 state court judgment admitting him to citizenship, and cancelled his certificate of naturalization. 5 More than four years after the default judgment was rendered against him, and while petitioner was still a government prisoner, he filed in the District Court a verified petition praying that the court set aside the judgment. The United States did not deny any of the facts alleged in the verified petition. The District Court, necessarily accepting the undenied allegations as true, held that the petitioner had been guilty of 'wilful and inexcusable neglect' and accordingly dismissed the petition 'because of the defendant's laches.' 6 F.R.D. 450, 451. The Circuit Court of Appeals, rejecting petitioner's several contentions, affirmed, one judge dissenting. 3 Cir., 166 F.2d 273. 6 In considering the case we also must accept as true the undenied allegations of the petitioner. These facts are of great importance in considering some of the legal contentions raised. The alleged facts chronologically arranged are as follows: 1933 7 Nov. 16. Petitioner was naturalized by order of court. 1936 8 Nov. 17. Petitioner married an American citizen and now has one child by that marriage. 1942 9 Spring. Petitioner was seriously ill. The illness left him financially poor and so weakened that he was unable to work. 10 May 12 United States Attorney filed the complaint in the United States District Court of New Jersey to cancel petitioner's citizenship. 11 May 15. Complaint served on petitioner. He had no money to hire a lawyer. He drew a draft of an answer to the complaint and wrote a letter to the American Civil Liberties Union asking that they represent him without fee. 12 July 7. Arrested under federal indictment charging petitioner and others with conspiracy to violate the Selective Service Act, 50 U.S.C.A. Appendix, § 301 et seq. Taken before United States Commissioner at Newark, New Jersey; later carried to New York by Federal Bureau of Investigation agents, there put in prison, unable to make bond of $25,000 under which he was held. His letter to Civil Liberties Union taken from him by agents of the FBI eight days before expiration of time to answer cancellation of citizenship charge in New Jersey. The agents retained the letter, never mailing it. 1942 13 July 17. Judgment by default entered by New Jersey court in citizenship cancellation case. At the time, petitioner was in a New York jail awaiting trial under the selective service conspiracy case. No evidence was offered by the Government to prove its charges in the complaint for cancellation of citizenship. The government's case consisted or no more than a verification of this complaint by an FBI agent on information and belief, based on the agent's having read FBI files concerning petitioner. 14 July 7, 1942, date of arrest, to June 1943. While petitioner was still in jail, a lawyer was appointed by the New York District Court to defend petitioner in the selective service criminal case. At his request the New York lawyer promised to help him also in the New Jersey cancellation proceedings, but the lawyer neglected to do so. Petitioner was convicted and sentenced to penitentiary. 1943 15 June. Petitioner elected to begin service of the New York sentence pending appeal, was carried to and confined in federal institution in Michigan where he remained until January 30, 1944. [606] 1944 16 Jan. 30. Petitioner transferred from federal prison in Michigan to jail in the District of Columbia to be tried with twenty-nine other persons on a charge of sedition. 1945 17 June 11. This Court reversed petitioner's New York conviction, Keegan v. United States, 325 U.S. 478, 65 S.Ct. 1203, 89 L.Ed. 1745, but he continued to be held in the District of Columbia jail unt l November 22, 1946. 1946 18 Nov. 22 District of Columbia sedition case dismissed. United States v. McWilliams et al., D.C.Cir., 163 F.2d 695. The case had previously been tried for eight months, but before completion a mistrial was declared because of the death of the presiding judge. Shortly after dismissal of the sedition case petitioner, still a prisoner of the United States, was carried to Ellis Island for deportation on account of the cancellation of his citizenship under the New Jersey default judgment. 19 Dec. 9 This Court denied certiorari in three court actions unsuccessfully prosecuted by the Citizen's Protective League on behalf of 159 individuals including petitioner. (The League was a non-profit organization 'to insure equal rights for all and to safeguard the constitutional rights of all persons.' Citizens Protective League v. Clark, 81 U.S.App.D.C. 116, 155 F.2d 290, 291, certiorari denied, 329 U.S. 787, 67 S.Ct. 354, 91 L.Ed. 674. The complaint prayed that the Attorney General be enjoined from deporting the 159 individuals. Petitioner had been ordered deported March 27, 1946, while he was in the District of Columbia jail charged with sedition.) 1946 20 Dec. 12. Three days after this Court's denial of certiorari, in the action brought by the Citizens Protective League, petitioner, still a government prisoner at Ellis Island, stated the substance of the foregoing facts under oath and a petition was filed on his behalf in the New Jersey District Court to vacate the default judgment and grant him a trial on the merits. Petitioner's verified motion also alleged that the government's charges against him in the New Jersey court were untrue and he strongly asserted his loyalty to the United States. 1947 21 Feb. 7. District judge dismissed the petitioner's motion holding that petitioner had been guilty of laches in not arranging while in prison for defense of the cancellation of citizenship charge. 22 Thus, this petitioner has now been held continuously in prison by the Government for six and one-half years. During that period he served one and one-half years of a penitentiary punishment under a conviction which this Court held was improper. He was also held in the District of Columbia jail two years and ten months under an indictment that was later dismissed. It is clear therefore, that for four and one-half years this petitioner was held in prison on charges that the Government was unable to sustain. No other conclusion can be drawn except that this long imprisonment was wrongful. Whether the judgment by default should be set aside must therefore be decided on the undenied allegations that the Government, largely through the action of FBI agents, wrongfully held petitioner in New York, Michigan, and District of Columbia prisons, while the same Government, largely acting through the same or other FBI agents, caused a district court to revoke petitioner's citizenship on the ground that petitioner had failed to make appearance and defend in the New Jersey courts, although petitioner was at the time without funds to hire a lawyer. 23 First. Amended Rule 60(b) of the Federal Rule of Civil Procedure became effective March 19, 1948.1 That was after the District Court denied the motion to set aside this default judgment and after affirmance of the District Court's action by the Court of Appeals. For these reasons the Government contends that amended Rule 60(b) should not be applied here. In some respects, the amended rule grants courts a broader power to set aside judgments than did the old rule. Petitioner should be afforded the benefit of the more liberal amended 60(b). For Rule 86(b) made amended 60(b) applicable to 'further proceedings in actions then pending' unless it 'would work injustice' so to apply the rule. It seems inconceivable that one could think it would work any injustice to the Government to measure the petitioner's rights by this amended rule in th § case where all he asks is a chance to try the denaturalization proceeding on its merits. Amended Rule 60(b) should be applied. 24 Second. Amended Rule 60(b) authorizes a court to set aside 'a void judgment' without regard to the limitation of a year applicable to motions to set aside on some other grounds. It is contended that this judgment is void because rendered by a District Court without hearing any evidence. The judgment is void if the hearing of evidence is a legal prerequisite to rendition of a valid default judgment in denaturalization proceedings. While 5 U.S.C. § 738, 8 U.S.C.A. § 738, under which this denaturalization complaint was filed, plainly authorizes courts to revoke the citizenship of naturalized citizens after notice and hearing, it contains no explicit authorization for rendition of default judgments. Congressional intention to authorize court action in the absence of a citizen might be implied, however, from the provision for notice by publication in § 738(b). Aside from possible constitutional questions, it may therefore be assumed that the section authorizes rendition of a denaturalization judgment in a defendant's absence. But it does not necessarily follow that a court may also render judgment without proof of the charges made in a denaturalization complaint. And there is strong indication in § 738 and companion sections that Congress did not intend to authorize courts automatically to deprive people of their citizenship for failure to appear. 25 8 U.S.C. § 746, 8 U.S.C.A. § 746,2 makes it a felony for applicants for naturalization or others to violate federal laws relating to naturalization. Had petitioner been found guilty of making the false oath here charged, he could have been convicted of and punished for a felony under this section. But he could have been convicted only after indictment and a jury trial at which he would have been present and represented by counsel. A conviction would have required a proof of guilt beyond a reasonable doubt, on testimony of witnesses given in the presence of the accused who would have had an opportunity to cross-examine the witnesses against him. In the event of such a conviction under required procedural safeguards, § 738(e) authorizes courts to revoke citizenship and cancel naturalization certificates. There is a b oad gap between a § 738 denaturalization thus accomplished and the one ordered by the court in this proceeding. For here, the defendant was absent, no counsel or other representative of his was present, no evidence was offered, and the only basis for action was a complaint containing allegations, questionable from a procedural and substantive standpoint, verified by an FBI agent on information acquired by him from looking at hearsay statements in an FBI dossier. The protection Congress afforded in § 738(e) emphasizes the unfairness that would result from permitting denaturalizations in other § 738 proceedings without any evidence at all. 26 When we look to federal statutes other than § 738 we find no command and no express authority for courts to enter denaturalization judgments by default without proof of facts to support the judgment. No such authority or command is contained in Rule 55 of the Federal Rules of Civil Procedure which rule relates to default judgments. Section (e) of Rule 55 expressly bars all judgments against the United States without proof, but in cannot be inferred from this that proof is never required as a prerequisite to default judgments against all defendants other than the United States. For subdivision (b)(2) of Rule 55 expressly provides for representation of defaulting parties in some instances. Subdivision (b)(2) also directs that in certain specified instances courts, before entering judgments after default of appearance, shall make investigations, conduct hearings, and even grant jury trial. In addition to these particularized instances, subdivision (b)(2) also provides for court hearings before default judgment where 'it is necessary * * * to establish the truth of any averment by evidence or to make an investigation of any other matter.' 27 Thus it appears that statutes and rules have largely left for judicial determination the type of cases in which hearings and proof should precede default judgments. In this situation it is the final responsibility of this Court to formulate the controlling rules for hearings and proof. See McNabb v. United States, 318 U.S. 332, 431, 63 S.Ct. 608, 613, 87 L.Ed. 819. For the following reasons it seems peculiarly appropriate that a person's citizenship should be revoked only after evidence has established that the person has been guilty of prohibited conduct justifying revocation. 28 Denaturalization consequences may be more grave than consequences that flow from conviction for crimes. Persons charged with crime in United States courts cannot be convicted on default judgments unsupported by proof. Even decrees of divorce or default judgments for money damages where there is any uncertainty as to the amount must ordinarily be supported by actual proof. The reasons for requirement of proof in cases involving money apply with much greater force to cases which involve forfeiture of citizenship and subsequent deportation. This Court has long recognized the plain fact that to deprive a person of his American citizenship is an extraordinarily severe penalty. The consequences of such a deprivation may even rest heavily upon his children. 8 U.S.C. § 719, 8 U.S.C.A. § 719. As a result of the denaturalization here, petitioner has been ordered deported. 'To deport one who son claims to be a citizen obviously deprives him of liberty * * *. It may result also in loss of both property and life, or of all that makes life worth living.' Ng Fung Ho v. White, 259 U.S. 276, 284, 42 S.Ct. 492, 495, 66 L.Ed. 938. Because denaturalization proceedings have not fallen within the technical classification of crimes is hardly a satisfactory reason for allowing denaturalization without proof while requiring proof to support a mere money fine or a short imprisonment. 29 Furthermore, because of the grave consequences incident to denaturalization proceedings we have held that a burden rests on the Government to prove its charges in such cases by c ear, unequivocal and convincing evidence which does not leave the issue in doubt. Schneiderman v. United States, 320 U.S. 118, 158, 63 S.Ct. 1333, 1352, 87 L.Ed. 1796. This burden is substantially identical with that required in criminal cases—proof beyond a reasonable doubt. The same factors that caused us to require proof of this nature as a prerequisite to denaturalization judgments in hearings with the defendant present, apply at least with equal force to proceedings in which a citizen is stripped of his citizenship rights in his absence. Assuming that no additional procedural safeguards are required, it is our opinion that courts should not in § 738 proceedings deprive a person of his citizenship until the Government first offers proof of its charges sufficient to satisfy the burden imposed on it, even in cases where the defendant has made default in appearance. 30 Third. But even if this judgment of denaturalization is not treated as void, there remain other compelling reasons under amended 60(b) for relieving the petitioner of its effect. Amended 60(b) provides for setting aside a judgment for any one of five specified reasons or for 'any other reason justifying relief from the operation of the judgment.' The first of the five specified reasons is 'mistake, inadvertence, surprise, or excusable neglect'. To take advantage of this reason the Rule requires a litigant to ask relief 'not more than one year after the judgment, order, or proceeding was entered or taken.' It is contended that the one-year limitation bars petitioner on the premise that the petition to set aside the judgment showed, at most, nothing but 'excusable neglect.' And of course, the one year limitation would control if no more than 'neglect' was disclosed by the petition. In that event the petitioner could not avail himself of the broad 'any other reason' clause of 60(b). But petitioner's allegations set up an extraordinary situation which cannot fairly or logically be classified as mere 'neglect' on his part. The undenied facts set out in the petition reveal far more than a failure to defend the denaturalization charges due to inadvertence, indifference, or careless disregard of consequences. For before, at the time, and after the default judgment was entered, petitioner was held in jail in New York, Michigan, and the District of Columbia by the United States, his adversary in the denaturalization proceedings. Without funds to hire a lawyer, petitioner was defended by appointed counsel in the criminal cases. Thus petitioner's prayer to set aside the default judgment did not rest on mere allegations of 'excusable neglect.' The foregoing allegations and others in the petition tend to support petitioner's argument that he was deprived of any reasonable opportunity to make a defense to the criminal charges instigated by officers of the very United States agency which supplied the secondhand information upon which his citizenship was taken away from him in his absence. The basis of his petition was not that he had neglected to act in his own defense, but that in jail as he was, weakened from illness, without a lawyer in the denaturalization proceedings or funds to hire one, disturbed and fully occupied in efforts to protect himself against the gravest criminal charges, he was no more able to defend himself in the New Jersey court than he would have been had he never received notice of the charges. Under such circumstances petitioner's prayer for setting aside the default judgment should not be considered only under the excusable neglect, but also under the 'other reason' clause of 60(b), to which the one year limitation provision does not apply. 31 Fourth. Thus we come to the question whether petitioner's undenied allegations show facts 'justifying relief from the operation of the judgment.' It is contended that the 'other reason' clause should be interpreted so as to deny relief except under circumstances sufficient to have authorized relief under the common law writs of coram nobis and audita querela, and that the facts shown here would not have justified relief under these common law proceedings. One thing wrong with this contention is that few courts ever have agreed as to what circumstances would justify relief under these old remedies. To accept this contention would therefore introduce needless confusion in the administration of 60(b) and would also circumscribe it within needless and uncertain boundaries. Furthermore 60(b) strongly indicates on its face that courts no longer are to be hemmed in by the uncertain boundaries of these and other common law remedial tools. In simple English, the language of the 'other reason' clause, for all reasons except the five particularly specified, vests power in courts adequate to enable them to vacate judgments whenever such action is appropriate to accomplish justice. 32 Fifth. The undenied allegations already set out show that a citizen was stripped of his citizenship by his Government, without evidence, a hearing, or the benefit of counsel, at a time when his Government was then holding the citizen in jail with no reasonable opportunity for him effectively to defend his right to citizenship. Furthermore, the complaint in the denaturalization proceeding strongly indicates that the Government here is proceeding on inadequate facts, just as it did in the criminal cases it brought against petitioner. For if the Government had been able on a trial to prove no more than the particular facts it alleged in its denaturalization complaint, it is doubtful if its proof could have been held sufficient to revoke petitioner's citizenship under our holdings in Baumgartner v. United States, 322 U.S. 665, 64 S.Ct. 1240, 88 L.Ed. 1525; Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 87 L.Ed. 1796; Knauer v. United States, 328 U.S. 654, 659, 66 S.Ct. 1304, 1307, 90 L.Ed. 1500, and see Rule 9(b) of the Rules of Civil Procedure. And all petitioner has asked is that the default judgment be set aside so that for the first time he may defend on the merits. Certainly the undenied facts alleged justify setting aside the default judgment for that purpose. Petitioner is entitled to a fair trial. He has not had it. The Government makes no claim that he has. Fair hearings are in accord with elemental concepts of justice, and the language of the 'other reason' clause of 60(b) is broad enough to authorize the Court to set aside the default judgment and grant petitioner a fair hearing. 33 Mr. Justice BLACK, Mr., Justice DOUGLAS, Mr. Justice MURPHY, Mr. Justice RUTLEDGE and Mr. Justice BURTON agree that the District Court erred in dismissing the petition to set aside the default judgment, and that the Court of Appeals erred in affirming the District Court judgment. The judgments accordingly are reversed and the cause is remanded to the District Court with instructions to set aside the judgment by default and grant the petitioner a hearing on the merits raised by the denaturalization complaint. 34 Reversed and remanded. 35 It is so ordered. 36 For modified judgment see 335 U.S. 631, 69 S.Ct. 398. 37 Mr. Justice BURTON, while agreeing with Mr. Justice REED that a judgment of denaturalization may be entered by default without a further showing than was made in this case, believes that, under the special circumstances here shown on behalf of this petitioner, the judgment by default should be set aside and the petitioner should be granted a hearing on the merits of the issues raised by the denaturalization complaint. He therefore joins in the judgment of the Court as limited to the special facts of this case and without expressing an opinion upon any issues not now before this Court. 38 Mr. Justice RUTLEDGE, with whom Mr. Justice MURPHY agrees, concurring in the result. 39 To treat a denaturalization proceeding, whether procedurally or otherwise, as if it were nothing more than a suit for damages for breach of contract or one to recover overtime pay ignores, in my view, every con ideration of justice and of reality concerning the substance of the suit and what is at stake. 40 To take away a man's citizenship deprives him of a right no less precious than life or liberty, indeed of one which today comprehends those rights and almost all others.1 To lay upon the citizen the punishment of exile for committing murder, or even treason, is a penalty thus far unknown to our law and at most but doubtfully within Congress' power. U.S.Const., Amend. VIII. Yet by the device or label of a civil suit, carried forward with none of the safeguards of criminal procedure provided by the Bill of Rights, this most comprehensive and basic right of all, so it has been held, can be taken away and in its wake may follow the most cruel penalty of banishment. 41 No such procedures could strip a naturalborn citizen of his birthright or lay him open to such a penalty. I have stated heretofore the reasons why I think the Constitution does not countenance either that deprivation or the ensuing liability to such a punishment for naturalized citizens. Schneiderman v. United States, 320 U.S. 118, concurring opinion page 165, 63 S.Ct. 1333, 1355, 87 L.Ed. 1796; Knauer v. United States, 328 U.S. 654, dissenting opinion page 675, 66 S.Ct. 1304, 1315, 90 L.Ed. 1500. 42 Those views of the substantive rights of naturalized citizens have not prevailed here. But the Schneiderman decision and Baumgartner v. United States, 322 U.S. 665, 64 S.Ct. 1240, 88 L.Ed. 1525, required a burden of proof for denaturalization which in effect approximates the burden demanded for conviction in criminal cases, namely, proof beyond a reasonable doubt of the charges alleged as cause for denaturalization.2 This was in itself and to that extent recognition that ordinary civil procedures, such as apply in suits upon contracts and to enforce other purely civil liabilities, do not suffice for denaturalization and all its consequences. More than this it was not necessary to decide in the cases cited. No less should be required, in view of the substantial kinship of the proceedings with criminal causes, whatever their technical form or label. Cf. Knauer v. United States, 328 U.S. 654, dissenting opinion pages 675, 678, 66 S.Ct. 1304, 1315, 1316, 90 L.Ed. 1500. 43 This case, however, presents squarely the issue whether, beyond any question of burden or weight of proof, the ordinary civil procedures can suffice to take away the naturalized citizen's status and lay him open to permanent exile with all the fateful consequences following for himself and his family, often as in this case native-born Americans. The question in its narrower aspect is indeed whether those consequences can be inflicted without any proof whatever. 44 Under our system petitioner could not be convicted or fined for mail fraud, overceiling sales, or unlawfullly possessing gasoline ration coupons upon a judgment taken by default, much less under the circumstances this record discloses to have been responsible for the default. Yet his basic right to all the protec ions afforded him as a citizen by the Constitution can be stripped from him, so it is now urged, without an iota of proof, without his appearance or presence in court, without counsel employed or assigned to defend that right, and indeed with no real opportunity on his part to prepare and make such a defense. The case thus goes far beyond the Court's ruling in Knauer v. United States, supra. And, in my opinion, it brings to clearer focus whether, beyond the matter of satisfying the burden of proof required by the Schneiderman and Baumgartner cases, the Knauer case rightly permitted denaturalization through the civil procedures there pursued.3 45 If, in deference to the Court's rulings, we are to continue to have two classes of citizens in this country, one secure in their status and the other subject at every moment to its loss by proceedings not applicable to the other class, cf. Schneiderman v. United States, supra, concurring opinion 320 U.S. at page 167, 63 S.Ct. at page 1356, 87 L.Ed. 1796, Knauer v. United States, supra, dissenting opinion 328 U.S. at page 678, 66 S.Ct. at page 1316, 90 L.Ed. 1500, I cannot assent to the idea that the ordinary rules of procedure in civil causes afford any standard sufficient to safeguard the status given to naturalized citizens. If citizenship is to be defeasible for naturalized citizens, other than by voluntary renunciation or other causes applicable to native-born citizens,4 the defeasance it seems to me should be surrounded by no lesser protections than those securing all citizens against conviction for crime. Regardless of the name given it, the denaturalization proceeding when it is successful has all the consequences and effects of a penal or criminal conviction except that the ensuing liability to deportation is a greater penalty than is generally inflicted for crime. 46 Regarding the proceeding in this light, I do not assent in principle that the judgment of denaturalization can be taken by default or that the rules of civil procedure applicable in ordinary civil causes apply to permit such a result. 47 * * * 48 The grounds which I have stated for these conclusions logically would lead to casting my vote to reverse the judgment with instructions to dismiss the proceedings. Since, however, that disposition does not receive the concurrence of a majority, I join with those who, on other grounds, think that the judgment should be reversed and remanded for a new trial, in voting so to dispose of the cause. Accordingly I concur in the Court's judgment. I may add that, upon the assumption that rules of civil procedure may apply in denaturalization proceedings, I am substantially in accord with the views expressed by Mr. Justice BLACK. 49 Mr. Justice REED, with whom the CHIEF JUSTICE and Mr. Justice JACKSON join, dissenting. 50 In May, 1942, the United States began proceedings in the United States District Court for the District of New Jersey, against Klapprott under § 338 of the Nationality Act of 1940, 54 Stat. 1137, 1158, 8 U.S.C. § 738, 8 U.S.C.A. § 738,1 to cancel his certificate of naturalization, issued in 1933, on the ground that he had taken a false oath of allegiance to procure the certificate. The complaint alleged that at the time he took the oath petitioner knew that he was not attached to the principles of the Constitution of the United States and did not intend to renounce his allegiance to the German Reich; that petitioner 'is and has been notoriously and openly one of the chief leaders and active members of the German-American Bund' and other organizations sympathetic to German Reich; and that he had made 'numerous statements indicating his allegiance and loyalty to the German Reich and his disregard and disrespect for the principles and institutions of the United States of America.' 51 Petitioner was personally served with summons on May 15, 1942. Without the introduction of any evidence, judgment by default was entered against him on July 17, 1942, when he failed to answer within the sixty days allowed by § 338, supra, note 1. 52 In January, 1947, four and one-half years later, Klapprott petitioned the same district court which had entered the judgment of denaturalization for an order to show cause why that judgment should not be vacated. In an affidavit appended to his petition, he stated, after admitting receipt of the summons and complaint, that it was impossible for him to enter a defense and intimated that he was unable to take steps to have the judgment vacated prior to 1947. There is no allegation that he was ignorant of the entry of the judgment for any period of time. See Rules 5(a) and 77(d) of the Federal Rules of Civil Procedure. The reasons contained in the affidavit in support of this general statement can be summarized as follows: Petitioner, as a result of serious illness, was in poor health and 'unable to get around very well' at the time summons was served. Since he had no money with which to retain lawyer, he drafted a letter to the American Civil Liberties Union of New York requesting legal assistance. On July 7, 1942, seven days before time for filing appearance expired, he was arrested by federal authorities on an indictment in the United States District Court for the Southern District of New York, charging him with a conspiracy to violate the Selective Service Act. The letter was taken by these authorities, and, so far as Klapprott knew, never mailed. The court appointed a lawyer to defend petitioner in the New York conspiracy case. Petitioner informed him of the denaturalization proceeding, to which the lawyer promised to attend, but which he neglected, allowing judgment to be entered by default. Because of the lengthy trial and exceedingly high bail in connection with the conspiracy charge, petitioner was still unable to take steps to have the judgment vacated. He was found guilty of the conspiracy2 and committed to the Federal Correctional Institution at Milan, Michigan. On January 30, 1944, pursuant to another indictment—the 'Sedition Case'3 in the United States District Court for the District of Columbia—he was transferred to the District of Columbia. He remained in custody throughout the trial of this case until November 21, 1946, when the indictment was dismissed. Petitioner was then released but was immediately remanded to custody at Ellis Island for the purpose of deportation. From there he began this attempt to have the judg ent of denaturalization vacated. 53 Petitioner in his affidavit denied the allegations in the government's original complaint and asserted that he had a good and legal defense to the action for cancellation of his certificate of naturalization. 54 If petitioner is entitled to relief from the default judgment, he must qualify under one or more of the provisions of Rule 60(b) of the Federal Rules of Civil Procedure.4 I do not think that his petition or the affidavit in support thereof meets the requirements of that Rule for vacating a judgment. 55 First. The Court assumes, as I think it must, that § 338 of the Nationality Act authorizes default judgments of denaturalization. So much is clear from the provisions in (b) of that section for notice by publication and in (c) for the denaturalization of one who has left the United States to establish a permanent residence elsewhere. The action authorized by the section is civil.5 The general rule in civil actions is that notice places on the party to whom it is directed the responsibility to appear and defend or face the consequences. Rule 55 of the Federal Rules of Civil Procedure provides for default judgments in civil actions where the party against whom relief is sought fails to plead. The instances enumerated in (b)(2) and (e) of that rule, as those where a default judgment shall not be entered, do not include this case. 56 The Court suggests under caption Second, however, that the presentation of evidence is a prerequisite to the entry of such a judgment, and that a default judgment en ered without evidence is void and therefore subject to vacation without a definite time limit under (4) of Rule 60(b). It points out that Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 1335, 87 L.Ed. 1796, held that 'clear and convincing' evidence is necessary to support a judgment of denaturalization. The holding in that case, however, must be viewed in its setting, i.e., a contested case. The case does not support the proposition that any evidence, clear and convincing or otherwise, is required in an uncontested denaturalization proceeding. The general rule in civil actions is that none is necessary. Even though deportation is a most serious disaster to the deportee, it is founded here on uncontested allegations of adequate facts that must be taken as true. Although the committee which formulated the Federal Rules of Civil Procedure twice made a hearing on evidence a requirement for the entry of a default judgment, Rule 55(b)(2) and (e), no such requirement was expressed for cases of this sort. Except for cases of the sort specified in (b)(2) and (e), and those where the amount of damages is in question, I think the meaning of the Rule is that a default is the equivalent of an admission of allegations which are well pleaded. 57 The Court seeks support in the fact that other sections of the Nationality Act, 8 U.S.C. §§ 738(e) and 746, 8 U.S.C.A. §§ 738(e), 746, provide for denaturalization when the alien has been convicted of the crime of procuring his certificate of naturalization by knowingly false statements under oath. The protections which safeguard the alien in such a criminal prosecution are sought to be extended to him in civil proceedings under § 738. To me the very existence in the Act of two parallel methods of denaturalization indicate that the protections inherent in the criminal proceeding are not intended to apply to the civil proceeding such as we have here. 58 Since no expression of Congress can be found, either in the Federal Rules or in the Nationality Act, to the effect that evidence is necessary to validate a civil default judgment of denaturalization, I do not think it is the function of this Court to supply one. 59 The suggestion of the Court in caption Fifth that the government's complaint does not state a cause of action seems unwarranted. Certainly the government is not required to plead all its evidence. Since the complaint alleged fraud and specified in paragraph 6 thereof the circumstances constituting fraud, set out in the first paragraph of this dissent, I think Knauer v. United States, 328 U.S. 654, 66 S.Ct. 1304, 90 L.Ed. 1500, belies the suggestion that the complaint is defective. 60 Thus I dissent from the suggestion that the judgment against Klapprott can be vacated as void under Rule 60(b)(4). 61 Second. The Court holds that petitioner is entitled to relief under (6), the 'other reason' clause of Rule 60(b). This follows, it is said, from his allegations that he was held in custody and subjected to several criminal prosecutions by the United States. As I see it, such allegations and nothing to the single ground on which relief could have been based, i.e., 'mistake, inadvertence, surprise, or excusable neglect'. Rule 60(b)(1). I do not mean to say that an arrest and a subsequent period of imprisonment which interfered to the extent of depriving him of the opportunity to get legal assistance or the ability to litigate would not entitle him to relief. In view of the facts set out in petitioner's own affidavit, however, it is difficult to see how imprisonment subjected him to any injustice in this case or how it furnishes him with an additional ground for relief. Thus petitioner does not allege that he requested the return to him or the mailing of his letter to the American Civil Liberties Union. He does not, in fact could not, claim that imprisonment deprived him of the right to counsel. On the contrary he admits that counsel was made available in time to enter an appearance in the d naturalization proceeding, but that counsel negligently failed to do so. Petitioner's ability to litigate during this period of purportedly drastic confinement is illustrated by the fact that in 1945, as stated in his affidavit, he began and continued until its unsuccessful termination a suit to enjoin the Department of Justice from deporting him. 62 Since the facts alleged amount to a showing of mistake, inadvertence, or excusable neglect only, and since a definite time limit of one year is imposed on relief based on these grounds, the Rule cannot be said to contemplate a remedy without time limit based on the same facts. Otherwise the word 'other' in clause (6) is rendered meaningless.6 63 The Court intimates that petitioner was woefully mistreated by the government. If by this it is meant that he is entitled to relief from judgment based on 'misconduct of an adverse party', Rule 60(b)(3), the answer is that relief on this ground is limited to one year from the judgment. On analysis, however, the suggestion that petitioner's trials have been carried on in a way contrary to concepts of justice as understood in the United States and in a manner incompatible with the pattern of American justice falls flat in view of the simple facts. Klapprott had counsel and open hearings. The courts have cleared him of complicity in a conspiracy to impede the raising of an army and have dismissed a prosecution for seditious conspiracy. To be cleared on these charges can have no effect upon the propriety of his deportation for violation of our naturalization laws. 64 The limitations imposed by Rule 60(b) are expressions of the policy of finally concluding litigation within a reasonable time. Such termination of lawsuits is essential to the efficient administration of justice. I would not frustrate the policy by allowing litigants to upset judgments of long standing on allegations such as Klapprott's. 65 Mr. Justice FRANKFURTER, dissenting. 66 American citizenship other than when acquired by birth rests on a judicial judgment of naturalization. Tutun v. United States, 270 U.S. 568, 46 S.Ct. 425, 70 L.Ed. 738. Congress has explicitly defined the procedures for annulling such a judgment. Johannessen v. United States, 225 U.S. 227, 32 S.Ct. 613, 56 L.Ed. 1066; Luria v. United States, 231 U.S. 9, 34 S.Ct. 10, 58 L.Ed. 101; § 15 of the Act of June 29, 1906, 34 Stat. 596, 601, now formulated in 54 Stat. 1158, 8 U.S.C. § 738, 8 U.S.C.A. § 738. Neither in its terms nor on a fair interpretation of our naturalization laws has Congress indicated that such a judgment—the certificate of naturalization—cannot be annulled by default, that is, without active contest against such annulment, provided that ample opportunity has in fact been afforded to a citizen to contest. This Court is not justified in adding a requirement to the cancellation proceedings that Congress has seen fit to withhold unless some provision of the Constitution so demands. The only possible provision on which an argument can be based that citizenship cannot be canceled by a default judgment is the Due Process Clause of the Fifth Amendment. I reject the suggestion that it offends due process for a judgment of naturalization obtained by fraud to be set aside if the defrauding alien is afforded ample opportunity to contest the Government's claim that he obtained his citizenship through fraud and chooses not to avail himself of that opportunity but allows a judgment of cancellation to go by default. 67 But in rejecting the contention that citizenship cannot be lost by a default judgment, one does not necessarily embrace the other extreme of assimilating a naturalization judgment to any other civil judgment. This Court has held that because a naturalization judgment involves interests of a different order from those involved in other civil proceedings, the annulment of such a judgment is guided by considerations qualitatively different from those hat govern annulment of ordinarry judgments. Schneiderman v. United States, 320 U.S. 118, 63 S.Ct. 1333, 87 L.Ed. 1796; Baumgartner v. United States, 322 U.S. 665, 64 S.Ct. 1240, 88 L.Ed. 1525. The considerations that set a contested proceeding for cancelling a naturalization judgment apart from other suits to annul a judgment, are equally relevant to a default judgment causing such cancellation. To be sure, the public interest in putting a fair end to litigation and in not allowing people to sleep in their rights has its rightful claim even in proceedings resulting in deprivation of citizenship. But because citizenship has such ramifying significance in the fate of an individual and of those dependent upon him, the public interest to be safeguarded in the administration of justice will not be neglected if courts look more sharply and deal less summarily when asked to set aside a default judgment for cancellation of citizenship than is required of them in setting aside other default judgments. 68 It is in the light of these general considerations that I would dispose of the present case. I deem it governed by the liberalizing amendment to Rule 60(b) of the Federal Rules of Civil Procedure even though that became effective after the decision below. It is of course not a hard and fast rule that procedural changes are to be prospectively applied to a pending litigation at any stage at which it may be possible to do so without working an injustice. But since citizenship is at stake and this is in effect an appeal in equity to be dealt with as of the time of adjudication, it seems more consonant with equitable considerations to judge the case on the basis of the Rule now in force, even though the lower court did not have the opportunity to apply it. 69 If the petitioner had paid no attention to the proceeding brought to revoke his citizenship, he would, in my opinion, have no ground for opening up the default judgment simply because during all the years in question he was incarcerated. Men can press their claims from behind prison walls, as is proved by the fact that perhaps a third of the cases for which review is sought in this Court come from penitentiaries. But Klapprott was not indifferent to the proceeding to set aside his citizenship. He took active measures of defense which were aborted through no fault of his own. To be sure he did not follow up these efforts, but what he is saying in the motion made after his criminal cases were ended is in substance that he was so preoccupied with defending himself against the dire charges of sedition (the conviction for which this Court set aside in Keegan v. United States, 325 U.S. 478, 65 S.Ct. 1203, 89 L.Ed. 1745) and the threat of deportation, that the New Jersey cancellation proceeding naturally dropped from his mind after he had taken what he thought appropriate steps for his protection. The Government in effect demurred to this contention and the District Court's action, affirmed by the Court of Appeals, practically ruled as a matter of law that the claim of Alapprott, even if true, affords no relief. It is to me significant that one of the two affirming judges of the Court of Appeals decided the case largely on a close reading of the old Rule 60(b) and that the other rested his case on laches, while this Court fails to draw on laches for the support of its conclusion. 70 Rule 60(b) now provides five grounds for relief from default judgments and a sixth catch-all ground, 'any other reason justifying relief from the operation of the judgment'.1 The only one of the first five reasons to which Klapprott's conduct, as explicitly narrated, may plausibly be assigned is that of 'excusable neglect,' relief from which must be obtained within a year after a default judgment. But I think that if the inferences fairly to be drawn from the circumstances narrated by Klapprott were found to be true, they would take his case outside of the characterization of 'neglect,' because 'neglect' in the context of its sub ect matter carries the idea of negligence and not merely of non-action, and would constitute a different reason 'justifying relief from the operation of the judgment.' When a claim for citizenship is at stake, we ought to read a complaint with a liberality that is the antithesis of Baron Parke's 'almost superstitious reverence for the dark technicalities of special pleading.' See 15 Dict. Nat. Giog. 226. Therefore, what fairly emanates from such a complaint should be treated as though formally alleged. And so I would not deny Klapprott an opportunity, even at this late stage, to establish as a psychological fact what his allegations imply, namely that the harassing criminal proceedings against him had so preoccupied his mind that he was not guilty of negligence in failing to do more than he initially did in seeking to defend the denaturalization proceeding. But I would not regard such a psychological issue established as a fact merely because the Government in effect demurred to his complaint. Since the nature of the ultimate issue—forfeiture of citizenship—is not to be governed by the ordinary rules of default judgments, neither should the claim of a state of mind be taken as proved simply because the Government, feeling itself justified in resting on a purely legal defense, did not deny the existence of that state of mind. 71 To rule out the opportunity to establish the psychological implications of the complaint would be to make its denial a rule of law. It would not take much of the trial court's time to allow Klapprott to establish them if he can. The time would be well spent even if he should fail to do so; it would be more consonant with the safeguards which this Court has properly thrown around the withdrawal of citizenship than is the summary disposition that was made. But I would require Klapprott to satisfy the trial judge that what he impliedly alleges is true, and it is here that I part company with the majority. 72 April 4, 1949. 73 The motion of the respondent to modify the judgment of this Court in this case is granted. The judgment announced January 17, 1949, is amended to read: 'The judgment of the Court of appeals is reversed and the cause is remanded to the District Court with directions to receive evidence on the truth or falsity of the allegations contained in petitioner's petition to vacate the default judgment entered in the denaturalization proceedings.' 74 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY, and Mr. Justice RUTLEDGE dissent from the modification of the order. 1 Amended Rule 60(b) provides: 'On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, of other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as provided in Section 57 of the Judicial Code, U.S.C. Title 28, § 118, or to set aside a judgment for fraud upon the court. Writs of coram nobis, coram vobis, audita querela, and bills of review and bills in the nature of a bill of review, are abolished, and the procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.' 2 In 1948 Criminal Code, see 18 U.S.C.A. §§ 1015, 1421 et seq. 1 Cf. Ng Fung Ho v. White, 259 U.S. 276, 284, 42 S.Ct. 492, 495, 66 L.Ed. 938; Schneiderman v. United States, 320 U.S. 118, 112, and concurring opinion page 165, 63 S.Ct. 1333, 1355, 87 L.Ed. 1796; Knauer v. United States, 328 U.S. 654, dissenting opinion page 675, 66 S.Ct. 1304, 1314, 90 L.Ed. 1500. 2 See Schneiderman v. United States, 320 U.S. 118, 125, 136, 153, 154, 158, 159, 63 S.Ct. 1333, 1336, 1342, 1349, 1350, 1352, 1353, 87 L.Ed. 1796. At page 158 of 320 U.S., at page 1352 of 63 S.Ct. we said: 'We conclude that the Government has not carried its burden of proving by 'clear, unequivocal, and convincing' evidence which does not leave 'the issue in doubt', that petitioner obtained his citizenship illegally.' The concurring opinion in Knauer v. United States, 328 U.S. 654, 674, 66 S.Ct. 1304, 1315, 60 L.Ed. 1500, went upon the basis of satisfaction 'beyond all reasonable doubt' concerning the proof of the grounds asserted for denaturalization. 3 In the view of those dissenting, as well as that of the majority in the Kanauer case, the Government had satisfied fully the burden of proof required by the Schneiderman and Baumgartner decisions. See 328 U.S. 654, 675, 66 S.Ct. 1304, 1315, 90 L.Ed. 1500. 4 See Knauer v. United States, 328 U.S. 654, dissenting opinion pages 675, 676, 66 S.Ct. 1304, 1315, 1316, 90 L.Ed. 1500. 1 '(a) It shall be the duty of the United States district attorneys for the respective districts, upon affidavit showing good cause therefor, to institute proceedings in any court specified in subsection (a) of section 701 of this title in the judicial district in which the naturalized citizen may reside at the time of bringing suit, for the purpose of revoking and setting aside the order admitting such person to citizenship and canceling the certificate of naturalization on the ground of fraud or on the ground that such order and certificate of naturalization were illegally procured. '(b) The party to whom was granted the naturalization alleged to have been fraudulently or illegally procured shall, in any such proceedings under subsection (a) of this section, have sixty days' personal notice in which to make answer to the petition of the United States; and if such naturalized person be absent from the United States or from the judicial district in which such person last had his residence, such notice shall be given by publication in the manner provided for the service of summons by publication or upon absentees by the laws of the State or the place where such suit is brought.' 2 Conviction subsequently reversed in Keegan v. United States, 325 U.S. 478, 65 S.Ct. 1203, 89 L.Ed. 1745. 3 United States v. McWilliams et al., D.C.Cir., 163 F.id 695. 4 Rule 60(b): 'On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore donominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as provided in Section 57 of the Judicial Code, U.S.C., Title 28, § 118, or to set aside a judgment for fraud upon the court. Writs of coram nobis, coram vobis, audita querela, and bills of review and bills in the nature of a bill of review, are abolished, and the procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.' 5 A subsequent section, 54 Stat. 1163, 8 U.S.C. § 746(a)(1) and (d), 8 U.S.C.A. § 746(a)(1), (d), specifically providing for the criminal penalties of fine and imprisonment for the utterance of a false oath such as this indicates an intention that proceedings under § 338 are not criminal. Cf. Knauer v. United States, 328 U.S. 654, 671, 66 S.Ct. 1304, 1313, 90 L.Ed. 1500; Luria v. United States, 231 U.S. 9, 27, 28, 34 S.Ct. 10, 15, 58 L.Ed. 101; Sourino v. United States, 5 Cir., 86 F.2d 309; United States v. Wezel, D.C., 49 F.Supp. 16, 17. 6 Cf. Wallace v. United States, 2 Cir., 142 F.2d 240, 244. 1 Rule 60. Relief From Judgment or Order. * * * '(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, Etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. * * *'
12
336 U.S. 118 69 S.Ct. 469 93 L.Ed. 543 GOGGINv.DIVISION OF LABOR LAW ENFORCEMENT, OF CALIFORNIA. No. 35. Argued Nov. 15, 1948. Decided Jan. 31, 1949. Mr. Martin Gendel, of Los Angeles, Cal., for petitioner. Mr. Edward M. Belasco, of Los Angeles, Cal., for respondent. Mr. Robert W. Ginnane, of Washington, D.C., for The United States, as amicus curiae, by special leave of Court. Mr. Justice BURTON delivered the opinion of the Court. 1 This case deals with the question whether § 67, sub. c of the Bankruptcy Act,1 in determining priorities in the payment of claims, speaks as of the time of filing the petition in bankruptcy. The precise issue presented is whether a tax claim of the United States, secured by a lien perfected before the bankruptcy of the taxpayer and accompanied, at the time of the filing of the petition in bankruptcy, by the Collector of Internal Revenue's actual possession of the bankrupt's personal property, is required by § 67, sub. c of the Bankruptcy Act to be postponed in payment to debts owed by the bankrupt for wages to claimants specified in clause (2) of § 64, sub. a of that Act,2 because the Collector later relinquished possession of such property to the trustee of the bankrupt's estate for sale by him. We hold that the lien was valid and entitled to priority of payment as against the wage claims at the date of bankruptcy and that the Collector's relinquishment of ossession of the bankrupt's property did not change the result. 2 The facts are undisputed. Before March 26, 1946, a Collector of Internal Revenue of the United States perfected a statutory lien upon the personal property of the Kessco Engineering Corporation, a California corporation, and took actual possession of such property pursuant to that lien. He attempted to sell such assets and received bids for them but did not complete the sale because the price obtainable was unsatisfactory to him. He instituted a second sale but abandoned it when he relinquished possession of the property to the trustee of the bankrupt's estate. On March 26, 1946, the corporation filed its voluntary petition in bankruptcy in the United States District Court for the Southern District of California, was adjudicated a bankrupt and George T. Goggin (who later became the trustee of the bankrupt's estate and is the petitioner herein) was appointed receiver. Having qualified as receiver on March 28, 1946, he communicated with counsel for the Collector as to the Collector's turning over to him the bankrupt's personal property. In this connection, the referee in bankruptcy later made a finding of fact which was adopted by the District Court and is as follows: 3 '* * * the personal property of the bankrupt in the hands of the Collector of Internal Revenue, * * * was turned over to the said George T. Goggin, who accepted the terms and conditions of a telegram from J. P. Wenchel, Chief Counsel of the Bureau of Internal Revenue, reading as follows: 4 "Reference to telephone conversation today with Mr. Webb (member of the Los Angeles office of Internal Revenue) relative to Kessco Engineering Corporation, Bankrupt, no objection by this office to Collector relinquishing personal property to Trustee for sale. Government's lien to attach to proceeds from sale subject to Trustee's expenses including costs of sale. 5 "J. P. Wenchel, Chief Counsel." Goggin, in his final capacity as trustee for the bankrupt, caused these assets to be sold at public auction, pursuant to order of court. Having liquidated all assets which had come into his possession, he had on hand, on December 12, 1946, about $31,206.20, which the referee certified was insufficient to pay in full the expenses of administration, the lien claims, the prior labor claims and prior tax claims in the case. The gross amount of the amended claim of the Collector for taxes, penalties and interest was $78,865.03. The prior wage claims totaled $3,424.87. The Department of Employment of the State of California also filed a tax claim for $15,135, which was recorded as a lien on or about December 24, 1945. Neither the validity nor the amount of any of these claims is in issue here.3 6 The present proceeding originated in a petition filed with the referee in bankruptcy by the trustee, seeking an order to show cause why the order of priority of the payment of the tax and prior wage claims and the expenses of administration should not be determined by the District Court. The referee made findings of fact and reached conclusions of law upon the basis of which he ordered that, from the monies in the possession of the trustee, there first be paid the expenses of administration and that the balance of such funds then in the hands of the trustee be paid to the Collector of Internal Revenue in partial payment of the Government's tax claims and the interest thereon as prescribed by law.4 The District Court adopted the findings of fact and conclusions of law of the referee and entered judgment thereon. The Court of Appeals for the Ninth Circuit reversed that judgment and held that, by virtue of the Collector's relinquishment of his possession of the personal property of the bankrupt, the taxes due to the United States must be postponed, in payment, to the debts of the bankrupt for certain wage claims, pursuant to § 67, sub. c of the Bankruptcy Act. 165 F.2d 155. Because of the importance of the issue in the administration of the Bankruptcy Act, we granted certiorari. 333 U.S. 860, 68 S.Ct. 746. 7 The bankrupt filed its petition and was adjudicated a bankrupt on March 26, 1946. The personal property of the bankrupt was then subject to the perfected statutory lien of the United States for taxes and that lien was accompanied by the actual physical possession of the property by a Collector of Internal Revenue on behalf of the United States. Those facts completely satisfy § 67, sub. c of the Bankruptcy Act.5 Subsequent events, such as the relinquishment of his possession by the Collector in favor of the trustee of the bankrupt's estate for the purpose of facilitating a sale of the property by the trustee, are not material to the determination of the issue before us.6 The terms under which the Collector's possession was relinquished are consistent with and support this result but the Government's right to payment ahead of the wage claims was determined at the time of bankruptcy and did not arise out of the arrangement under which possession was relinquished to the trustee. 8 This general point of view in interpreting the Bankruptcy Act is one of long standing. In Everett v. Judson, 228 U.S. 474, 479, 33 S.Ct. 568, 569, 57 L.Ed. 927, 46 L.R.A.,N.S., 154, this Court said: 9 'We think that the purpose of the law was to fix the line of cleavage with reference to the condition of the bankrupt estate as of the time at which the petition was filed and that the property which vests in the trustee at the time of adjudication is that which the bankrupt owned at the time of the filing of the petition.' 10 See also, Myers v. Matley, 318 U.S. 622, 626, 63 S.Ct. 780, 783, 87 L.Ed. 1043, 145 A.L.R. 498; United States v. Marxen, 307 U.S. 200, 207, 208, 59 S.Ct. 811, 815, 83 L.Ed. 1222; Acme Harvester Co. v. Beekman Lumber Co., 222 U.S. 300, 307, 32 S.Ct. 96, 99, 56 L.Ed. 208.7 11 While § 67, sub. c was added to the Bankruptcy Act by the Chandler Act in 1938, we find nothing in it or in its legislative history to suggest an abandonment of the underlying point of view as to the time as of which it speaks and the general purpose of Congress to continue to safeguard intere ts under liens perfected before bankruptcy. City of Richmond v. Bird, 249 U.S. 174, 39 S.Ct. 186, 63 L.Ed. 543; In re Knox-Powell-Stockton Co., 9 Cir., 100 F.2d 979; In re Van Winkle, D.C., 49 F.Supp. 711. While § 64, as amended, somewhat readjusts priorities among unsecured claims, § 67 continues to recognize the validity of liens perfected before bankruptcy as against unsecured claims. Section 67, sub. b has clarified the validity of statutory liens, including those for taxes, even though arising or perfected while the debtor is insolvent and within four months of the filing of the petition in bankruptcy. It expressly recognizes that the validity of liens existing at the time of filing a petition in bankruptcy may be perfected under some circumstances after bankruptcy. Section 67, sub. c, as amended in 1938, does, however, introduce a new postponement in the payment of certain claims secured by liens to the payment of other claims specified in clauses (1) (for certain administrative expenses, etc.) and (2) (for certain wages) of § 64 sub. a. This subordination is, however, sharply limited. For example, it does not apply to statutory liens on real property, or to those actually enforced by sale before bankruptcy, or, in general, to liens on personal property when accompanied by actual possession of such property. The background of § 67, sub. c suggests a conscious purpose to give a narrowly limited priority to administrative expenses and to certain wage claims, at least in instances disclosing accumulations of unpaid taxes the priority of which wage earners had no good reason to suspect, and which might absorb the entire estate of the bankrupt unless postponed by these provisions.8 The purpose of § 67 in requiring a public warning of the existence of an enforceable statutory lien for taxes was served in the instant case not only by the steps taken to perfect the Government's lien but by the Collector's seizure and actual possession of the personal property of the taxpayer before the filing of the taxpayer's petition in bankruptcy. 12 The validity of the lien for taxes as against the wage claimants was thus established at the time of the filing of the petition in bankruptcy and the Collector's possession of the personal property of the bankrupt excluded the application of § 67, sub. c which otherwise would have postponed the payment of the tax claims to the payment of the claims for administrative expenses and wages specified in clauses (1) and (2) of § 64, sub. a. By his subsequent arrangement with the trustee for the sale of the bankrupt's property, the Collector did not lose the right to priority of payment accorded to the perfected tax liens, at the time of bankruptcy, as against the wage claims. 13 The arrangement between the Collector and the trustee was a natural and proper one. While the ame ded claim for taxes, penalties and interest, dated August 28, 1946, amounted to $78,865.03, the original claim, filed with the notices of lien prior to March 26, 1946, amounted to only $40,921.94 (even including the interest and costs later computed to August 21, 1946). Of this sum the taxes themselves amounted only to $34,848.04. To meet this, the trustee of the bankrupt's estate, on December 12, 1946, had on hand $31,206.20, evidently derived from the sale of the property originally held by the Collector. These figures, accordingly, suggest the possibility that, in March, 1946, it reasonably may have been supposed that a surplus above the amount of the Government's tax claim might be realized from the sale of the assets then in the possession of the Collector. In that event, it would have been the obviously appropriate procedure for the trustee to sell that property free and clear of liens and encumbrances and then distribute the proceeds to the rightful claimants. Even though there was little or no prospect of realizing such a surplus, it was reasonable and appropriate for the trustee, with the consent of the lien holder, thus to sell the property and distribute its proceeds. See Van Huffel v. Harkelrode, 284 U.S. 225, 52 S.Ct. 115, 76 L.Ed. 256, 78 A.L.R. 453; 6 Remington on Bankruptcy §§ 2577-2578, 4th Ed. 1937.9 The propriety of the present conclusion is emphasized by the fact that the opposite conclusion would, in many other cases, operate to the detriment both of unsecured creditors and of the statutory lien holders. It would compel a lien holder to retain his actual possession of the property in order to be sure of his full priority in the payment of his tax claim. He would be compelled to do this, even though by doing so the bankrupt's property probably would yield a smaller sales price than if sold by the trustee. Furthermore, the lien holder would be brought into sharp conflict with the trustee whenever there was reason to suppose that the proceeds of the sale might equal or exceed the tax claims secured by the lien. Under such circumstances the bankruptcy court generally may order the sale of the bankrupt's property by the trustee, free and clear of liens and encumbrances. See 4 Collier on Bankruptcy §§ 70.97, 70.99, 14th Ed. 1942; 6 Remington on Bankruptcy § 2583, 4th Ed. 1937. Accordingly, we find no substantial support for the argument that the lien holder's voluntary relinquishment of his possession of the bankrupt's property, in favor of the bankrupt's trustee, for the purpose of permitting the trustee to sell the property in this case, must carry with it, as a matter of law, a postponement of the payment of the lien holder's tax claim to that of the claims for wages here presented. 14 For these reasons the judgment of the Court of Appeals is reversed. 15 Reversed. 1 As § 67, sub. b is referred to in § 67, sub. c and is material to its interpretation, both subdivisions of § 67 are quoted below: 'Sec. 67. Liens and Fraudulent Transfers.-* * * 'b. The provisions of section 60 of this Act to the contrary notwithstanding, statutory liens in favor of employees, contractors, mechanics, landlords, or other classes of persons, and statutory liens for taxes and debts owing to the United States or any State or subdivision thereof, created or recognized by the laws of the United States or of any State, may be valid against the trustee, even though arising or perfected while the debtor is insolvent and within four months prior to the filing of the petition in bankruptcy or of the original petition under chapter X, XI, XII, or XIII of this Act, by or against him. Where by such laws such liens are required to be perfected and arise but are not perfected before bankruptcy, they may nevertheless be valid, if perfected within the time permitted by and in accordance with the requirements of such laws, except that if such laws require the liens to be perfected by the seizure of property, they shall instead be perfected by filing notice thereof with the court. 'c. Where not enforced by sale before the filing of a petition in bankruptcy or of an original petition under chapter X, XI, XII, or XIII of this Act, though valid under subdivision b of this section, statutory liens, including liens for taxes or debts owing to the United States or to any State or subdivision thereof, on personal property not accompanied by possession of such property, and liens whether statutory or not, of distress for rent shall be postponed in payment to the debts specified in clauses (1) and (2) of subdivision a of section 64 of this Act, and, except as against other liens, such liens for wages or for rent shall be restricted in the amount of their payment to the same extent as provided for wages and rent respectively in subdivision a of section 64 of this Act.' (Italics supplied.) Bankruptcy Act of 1898, c. 541, 30 Stat. 544, 564, as amended by the Chandler Act of June 22, 1938, c. 575, 52 Stat. 840, 875-877, 11 U.S.C. § 107(b) and (c), 11 U.S.C.A. § 107, subs. b, c. 2 Not only the portions of § 64, sub. a specifying the wages here in controversy but those otherwise related to the issues of this case are quoted below: 'Sec. 64. Debts Which Have Priority.-a. The debts to have priority, in advance of the payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the order of payment, shall be (1) the actual and necessary costs and expenses of preserving the estate subsequent to filing the petition; the fees for the referees' salary fund and for the referees' expense fund; the filing fees paid by creditors in involuntary cases; where property of the bankrupt, transferred or concealed by him either before or after the filing of the petition, shall have been recovered for the benefit of the estate of the bankrupt by the efforts and at the cost and expense of one or more creditors, the reasonable costs and expenses of such recovery; the costs and expenses of administration, including the trustee's expenses in opposing the bankrupt's discharge, the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reasonable attorney's fee, for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases and to the bankrupt in voluntary and involuntary cases, as the court may allow; (2) wages, not to exceed $600 to each claimant, which have been earned within three months before the date of the commencement of the proceeding, due to workmen, servants, clerks, or traveling or city salesmen on salary or commission basis, whole or part time, whether or not selling exclusively for the bankrupt; * * * (4) taxes legally due and owing by the bankrupt to the United States or any State or any subdivision t ereof: Provided, That no order shall be made for the payment of a tax assessed against any property of the bankrupt in excess of the value of the interest of the bankrupt estate therein as determined by the court: And provided further, That, in case any question arises as to the amount or legality of any taxes, such question shall be heard and determined by the court; and (5) debts owing to any person, including the United States, who by the laws of the United States in (is) entitled to priority, and rent owing to a landlord who is entitled to priority by applicable State law: Provided, however, That such priority for rent to a landlord shall be restricted to the rent which is legally due and owing for the actual use and occupancy of the premises affected, and which accrued within three months before the date of bankruptcy.' (Italics supplied.) Bankruptcy Act of 1898, c. 541, 30 Stat. 544, 563, as amended by the Chandler Act of June 22, 1938, c. 575, 52 Stat. 840, 874, and 60 Stat. 323, 330, 11 U.S.C. § 104(a), 11 U.S.C.A. § 104, sub. a. 3 There is no issue here as to the amount of penalties or interest included in the Collector's claim for taxes or as to the date to which interest on such claim shall be computed. There is no issue here as to any difference between statutory liens which were perfected more t an four months before the filing of the petition in bankruptcy or those perfected within less than that time. As the lien claimed by the United States exceeds the funds available, it has filed its brief in this Court as the sole real party in interest and in opposition to the wage claims. The respondent, Division of Labor Law Enforcement of the State of California, appears on behalf of all of the labor claimants. There also is no issue here as to the amount to be paid for the expenses of administration or the items which such expenses may include in addition to the costs of the sale made by the trustee. 4 Provision, not material here, was made that, if additional money came into the possession of the trustee, the court, upon notice to all necessary and proper parties, should determine the respective liens or priorities, if any there be, of the Collector of Internal Revenue, the prior labor claimants, the Department of Employment of the State of California and other tax claimants entitled to be heard. 5 See note 1, supra. 6 See Davis v. City of New York, 2 Cir., 119 F.2d 559. In that case the City perfected its lien for retail sales taxes by seizure of assets of the taxpayer, May 16, 1939. An involuntary petition in bankruptcy was filed June 7, 1939. against the taxpayer, and it was adjudicated a bankrupt, June 17, 1939. The assets were thereafter sold in execution of the warrant issued by the city treasurer. The levy was held to be a valid statutory levy as against the trustee of the bankrupt's estate and the City was allowed to retain the proceeds of the sale, under §§ 67, sub. b and 67, sub. c of the Bankruptcy Act, as amended in 1938. For a converse si uation see City of New York v. Hall, 2 Cir., 139 F.2d 935. In that case the City perfected its lien on personal property of the taxpayer, arising out of long delinquent business and sales taxes, by the delivery of warrants on January 14, 1943, at 10:15 a.m., to the city's warrant agent for execution and levy on the property. The actual levy on, and inventory of, the property and the posting of notices of sale were not effected until shortly after 4:30 p.m. In the meantime, at 4:22 p.m., an involuntary petition in bankruptcy was filed against the taxpayer and upon this he was adjudicated a bankrupt. Pursuant to an order of the bankruptcy court, a receiver sold the property and the court declined to order the net proceeds to be turned over to the City. The City was the holder of a statutory lien but, at the time of the filing of the petition in bankruptcy, the lien was not accompanied by actual possession of the personal property to which it attached. It, therefore, was subordinated, under § 67, sub. c of the Bankruptcy Act, to the administration expenses and wages covered by clauses (1) and (2) of § 64, sub. a. 'Notwithstanding the admonition of Section 67, sub. c, the City chose to slumber on its rights. Congress intended to penalize such somnolence.' 139 F.2d at page 936. 7 'Section 1. Meaning of Words and Phrases.-The words and phrases used in this Act and in proceedings pursuant hereto shall, unless the same be inconsistent with the context, be construed as follows: '(13) 'Date of bankruptcy', 'time of bankruptcy', 'commencement of proceedings', or 'bankruptcy', with reference to time, shall mean the date when the petition was filed; * * *' 30 Stat. 544, as amended by 52 Stat. 840, 841, 11 U.S.C.A. § 1(13). '* * * the rights of creditors are fixed by the Bankruptcy Act as of the filing of the petition in bankruptcy. This is true both as to the bankrupt and among themselves. The assets at that time are segregated for the benefit of creditors. The transfer of the assets to someone for application to 'the debts of the insolvent, as the rights and priorities of creditors may be made to appear' (citing Bramwell v. United States Fidelity & Guaranty Co., 269 U.S. 483, 490, 46 S.Ct. 176, 178, 70 L.Ed. 368), takes place as of that time.' United States v. Marxen, 307 U.S. 200, 207, 208, 59 S.Ct. 811, 815, 83 L.Ed. 1222. 'The general rule in bankruptcy is that the filing of the petition freezes the rights of all parties interested in the bankrupt estate. Exceptions only emphasize the rule. Whatever disagreement in opinion there may have been on the matter prior to the Act of 1938, it is now clear that statutory liens may be valid if they arise before bankruptcy although they are perfected after bankruptcy, if the perfection is within the time permitted by and in accordance with the requirements of applicable law.' 4 Collier on Bankruptcy 228-229, 14th Ed. 1942. 8 These provisions apparently originated in Amendments proposed by the National Bankruptcy Conference which were before Congress in a Committee Report Analysis of H.R.12889, 74th Cong., 2d Sess. (1936). This report states that the bill was introduced by Mr. Chandler, May 28, 1936, containing Amendments proposed by the National Bankruptcy Conference, and the several Sections are ac- companied by explanatory notes. Section 67, sub. c, as there proposed, resembles substantially the Section as finally enacted. The note explanatory of it is attributed to Jacob I. Weinstein, a member of the Conference, includes the following statement: 'Section 64 (of the Bankruptcy Act before amendment by the Chandler Act) is declaratory of a policy that the costs and expenses in connection with a bankruptcy proceeding and its administration shall be first paid in distribution. It is a sound policy and is in accordance with the general principles well established in liquidation proceedings. But Section 67 of the Act does not apply the same limitation with respect to valid liens. The Supreme Court, in the case of City of Richmond v. Bird, 1919, 39 S.Ct. 186, 63 L.Ed. 543, 43 Am.Bankr.Rep. 260, resolved the conflict in the lower court decisions by holding that the priority provisions of Section 64 do not apply to liens valid under Section 67. * * * 'It is significant that in recent years state legislatures have been enacting special legislation in favor of tax claims, public debts, and a variety of private claims. Statistics in the bankruptcy cases show that the effective administration of the bankruptcy law has seriously suffered therefrom. Such claims, particularly tax liens, often consume the entire estate, leaving nothing for the payment of the costs and expenses of administration incurred in reducing the assets to cash. In many such cases the tax liens represent an accumulation of delinquent items covering a long period of time, w thout any attempt on the part of tax collectors to enforce payment prior to the bankruptcy proceeding. 'There is therefore need for a provision to protect the administration costs and expenses; and similar considerations apply to wage claims. Accordingly we have selected, from among the priorities fixed by Section 64 (as revised), these particular items for protection. However, by reason of the historical development and the inherent differences existing in the incidents attaching to real and personal property, it would seem advisable to restrict the remedy thus provided to liens on personal property, where such liens have not been enforced by sale prior to bankruptcy.' (Italics supplied.) Id. at page 212, n. 1. At that time the bill did not also except from subordination statutory tax liens on personal property 'accompanied by possession of such property.' The addition of that clause gives it special emphasis and suggests its appropriate effect as a warning to other claimants that the property, so possessed, will not be available in the first instance for the administrative expenses and wage claims specified in clauses (1) and (2) of § 64, sub. a. The report filed by Mr. Chandler for the Committee on the Judiciary, July 29, 1937, to accompany the bill then known as H.R.8046 merely stated: 'In subdivisions b and c statutory liens are protected and permitted to be perfected if the time allowed by law for perfecting them has not expired.' H.R.Rep.No.1409, 75th Cong., 1st Sess. 34 (1937), and see references to §§ 64 and 67, sub. c on pages 9, 15, 16. See also, Weinstein, The Bankruptcy Law of 1938 (1938): 'This subdivision is new and is designed to correct an inequitable condition which existed under the old Act, particularly with respect to tax liens allowed, through the inaction of tax authorities, to be accumulated over a long period of time. Frequently, such liens consumed the entire estate, even to the exclusion of the costs and expenses incurred in the proceeding. While subd. a of sec. 64 provides for priority of payment of such costs and expenses, such payment is prior only to the other unsecured debts and does not affect or impair valid liens, whether statutory or otherwise. But tax claims may take the form of unsecured debts due to the sovereign, and thus payable by way of priority in the order as provided in sec. 64, or the form of liens created by local statutes. As indicated, if the tax claim takes the form of a lien, or is reduced to the form of a lien, it is not affected by the provisions of sec. 64. In view of the inequitable condition above referred to, there was need for a provision to protect the administration costs and expenses, and like considerations of public policy required a similar protection for wage claimants. However, the historical development, and the inherent differences in the incidents attaching to real and personal property, made it advisable to restrict the remedy provided by this paragraph to liens on personal property, but, in respect even to personal property, the provisions are applicable only where the property has not been reduced to possession or where the liens have not been enforced by sale prior to bankruptcy.' (Italics supplied in the second instance.) At pages 144, 145. 9 The only question then arising would be as to the extent to which the trustee might deduct from those proceeds his general expenses of administration, as well as the costs of the sale itself. This question was touched upon in the agreement with the trustee but no issue is presented here as to it.
1112
336 U.S. 53 69 S.Ct. 413 93 L.Ed. 497 WILKERSONv.McCARTHY et al. No. 53. Argued Dec. 6, 1948. Decided Jan. 31, 1949. Rehearing Denied March 28, 1949. See 336 U.S. 940, 69 S.Ct. 744. Parnell Black, of Salt Lake City, Utah, for petitioner. Dennis McCarthy, of Salt Lake City, Utah, for respondents. Mr. Justice BLACK delivered the opinion of the Court. 1 The petitioner, a railroad switchman, was injured while performing duties as an employee of respondents in their railroad coach yard at Denver, Colorado. He brought this action for damages under the Federal Employers' Liability Act.1 2 The complaint alleged that in the performance of his duties in the railroad yard it became necessary for him to walk over a wheel-pit on a narrow boardway, and that due to negligence of respondents, petitioner fell into the pit and suffered grievous personal injuries. The complaint further alleged that respondents had failed to furnish him a safe place to work in several detailed particulars, namely, that the pit boardway (1) was not firmly set, (2) was not securely attached, and (3) although only about 20 inches wide, the boardway had been permitted to become greasy, oily, and slippery, thereby causing petitioner to lose his balance, slip, and fall into the pit. 3 The respondents in their answer to this complaint admitted the existence of the pit and petitioner's injuries as a result of falling into it. They denied, however, that the injury resulted from the railroad's negligence, charging that plaintiff's own negligence was the sole proximate cause of his injuries. On motion of the railroad the trial judge directed the jury to return a verdict in its favor. The Supreme Court of Utah affirmed, one judge dissenting. Utah, 187 P.2d 188. 4 The opinion of the Utah Supreme Court strongly indicated, as the dissenting judge pointed out, that its finding of an absence of negligence on the part of the railroad rested on that court's independent resolution of conflicting testimony. This Court has previously held in many cases that where jury trials are required, courts must submit the issues of negligence to a jury if evidence might justify a finding either way on those issues. See, e.g., Lavender v. Kurn, 327 U.S. 645, 652, 653, 66 S.Ct. 740, 743, 744, 90 L.Ed. 916; Bailey v. Central Vermont Ry., 319 U.S. 350, 354, 63 S.Ct. 1062, 1064, 1065, 87 L.Ed. 1444; Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 68, 63 S.Ct. 444, 451, 452, 87 L.Ed. 610, 143 A.L.R. 967; and see Brady v. Southern R. Co., 320 U.S. 476, 479, 64 S.Ct. 232, 234, 88 L.Ed. 239. It was because of the importance of preserving for litigants in FELA cases their right to a jury trial that we granted certiorari in this case. 5 The evidence showed the following facts without dispute: 6 Petitioner fell into the pit July 26, 1945. The pit, constructed in 1942, ran approximately forth feet east and west underneath three or more parallel tracks which crossed the pit from north to south. The pit was 11 feet deep and 4 feet 2 1/2 inches wide, with cement walls and floor. Car wheels in need of repair were brought to the pit, lowered into it, there repaired, and then lifted from the pit for return to use. When not in use the pit was kept solidly covered with heavy boards. These boards were used as a walkway by all employees. When the pit was in use the cover boards were removed except one 75 pound 'permanent board' 22 inches wide and 4 feet 2 1/2 inches long. While the solid covering was off, this 'permanent board,' built to fit snugly and firmly, was unquestionably used as a walkway by all employees up to about Mav 1, 1945. 7 On this latter date, the railroad put up 'safety chains' fastened to guard posts, inclosing 16 1/2 feet of the pit, on its north, south and west sides. The posts, 42 inches high, fitted into tubes imbedded in the ground, the tubes being larger than the posts—enough larger to allow the posts to work freely. The chains, attached two inches from the top of the posts, ere to be kept up while the pit was in use and taken down when the pit was not in use. They were up when plaintiff slipped from the 'permanent board' into the pit. At that time a tourist car was standing over the pit on track '23 1/2.' This track '23 1/2' was east of the two east chain posts, its west rail being about 36 inches, and the tourist car overhand about 7 inches from the two east chain supporting posts.2 The floor of the 'overhang' was about 51 inches above the ground, or 9 inches above the top of the posts, thus allowing an unobstructed clearance of 51 inches under the overhand. The 'permanent board' was inside the chain enclosure, the board's east side being about 9 1/2 inches from the two eastern chain posts. Despite the proximity of the tourist car to the posts there was sufficient space east of each chain post so that pit workers had access to and used the board as a walkway. One of the defendant's witnesses, a very large man weighing 250 pounds, passed through it, though according to his testimony, with 'very bad discomfort.' Petitioner was a much smaller man, weighing 145 pounds, and it was by passing between one of these posts and the tourist car that petitioner reached the 'permanent board' which bridged the pit. Oil from wheels would sometimes accumulate at the bottom of the pit, and as stated by the Utah Supreme Court the 'permanent board' was 'almost certain to become greasy or oily' from use by the pit-men. 8 Neither before nor after the chains were put up, had the railroad ever forbidden pit workers or any other workers to walk across the pit on the 'permanent board.' Neither written rules nor spoken instructions had forbidden any employees to use the board. And witnesses for both sides testified that pit workers were supposed to, and did, continue to use the board as a walkway after the chains and posts were installed. The Utah Supreme Court nevertheless held that erection of the chain and post enclosure was itself the equivalent of company orders that no employees other than pit workers should walk across the permanent board when the chains were up. And the Utah Supreme Court also concluded that there was insufficient evidence to authorize a jury finding that employees generally, as well as pit workers, had continued their long standing and open practice of crossing the pit on the permanent board between the time the chains were put up and the time petitioner was injured. 9 It is the established rule that in passing upon whether there is sufficient evidence to submit an issue to the jury we need look only to the evidence and reasonable inferences which tend to support the case of a litigant against whom a peremptory instruction has been given. Viewing the evidence here in that way it was sufficient to show the following: Switchmen and other employees, just as pit workers, continued to use the permanent board to walk across the pit after the chains were put up as they had used it before. Petitioner3 and another witness4 employed on work around the pit, testified positively that such practice continued. It is true that witnesses for the respondents testified that after the chains were put up only the car men, in removing and applying wheels, used the board 'to walk from one side of the pit to another * * *.' Thus the conflict as to continued use of the board as a walkway after erection of the chains was whether the pit workers alone continued to use it as a walkway, or whether employees generally so used it. While this left only a very narrow conflict in the evidence, it was for the jury, not the court, to resolve the conflict. 10 It was only as a result of its inappropriate resolution of this conflicting evidence that the State Supreme Court affirmed the action of the trial court in directing the verdict. Following its determination of fact the Utah Supreme Court acted on the assumption that the respondents 'had no knowledge, actual or constructive, that switchmen were using the plank to carry out their tasks,' (187 P.2d 196), and the railroad had 'no reason to suspect' that empl yees generally would so use the walkway. From this, the Court went on to say that respondents 'were only required to keep the board safe for the purposes of the pit crewmen * * * and not for all the employees in the yard.' But the court emphasized that under different facts maintenance of 'a 22-inch board for a walkway, which is almost certain to become greasy or oily, constitutes negligence.' And under the evidence in this case as to the board, grease and oil, the court added: 'It must be conceded that if defendants knew or were charged with knowledge that switchmen and other workmen generally in the yard were habitually using the plank as a walkway in the manner claimed by plaintiff, then the safety enclosure might be entirely inadequate, and a jury question would have been presented on the condition of the board and the adequacy of the enclosure.' We agree with this last quoted statement of the Utah court, and since there was evidence to support a jury finding that employees generally had habitually used the board as a walkway, it was error for the trial judge to direct a verdict in favor of respondent. 11 There was, as the state court pointed out, evidence to show that petitioner could have taken a slightly longer route and walked around the pit, thus avoiding the use of the board. This fact, however, under the terms of the Federal Employers' Liability Act, would not completely immunize the respondents from liability if the injury was 'in part' the result of respondents' negligence. For while petitioner's failure to use a safer method of crossing might be found by the jury to be contributory negligence, the Act provides that 'contributory negligence shall not bar a recovery, but the damages shall be diminished by the jury in proportion to the amount of negligence attributable to such employee * * *.' 12 Much of respondents' argument here is devoted to the proposition that the Federal Act does not make the railroad an absolute insurer against personal injury damages suffered by its employees. That proposition is correct, since the Act imposes liability only for negligent injuries. Cf. Coray v. Southern Pac. Co., 335 U.S. 520, 69 S.Ct. 275. But the issue of negligence is one for juries to determine according to their finding of whether an employer's conduct measures up to what a reasonable and prudent person would have done under the same circumstances. And a jury should hold a master 'liable for injuries attributable to conditions under his control when they are not such as a reasonable man ought to maintain in the circumstances', bearing in mind that 'the standard of care must be commensurate to the dangers of the business.' Tiller v. Atlantic Coast Linc R. Co., 318 U.S. 54, 67, 63 S.Ct. 444, 451, 87 L.Ed. 610, 143 A.L.R. 967. 13 There are some who think that recent decisions of this Court which have required submission of negligence questions to a jury make, 'for all practical purposes, a railroad an insurer of its employees.' See individual opinion of Judge Major, Griswold v. Gardner, 7 Cir., 155 F.2d 333, 334. But see Judge Kerner's dissent from this view 155 F.2d 333, at page 337 and Judge Lindley's dissenting opinion 155 F.2d 333, at pages 337, 338. This assumption, that railroads are made insurers where the issue of negligence is left to the jury, is inadmissible. It rests on another assumption, this one unarticulated, that juries will invariably decide negligence questions against railroads. This is contrary to fact, as shown for illustration by other Federal Employers Liability cases, Barry v. Reading Co., 3 Cir., 147 F.2d 129, certiorari denied, 324 U.S. 867, 65 S.Ct. 912, 89 L.Ed. 1422; Benton v. St. Louis-San Francisco R. Co., Mo. Sup., 182 S.W.2d 61, certiorari denied, 324 U.S. 843, 65 S.Ct. 676, 89 L.Ed. 1405. And cf. Bruner v. McCarthy, 105 Utah 399, 142 P.2d 649, certiorari dismissed for reasons stated, 323 U.S. 673, 65 S.Ct. 126, 89 L.Ed. 547. Moreover, this Court stated some sixty years ago when considering the proper tribu al for determining questions of negligence: 'We see no reason, so long as the jury system is the law of the land and the jury is made the tribunal to decide disputed questions of fact, why it should not decide such questions as these as well as others.' Jones v. East Tennessee, V. & G.R. Co., 128 U.S. 443, 445, 9 S.Ct. 118, 32 L.Ed. 478. And peremptory instructions should not be given in negligence cases 'where the facts are in dispute, and the evidence in relation to them is that from which fair-minded men may draw different inferences.' Washington & G.R. Co. v. McDade, 135 U.S. 554, 572, 10 S.Ct. 1044, 1049, 34 L.Ed. 235. Such has ever since been the established rule for trial and appellate courts. See Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 67, 68, 63 S.Ct. 444, 451, 452, 87 L.Ed. 610, 143 A.L.R. 967. Courts should not assume that in determining these questions of negligence juries will fall short of a fair performance of their constitutional function. In rejecting a contention that juries could be expected to determine certain disputed questions on whim, this Court, speaking through Mr. Justice Holmes, said: 'But it must be assumed that the constitutional tribunal does its duty, and finds facts only because they are proved.' Aikens v. State of Wisconsin, 195 U.S. 194, 206, 25 S.Ct. 3, 6, 49 L.Ed. 154. 14 In reaching its conclusion as to negligence, a jury is frequently called upon to consider many separate strands of circumstances, and from these circumstances to draw its ultimate conclusion on the issue of negligence. Here there are many arguments that could have been presented to the jury in an effort to persuade it that the railroad's conduct was not negligent, and many counter arguments which might have persuaded the jury that the railroad was negligent. The same thing is true as to whether petitioner was guilty of contributory negligence. Many of such arguments were advanced by the Utah Supreme Court to support its finding that the petitioner was negligent and that the railroad was not.5 But the arguments made by the State Supreme Court are relevant and appropriate only for consideration by the jury, the tribunal selected to pass on the issues. For these reasons, the trial court should have submitted the case to the jury, and it was error for the Utah Supreme Court to affirm its action in taking the case from the jury. 15 It is urged by petitioner that other fact issues should have been submitted to the jury in addition to those we have specifically pointed out. We need not consider these contentions now, since they may not arise on another trial of the case. 16 The judgment of the Supreme Court of Utah is reversed and the cause is remanded for further action not inconsistent with this opinion. It is so ordered. 17 Reversed and remanded. 18 Mr. Justice FRANKFURTER, concurring. 19 Trial by jury as guaranteed by the Constitution of the United States and of the several States presupposes a jury under proper guidance of a disinterested and competent trial judge. Herron v. Southern Pacific Co., 283 U.S. 91, 51 S.Ct. 383, 75 L.Ed. 857. It is an important element of trial by jury which puts upon the judge the exacting duty of determining whether there is solid evidence on which a jury's verdict could be fairly based. When a plaintiff claims that an injury which he has suffered is attributable to a defendant's negligence—want of care in the discharge of a duty which the defendant owed to him—it is the trial judge's function to determine whether the evidence in its entirety would rationally support a verdict for the plaintiff, assuming that the jury took, as it would be entitled to take, a view of the evidence most favorable to the plaintiff. If there were a bright line dividing negligence from non-negligence, there would be no problem. Only an incompetent or a wilful judge would take a case from the jury when the issue should be left to the jury. But since questions of negligence are questions of degree, often very nice differences of degree, judges of competence and conscience have in the past, and will in the future, disagree whether proof in a case is sufficient to demand submission to the jury. The fact that a third court thinks there was enough to leave the case to the jury does not indicate that the other two courts were unmindful of the jury's function. The easy but timid way out for a trial judge is to leave all cases tried to a jury for jury determination, but in so doing he fails in his duty to take a case from the jury when the evidence would not warrant a verdict by it. A timid judge, like a biased judge, is intrinsically a lawless judge. 20 These observations are especially pertinent to suits under the Federal Employers' Liability Act. The difficulties in these cases derive largely from the outmoded concept of 'negligence' as a working principle for the adjustments of injuries inevitable under the technological circumstances of modern industry. This cruel and wasteful mode of dealing with industrial injuries has long been displaced in industry generally by the insurance principle that underlies workmen's compensation laws. For reasons that hardly reflect due regard for the interests of railroad employees, 'negligence' remains the basis of liability for injuries to them. It is, of course, the duty of courts to enforce the Federal Employers' Liability Act, however outmoded and unjust in operation it may be. But so long as negligence rather than workmen's compensation is the basis of recovery, just so long will suits under the Federal Employers' Liability Act lead to conflicting opinions about 'fault' and 'proximate cause.' The law reports are full of unedifying proof of these conflicting views, and that too by judges who seek conscientiously to perform their duty by neither leaving everything to a jury nor, on the other hand, turning the Federal Employers' Liability Act into a workmen's compensation law. 21 Considering the volume and complexity of the cases which obviously call for decision by this Court, and considering the time and thought that the proper disposition of such cases demands, I do not hink we should take cases merely to review facts already canvassed by two and sometimes three courts even though those facts may have been erroneously appraised. The division in this Court would seem to demonstrate beyond peradventure that nothing is involved in this case except the drawing of allowable inferences from a necessarily unique set of circumstances. For this Court to take a case which turns merely on such an appraisal of evidence, however much hardship in the fallible application of an archaic system of compensation for injuries to railroad employees may touch our private sympathy, is to deny due regard to the considerations which led the Court to ask and Congress to give the power to control the Court's docket. Such power carries with it the responsibility of granting review only in cases that demand adjudication on the basis of importance to the operation of our federal system; importance of the outcome merely to the parties is not enough. It has been our practice to dismiss a writ of certiorari even after it was granted where argument exposed a want of conflict or revealed that the case involved no more than its particular facts.1 I believe we should adhere to this practice in the present case. 22 But the importance of adhering to this practice cannot be seen in the perspective of a single case. Despite the mounting burden of the Court's business, this is the thirtieth occasion in which a petition for certiorari has been granted during the past decade to review a judgment denying recovery under the Federal Employers' Liability Act in a case turning solely on jury issues. The only petition on behalf of a carrier that brought such a case here during this period was dismissed, and rightly, as improvidently granted. McCarthy v. Bruner, 322 U.S. 718, 64 S.Ct. 1047, 88 L.Ed. 1558; 323 U.S. 673, 65 S.Ct. 126, 89 L.Ed. 547. Nor does what the United States Reports disclose regarding the disposition of petitions for certiorari tell the whole story of the Court's exercise of discretion in granting or denying them. This is so because of adherence, on the whole, to the wise practice of not publicly recording the vote of the Justices. Of course, some light on the situation is derivatively shed by the disclosed position of the Justices on the merits of the cases. But the unavailable data are, as can readily be imagined, especially relevant in the case of such a recurring problem as granting or denying certiorari under a particular statute. 23 I would, therefore, dismiss the petition as having been improvidently granted. Since, however, that is not to be done, I too have been obliged to recanvass the record and likewise think that there was here enough evidence to go to the jury. 24 Mr. Justice BURTON, having concurred in the Court's opinion, also joins this opinion. 25 Mr. Justice DOUGLAS, concurring. 26 While I join in the opinion of the Court, I think it appropriate to take this occasion to account for our stewardship in this group of cases. 27 The Federal Employers' Liability Act was designed to put on the railroad industry some of the cost for the legs, eyes, arms, and lives which it consumed in its operations. Not all these costs were imposed, for the Act did not mak the employer an insurer. The liability which it imposed was the liability for negligence. But judges had created numerous defenses—fellow-servant rule, assumption of risk, contributory negligence—so that the employer was often effectively insulated from liability even though it was responsible for maintenance of unsafe conditions of work. The purpose of the Act was to change that strict rule of liability, to lift from employees the 'prodigious burden' of personal injuries which that system had placed upon them, and to relieve men 'who by the exigencies and necessities of life are bound to labor' from the risks and hazards that could be avoided or lessened 'by the exercise of proper care on the part of the employer in providing safe and proper machinery and equipment with which the employee does his work.'1 28 That purpose was not given a friendly reception in the courts. In the first place, a great maze of restrictive interpretations were engrafted on the Act, constructions that deprived the beneficiaries of many of the intended benefits of the legislation. See Seaboard Air Line Ry. v. Horton, 233 U.S. 492, 34 S.Ct. 635, 58 L.Ed. 1062, L.R.A.1915C, 1, Ann.Cas. 1915B, 475; Toledo, St. L. & W.R. Co. v. Allen, 276 U.S. 165, 48 S.Ct. 215, 72 L.Ed. 513; and the review of the cases in Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 62-67, 63 S.Ct. 444, 448-451, 87 L.Ed. 610, 143 A.L.R. 967. In the second place, doubtful questions of fact were taken from the jury and resolved by the courts in favor of the employer. This Court led the way in overturning jury verdicts rendered for employees. See Chicago, M. & St. P.R. Co. v. Coogan, 271 U.S. 472, 46 S.Ct. 564, 70 L.Ed. 1041; Missouri Pac. R. Co. v. Aeby, 275 U.S. 426, 48 S.Ct. 177, 72 L.Ed. 351; New York Central R. Co. v. Ambrose, 280 U.S. 486, 50 S.Ct. 198, 74 L.Ed. 562. And so it was that a goodly portion of the relief which Congress had provided employees was withheld from them. 29 The first of these obstacles which the courts had created could be removed by Congress. In 1939 Congress did indeed move to release the employees from the burden of assumption of risk which the Court had reimposed on them. 53 Stat. 1404, 45 U.S.C. § 54, 45 U.S.C.A. § 54; Tiller v. Atlantic Coast Line R. Co., supra. The second evil was not so readily susceptible of Congressional correction under a system where liability is bottomed on negligence. Since the condition was one created by the Court and beyond effective control by Congress, it was appropriate and fitting that the Court correct it. In fact, a decision not to correct it was to let the administration of this law be governed not by the aim of the legislation to safeguard employees but by a hostile philosophy that permeated its interpretation. 30 The basis of liability under the Act is and remains negligence. Judges will not always agree as to what facts are necessary to establish negligence. We are not in agreement in all cases. But the review of the cases coming to the Court from the 1943 Term to date2 and set forth in the Appendix to this opinion shows, I think, a record more faithful to the design of the Act than previously prevailed. 31 Of the 55 petitions for certiorari filed during this period, 20 have been granted. Of these one was granted at the instance of the employer, 19 at the instance of an employee. In 16 of these cases the lower court was reversed for setting aside a jury verdict for an employee or taking the case f om the jury. In 3 the lower court was sustained in taking the case from the jury. In the one case granted at the instance of the employer we held that it had received the jury trial on contributory negligence to which it was entitled. In these 20 cases we were unanimous in 10 of the decisions which we rendered on the merits. 32 Of the 35 petitions denied, 21 were by employers claiming that jury verdicts were erroneous or that new trials should not have been ordered. The remaining 14 were filed by employees. In 10 of these the lower court had withheld the case from the jury and rendered judgment for the employer, in 3 it had sustained jury verdicts for the employer and in 1 reversed a jury verdict for the employee and directed a new trial. 33 From this group of cases three observations can be made: 34 (1) The basis of liability has not been shifted from negligence to absolute liability. 35 (2) The criterion governing the exercise of our discretion in granting or denying certiorari is not who loses below but whether the jury function in passing on disputed questions of fact and in drawing inferences from proven facts has been respected. 36 (3) The historic role of the jury in performing that function, see Jones v. East Tennessee, V. & G.R. Co., 128 U.S. 443, 445, 9 S.Ct. 118, 32 L.Ed. 478; Washington & G.R. Co. v. McDade, 135 U.S. 554, 572, 10 S.Ct. 1044, 1049, 1050, 34 L.Ed. 235; Bailey v. Central Vermont Ry., supra, is being restored in this important class of cases. 37 Mr. Justice MURPHY and Mr. Justice RUTLEDGE join in this opinion. 38 APPENDIX. I. Cases in which certiorari was granted: 39 A. Where lower court which took the case from the jury or set aside a jury verdict for an employee was reversed: Tennant v. Peoria & P.U.R. Co., 321 U.S. 29, 64 S.Ct. 409, 88 L.Ed. 520; Tiller v. Atlantic Coast Line R. Co., 323 U.S. 574, 65 S.Ct. 421, 89 L.Ed. 465; Blair v. Baltimore & O.R. Co., 323 U.S. 600, 65 S.Ct. 545, 89 L.Ed. 490; Keeton v. Thompson, 326 U.S. 689, 66 S.Ct. 135, 90 L.Ed. 405; Lavender v. Kurn, 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916; Cogswell v. Chicago & E.I.R. Co., 328 U.S. 820, 66 S.Ct. 1122, 90 L.Ed. 1601; Jesionowski v. Boston & M.R. Co., 329 U.S. 452, 67 S.Ct. 401, 91 L.Ed. 416, 169 A.L.R. 947; Ellis v. Union P.R. Co., 329 U.S. 649, 67 S.Ct. 598, 91 L.Ed. 572; Pauly v. McCarthy, 330 U.S. 802, 67 S.Ct. 962, 91 L.Ed. 1261; Myers v. Reading Co., 331 U.S. 477, 67 S.Ct. 1334, 91 L.Ed. 1615, Safety Appliance Act, 45 U.S.C.A. § 11; Lillie v. Thompson, 332 U.S. 459, 68 S.Ct. 140; Anderson v. Atchison, T. & S.F.R. Co., 333 U.S. 821, 68 S.Ct. 854; Eubanks v. Thompson, 334 U.S. 854, 68 S.Ct. 1528; Penn. v. Chicago & N.W.R. Co., 335 U.S. 849, 69 S.Ct. 79; Coray v. Southern Pac. Co., 335 U.S. 520, 69 S.Ct. 275; Wilkerson v. McCarthy, 336 U.S. 53, 69 S.Ct. 413. 40 B. Where lower court which set aside a jury verdict for an employee or rendered judgment for the employer on questions of law was sustained: Brady v. Southern R. Co., 320 U.S. 476, 64 S.Ct. 232, 88 L.Ed. 239; Hunter v. Texas Electric R. Co., 332 U.S. 827, 68 S.Ct. 203; Eckenrode v. Pennsylvania R. Co., 335 U.S. 329, 69 S.Ct. 91. 41 C. Where lower court which upheld the jury's verdict on the issues of negligence and contributory negligence was sustained: McCarthy v. Bruner, 323 U.S. 673, 65 S.Ct. 126, 89 L.Ed. 547. II. Cases in which certiorari was denied: 42 A. Where lower court withheld case from jury and rendered judgment for the employer: Beamer v. Virginian R. Co., 321 U.S. 763, 64 S.Ct. 486, 88 L.Ed. 1060; Cowdrick v. Pennsylvania R. Co., 323 U.S. 799, 65 S.Ct. 555, 89 L.Ed. 637; Negro v. Boston & M.R. Co., 324 U.S. 862, 65 S.Ct. 867, 89 L.Ed. 1419; Fantini v. Reading Co., 325 U.S. 856, 65 S.Ct. 1185, 89 L.Ed. 1976; Scarborough v. Pennsylvania R. Co., 326 U.S. 755, 66 S.Ct. 93, 90 L.Ed. 453; Chisholm v. Reading Co., 329 U.S. 807, 67 S.Ct. 502, 91 L.Ed. 688; Waller v. Northern P. Terminal Co., 329 U.S. 742, 67 S.Ct. 45, 91 L.Ed. 640; Wolfe v. Henwood, 332 U.S. 773, 68 S.Ct. 88; Las gna v. McCarty, 332 U.S. 829, 68 S.Ct. 205; Trust Co. of Chicago v. Erie R. Co., 334 U.S. 845, 68 S.Ct. 1513. 43 B. Where lower court sustained a jury verdict for the employer: Barry v. Reading Co., 324 U.S. 867, 65 S.Ct. 912, 89 L.Ed. 1422; Benton v. St. Louis-San Francisco R. Co., 324 U.S. 843, 65 S.Ct. 676, 89 L.Ed. 1405; Benson v. Missouri-Kansas-Texas R. Co., 332 U.S. 830, 68 S.Ct. 206. 44 C. Where lower court reversed a jury verdict for the employee and directed a new trial: Owens v. Union Pac. R. Co., 323 U.S. 740, 65 S.Ct. 57, 89 L.Ed. 593. 45 D. Where lower court sustained jury verdict for the employee or held that the employee's case should have gone to the jury: Southern Ry. Co. v. Jester, 323 U.S. 716, 65 S.Ct. 44, 89 L.Ed. 576; Thompson v. Godsby, 323 U.S. 719, 65 S.Ct. 48, 89 L.Ed. 579; Northern Pac. R. Co. v. Bimberg, 323 U.S. 752, 65 S.Ct. 87, 89 L.Ed. 602; Terminal R. Ass'n of St. Louis v. Copeland, 323 U.S. 799, 65 S.Ct. 554, 89 L.Ed. 637; Chicago & E.I.R. Co. v. Waddell, 323 U.S. 732, 65 S.Ct. 69, 89 L.Ed. 587; Boston & M.R. Co. v. Cabana, 325 U.S. 873, 65 S.Ct. 1414, 89 L.Ed. 1991; Texas & P.R. Co. v. Riley, 325 U.S. 873, 65 S.Ct. 1414, 89 L.Ed. 1991; Terminal R. Ass'n of St. Louis v. Mooney, 326 U.S. 723, 66 S.Ct. 28, 90 L.Ed. 428; Terminal R. Ass'n of St. Louis v. Schorb, 326 U.S. 786, 66 S.Ct. 470, 90 L.Ed. 477; Baltimore & O. Chicago Terminal R. Co. v. Howard, 328 U.S. 867, 66 S.Ct. 1377, 90 L.Ed. 1637; Gardner v. Griswold, 329 U.S. 725, 67 S.Ct. 74, 91 L.Ed. 628; Henwood v. Chaney, 329 U.S. 760, 67 S.Ct. 113, 91 L.Ed. 655; Boston & M.R. v. Meech, 329 U.S. 763, 67 S.Ct. 124, 91 L.Ed. 658; Wheeling & L.E.R. Co. v. Keith, 332 U.S. 763, 68 S.Ct. 67; Delaware, Lackawanna & W.R. Co. v. Mostyn, 332 U.S. 770, 68 S.Ct. 82; Atlantic Coast Line R. Co. et al. v. Meeks, 333 U.S. 827, 68 S.Ct. 453; Wabash R. Co. v. Hampton, 333 U.S. 833, 68 S.Ct. 460; Fleming v. Husted, 333 U.S. 843, 68 S.Ct. 661; Unity R. Co. v. Kurimsky, 333 U.S. 855, 68 S.Ct. 734; Baltimore & O.R. Co. v. Skidmore, 335 U.S. 816, 69 S.Ct. 34. 46 E. Where lower court set aside a jury verdict for the employer because of erroneous instructions and ordered a new trial. Pennsylvania R. Co. v. McCarthy, 329 U.S. 812, 67 S.Ct. 635, 91 L.Ed. 693. 47 Mr. Chief Justice VINSON, dissenting. 48 In my view of the record, there is no evidence, nor any inference which reasonably may be drawn from the evidence when viewed in the light most favorable to the petitioner, which could sustain a verdict for him. This leads me to conclude that the trial court properly directed a verdict for the respondents, and I would affirm. 49 Mr. Justice JACKSON, dissenting. 50 The trial court, after hearing all the evidence and seeing the witnesses, directed a verdict of no cause of action. The Utah Supreme Court, in a careful opinion, decided two propositions: First, whether this Court still holds that a plaintiff 'in order to recover must still show negligence on the part of the employer.' It resolved its doubts by relying upon statements of this Court to the effect that it still does adhere to that requirement.1 Second, whether there is any evidence of negligence. On a careful analysis, it found no evidence whatever of negligence in this case. Following established principles of law, it concluded that it would have been error to let such a case go to the jury, and therefore affirmed the trial court's refusal so to do. 51 This Court now reverses and, to my mind at least, espouses the doctrine that any time a trial or appellate court weighs evidence or examines facts it is usurping the jury's function. But under that rule every claim of injury would require jury trial, even if the evidence showed no possible basis for a finding of negligence. Determination of whether there could be such a basis is a function of the trial court, even though it involves weighing evidence and examining facts. I think we are under a duty to examine the record impartially if we take such cases and to sustain the lower courts where, as here, a finding of negligence would obviously be without basis in fact. 52 I am not unaware that even in this opinion the Court continues to pay lip service to the doctrine that liability in these cases is to be based only upon fault. But its standard of fault is such in this case as to indicate that the principle is without much practical meaning. 53 This record shows that both the wheel pit into which plaintiff fell and the board on which he was trying to cross over the pit were blocked off by safety chains strung between posts. Plaintiff admits he knew the chains were there to keep him from crossing over the pit and to require him to go a few feet farther to walk around it. After the chains were put up, any person undertaking to use the board as a cross walk had to complete involved contortions and gymnastics, particularly when, as was the case with petitioner, a car was on the track 23 1/2. A casual examination of the model filed as an exhibit in this Court shows how difficult was such a passage. Nevertheless, the Court holds that if employees succeeded in disregarding the chains and forced passage frequently enough to be considered 'customary,' and th railroad took no further action, its failure so to do was negligence. The same rule would no doubt apply if the railroad's precautions had consisted of a barricade, or an armed guard. I think the railroad here could not fairly be found guilty of negligence and that there was no jury question. 54 If in this class of cases, which forms a growing proportion of its total, this Court really is applying accepted principles of an old body of liability law in which lower courts are generally experienced, I do not see why they are so baffled and confused at what goes on here. On the other hand, if this Court considers a reform of this law appropriate and within the judicial power to promulgate, I do not see why it should constantly deny that it is doing just that. 55 I think a comparison of the State Supreme Court's opinion, 187 P.2d 188, with the opinion of this Court will fairly raise, in the minds of courts below and of the profession, the question I leave to their perspicacity to answer: In which proposition did the Supreme Court of Utah really err? 1 35 Stat. 65 as amended by 36 Stat. 291 and 53 Stat. 1404, 45 U.S.C. §§ 51—60, 45 U.S.C.A. §§ 51—60. 2 There was evidence that other types of cars had a wider overhang thereby reducing the space available for passage between the posts and the car. This evidence bore directly on the fact question as to the practice of employees generally in using the boardway as petitioner did here. 3 Petitioner testified in part as follows: 'Q. Mr. ilkerson, I will ask you to state whether or not you have ever observed other switchmen or workmen working in the yards there in passing over that pit while cars were standing on 23 1/2 since the safety chains were up? 'A. Yes, sir, I have. 'Q. What has that practice been, the practice of crossing over the pit? 'A. Men that work around there, regardless of whether switchmen or car men that wanted to go that way went through there. 'Q. Went through—you mean over the pit? 'A. Over that pit, as I just described, from either side. 'Q. I will ask you to state whether or not you observed any practice with reference to crossing over the pit when men were working on the cars there in the day time before these chains were installed? 'A. Walked right straight across the board. 'Q. Was there a board usually there to walk over? 'A. Yes, sir. 'Q. Was there any change in that practice after the chains were installed? 'A. None, only they had to walk around the chains. 'Q. What did you observe with reference to the number of times the occasions when men would cross over the pit. 'A. Oh, I couldn't say; I suppose maybe a hundred times; varies, men, both switchmen and carmen or others working there in the yard necessary, pullman, employees and so forth. 'Q. Crossed over the pit? 'A. Yes, sir, it was a common practice for everybody to use that that way. 'Q. Did you ever see—did you ever notice the board ever being used for any other purpose except men walking across? 'A. No, sir, I haven't. 'Q. Ask you to state whether or not you experience any difficulty in passing between the car and the post and onto the board and over the board and between the car and the north post at the time you passed it, the first time in the morning? 'A. No.' 4 Another witness testified in part as follows: 'Q. And what have you notice with reference to the practice of men passing between the standing cars on 23 1/2 and the posts that hold the safety chains? 'A. Well, they would walk through and get on the board and walk to and from each side, and the men that work on the pit work on that board, and sometimes set on the board next to the—in next to the car there to perform their work, you know, like where they are up under, or working on the car, they use the board over from it to work on. 'Q. What has been your practice in passing between cars that are standing on 23 1/2 and the posts that hold the stakes and chains when they have been in place? 'A. When I have occasion to pass through there, I put my hand on the post, step over on the board, and go around the other post, and that is the way I pass to and from on the pit. 'Q. Have you observed other men passing over the pit under similar circumstances? 'A. Yes, sir, I have. 'Q. And what can you say with reference to the—such occurrences, as to how often they happen? 'A. O, I would judge that I saw the men pass through there dozens of times. 'Q. Have you seen any other switchman working there in the yards act similarly; that is, go around the post, between the post and the car and pass over the board? 'A. Yes, sir, I have saw my helpers at different times and before the chains were placed, we used the board at all times, you know, just to cross the pit. I have walked across the pit a number of times that way, and also my helpers.' This witness later gave the names of two switchmen he had seen cross after chains were put up, but he did not thereby qualify his testimony previously given as to the practice of employees generally to use the walkway. 5 The state court argued that 'Other and safer routes were open' to the petitioner. But contributory negligence does not exempt a railroad from liability for its own negligence. The state court also advanced the following argument: 'In this particular case, the board appears adequate for the use of the pit crewmen, but entirely inadequate if intended to be a cross-walk for other employees. Employees climbing in and out of the pit approach more deliberately, use other and different hand holds, and are more careful of their footing, while employees swinging on to the plank in a hurry are apt to forget about the slippery condition of an oily board and forget about the dangers incident to crossing, as did the plaintiff, who swung himself around the chain post and onto the plank.' Aside from the apparent absence of direct evidence that pit crewmen would exercise greater care to protect themselves than would other employees, whether they would or not is patently a jury question. The state court also said: 'Had they not intended to preclude the use of the board as a walk-way, the defendants would not have installed the chain posts so as to block an open straight approach to the board.' This argument of the state court ignores the absence of any direct evidence to show that the chains were erected to keep people from walking over the old 'permanent board' walkway. Petitioner testified that it was his understanding that the chains were erected 'to keep people from walking directly into the open pit.' Another argument of the State Supreme Court was: 'Also, a sign not to cross would have afforded plaintiff no additional security or warn ng, for he disregarded the chain and he would no doubt have ignored another form of warning.' If such an inference was justifiable and was relevant at all on the question of railroad negligence, it was an inference to be drawn from facts by the jury, not by the court. 1 The reasons for this practice were indicated by Chief Justice Taft for a unanimous Court in Layne & Bowler Corp. v. Western Well Works, 261 U.S. 387, 393, 43 S.Ct. 422, 423, 67 L.Ed. 712: 'If it be suggested that as much effort and time as we have given to the consideration of the alleged conflict would have enabled us to dispose of the case before us on the merits, the answer is that it is very important that we be consistent in not granting the writ of certiorari except in cases involving principles the settlement of which is of importance to the public, as distinguished from that of the parties, and in cases where there is a real and embarrassing conflict of opinion and authority between the Circuit Courts of Appeals. The present case certainly comes under neither head.' 1 H.R.Rep.No.1386, 60th Cong., 1st Sess. 2 (1908). 2 Cases where petitions for certiorari were granted this Term but which have not yet been decided on the merits have not been included. Nor have cases been included which though arising under the Act present issues other than those of negligence. Moreover, Wabash R. Co. v. Williamson, 196 S.W.2d 129, certiorari denied, 330 U.S. 824, 67 S.Ct. 860, 91 L.Ed. 1274, has been omitted since negligence was admitted by the employer, the case turning on the construction of a railroad rule. 1 The Supreme Court of Utah considered and rejected the opinion in Griswold v. Gardner, 7 Cir., 155 F.2d 333, in which it was said: 'Any detailed review of the evidence in a case of this character for the purpose of determining the propriety of the trial court's refusal to direct a verdict would be an idle and useless ceremony in the light of the recent decisions of the Supreme Court. This is so regardless of what we might think of the sufficiency of the evidence in this respect. The fact is, so we think, that the Supreme Court has in effect converted this negli ence statute into a compensation law thereby making, for all practical purposes, a railroad an insurer of its employees. See dissent of Mr. Justice Roberts in Bailey v. Central Vermont Ry., 319 U.S. 350, 358, 63 S.Ct. 1062, 1066, 87 L.Ed. 1444. 'The Supreme Court, commencing with Tiller v. Atlantic Coast Line R. Co., 318 U.S. 54, 63 S.Ct. 444, 87 L.Ed. 610, 143 A.L.R. 967, in a succession of cases has reversed every court (with one exception hereinafter noted) which has held that a defendant was entitled to a directed verdict. In the Tiller case, the Supreme Court reversed the Court of Appeals for the Fourth Circuit, 128 F.2d 420, which had affirmed the District Court in directing a verdict. The case, upon remand, was again tried in the court below, where a directed verdict was denied. For this denial the Court of Appeals reversed and again the Supreme Court reversed the Court of Appeals, holding that the District Court properly submitted the case to the jury. In Tennant v. Peoria & P.U.R. Co., 321 U.S. 29, 64 S.Ct. 409, 88 L.Ed. 520, this court reversed the District Court on account of its refusal to direct a verdict, and our decision, 7 Cir., 134 F.2d 860, was reversed by the Supreme Court. In Bailey v. Central Vermont Ry., 319 U.S. 350, 63 S.Ct. 1062, 87 L.Ed. 1444, the Supreme Court of Vermont held that there should have been a directed verdict for the defendant, and the Supreme Court reversed the decision of that Court. In Blair v. Baltimore & O.R. Co., 323 U.S. 600, 65 S.Ct. 545, 89 L.Ed. 490, the Supreme Court reversed the Supreme Court of Pennsylvania which had held that there should have been a directed verdict. In the recent case of Lavender, Administrator, etc., v. Kurn et al., 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916, the Supreme Court reversed the Supreme Court of Missouri which had held that there should have been a directed verdict for each of the defendants. 'The only exception to this unbroken line of decisions is Brady v. Southern R. Co., 320 U.S. 476, 64 S.Ct. 232, 88 L.Ed. 239, where the Supreme Court of North Carolina was affirmed in its holding that there should have been a directed verdict. This exception, however, is of little consequence in view of the fact that four members of the court dissented.'
78
336 U.S. 77 69 S.Ct. 448 93 L.Ed. 513 KOVACSv.COOPER, Judge. No. 9. Submitted Oct. 11, 1948. Decided Jan. 31, 1949. Rehearing Denied Feb. 28, 1949. See 336 U.S. 921, 69 S.Ct. 638. Appeal from the Court of Errors and Appeals of the State of New jersey. Mr. George Pellettieri, of Trenton, N.J., for appellant. Louis Josephson, of Trenton, N.J., for appellee. Mr. Justice REED announced the judgment of the Court and an opinion in which The CHIEF JUSTICE and Mr. Justice BURTON join. 1 This appeal involves the validity of a provision of Ordinance No. 430 of the City of Trenton, New Jersey. It reads as follows: 2 '4. That it shall be unlawful for any person, firm or corporation, either as principal, agent or employee, to play, use or operate for advertising purposes, or for any other purpose whatsoever, on or upon the public streets, alleys or thoroughfares in the City of Trenton, any device known as a sound truck, loud speaker or sound amplifier, or radio or phonograph with a loud speaker or sound amplifier, or any other instrument known as a calliope or any instrument of any kind or character which emits therefrom loud and raucous noises and is attached to and upon any vehicle operated or standing upon said streets or public places aforementioned.' 3 The appellant was found guilty of violating this ordinance by the appellee, a police judge of the City of Trenton. His conviction was upheld by the New Jersey Supreme Court, Kovacs v. Cooper, 135 N.J.L. 64, 50 A.2d 451, and the judgment was affirmed without a majority opinion by the New Jersey Court of Errors and Appeals in an equally divided court. The dissents are printed. 135 N.J.L. 584, 52 A.2d 806. 4 We took jurisdiction1 to consider the challenge made to the constitutionality of the section on its face and as applied on the ground that § 1 of the Fourteenth Amendment of the United States Constitution was violated because the section and the conviction are in contravention of rights of freedom of speech, freedom of assemblage and freedom to communicate information and opinions to others. The ordinance is also challenged as violative of the Due Process Clause of the Fourteenth Amendment on the ground that it is so obscure, vague, and indefinite as to be impossible of reasonably accurate interpretation. No question was raised as to the sufficiency of the complaint. 5 At the trial in the Trenton police court, a city patrolman testified that while on his post he heard a sound truck broadcasting music. Upon going in the direction of said sound, he located the truck on a public street near the municipal building. As he approached the truck, the music stopped and he heard a man's voice broadcasting from the truck. The appellant admitted that he operated the mechanism for the music and spoke into the amplifier. The record from the police court does not show the purpose of the broadcasting but the opinion in the Supreme Court suggests that the appellant was using the sound apparatus to comment on a labor dispute then in progress in Trenton. 6 The contention that the section is so vague, obscure and indefinite as to be unenforceable merits only a passing reference. This objection centers around the use of the words 'loud and raucous.' While these are abstract words, they have through daily use acquired a content that conveys to any interested person a sufficiently accurate concept of what is forbidden. Last term, after thorough consideration of the problem of vagueness in legislation affecting liberty of speech, this Court invalidated a conviction under a New York statute, Penal Law, McK.Consol.Laws, c. 40, § 1141, construed and applied to punish the distribution of magazines 'principally made up of criminal news or stories of deeds of bloodshed, or lust, so massed as to become vehicles for inciting violent and depraved crimes against the person.' Winters v. New York, 333 U.S. 507, 518, 68 S.Ct. 665, 671. As thus construed we said that the statute was so vague that an honest distributor of tales of war horrors could not know whether he was violating the statute. 333 U.S. at page 520, 68 S.Ct. at page 672. But in the Winters case we pointed out that prosecutions might be brought under statutes punishing the distribution of 'obscene, lewd, lascivious, filthy, indecent or disgusting' magazines. 333 U.S. at page 511, 68 S.Ct. at page 668. We said, 333 U.S. at page 518, 68 S.Ct. at page 671: 7 'The impossibility of defining the precise line between permissible uncertainty in statutes caused by describing crimes by words well understood through long use in the criminal law obscene, lewd, lascivious, filthy, indecent or disgusting—and the unconstitutional vagueness that leaves a person uncertain as to the kind of prohibited conduct—massing stories to incide crim—has resulted in three argument of this case in this Court.' 8 We used the words quoted above from 333 U.S. at page 511, 68 S.Ct. at page 668, as examples of permissible standards of statutes for criminal prosecution. 333 U.S. at page 520, 68 S.Ct. at page 672. There we said: 9 'To say that a state may not punish by such a vague statute carries no implication that it may not punish circulation of objecti nable printed matter, assuming that it is not protected by the principles of the First Amendment, by the use of apt words to describe the prohibited publications. * * * Neither the states nor Congress are prevented by the requirement of specificity from carrying out their duty of eliminating evils to which, in their judgment, such publications give rise.' 10 We think the words of § 4 of this Trenton ordinance comply with the requirements of definiteness and clarity, set out above. 11 The scope of the protection afforded by the Fourteenth Amendment, for the right of a citizen to play music and express his views on matters which he considers to be of interest to himself and others on a public street through sound amplification devices mounted on vehicles, must be considered. Freedom of speech, freedom of assembly and freedom to communicate information and opinion to others are all comprehended on this appeal in the claimed right of free speech. They will be so treated in this opinion. 12 The use of sound trucks and other peripatetic or stationary broadcasting devices for advertising, for religious exercises and for discussion of issues or controversies has brought forth numerous municipal ordinances. The avowed and obvious purpose of these ordinances is to prohibit or minimize such sounds on or near the streets since some citizens find the noise objectionable and to some degree an interference with the business or social activities in which they are engaged or the quiet that they would like to enjoy.2 A satisfactory adjustment of the conflicting interests is difficult as those who desire to broadcast can hardly acquiesce in a requirement to modulate their sounds to a pitch that would not rise above other street noises nor would they deem a restriction to sparsely used localities or to hours after work and before sleep—say 6 to 9 p.m.—sufficient for the exercise of their claimed privilege. Municipalities are seeking actively a solution. National Institute of Municipal Law Officers, Report No. 123, 1948. Unrestrained use throughout a municipality of all sound amplifying devices would be intolerable. Absolute prohibition within municipal limits of all sound amplification, even though reasonably regulated in place, time and volume, is undesirable and probably unconstitutional as an unreasonable interference with normal activities. 13 We have had recently before us an ordinance of the City of Lockport, New York, prohibiting sound amplification whereby the sound was cast on public places so as to attract the attention of the passing public to the annoyance of those within the radius of the sounds. The ordinance contained this exception: 14 'Section 3. Exception.—Public dissemination, through radio loudspeakers, of items of news and matters of public concern and athletic activities shall not be deemed a violation of this section provided that the same be done under permission obtained from the Chief of Police.' 15 This Court held the ordinance 'unconstitutional on its face,' Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148, 1149 because the quoted section established a 'previous restraint' on free speech with 'no standards prescribed for the exercise' of discretion by the Chief of Police. When ordinances undertake censorship of speech or religious practices before permitting their exercise, the Constitution forbids their enforcement.3 The Court said in the Saia case, 334 U.S. at pages 560, 561, 68 S.Ct. at pages 1149, 1150: 16 'The right to be heard is placed in the uncontrolled discretion of the Chief of Police. He stands athwart the channels of communication as an obstruction which can be removed only after criminal trial and conviction and lengthy appeal. A more effective previous restraint is difficult to imagine.' 17 This ordinance is not of that character. It contains nothing comparable to the above quoted § 3 of the ordinance in the Saia case. It is an exercise of the authority granted to the city by New Jersey 'to prevent disturbing noises,' N.J.Stat.Ann., tit. 40:48—1(8), nuisances well within the municipality's power to control. The police power of a state extends beyond health, morals and safety, and comprehends the duty, within constitutional limitations, to protect the well-being and tranquility of a community.4 A state or city may prohibit acts or things reasonably thought to bring evil or harm to its people. 18 In this case, New Jersey necessarily has construed this very ordinance as applied to sound amplification.5 The Supreme Court said, 135 N.J.L. 64, 66, 50 A.2d 451, 452: 19 'The relevant provisions of the ordinance apply only to (1) vehicles (2) containing an instrument in the nature of a sound amplifier or any other instrument emitting loud and raucous noises and (3) such vehicle operated or standing upon the public streets, alleys or thoroughfares of the city.' If that means that only amplifiers that emit, in the language of the ordinance, 'loud and raucous noises' are barred from the streets, we have a problem of regulation. The dissents accept that view.6 So did the appellant in his Statement as to Jurisdiction and his brief.7 Although this Court must decide for itself whether federal questions are presented and decided,8 we must accept the state court's conclusion as to the scope of the ordinance.9 We accept the determination of New Jersey that § 4 applies only to vehicles with sound amplifiers emitting loud and raucous noises. Courts are inclined to adopt that reasonable interpretation of a statute which removes it farthest from possible constitutional infirmity. Cox v. New Hampshire, 312 U.S. 569, 575, 576, 61 S.Ct. 762, 765, 85 L.Ed. 1049, 133 A.L.R. 1396; cf. United States v. C.I.O., 335 U.S. 106, 120, 68 S.Ct. 1349, 1356. We need not determine whether this ordinance so construed is regulatory or prohibitory. All regulatory enactments are prohibitory so far as their restrictions are concerned, and the prohibition of this ordinance as to a use of streets is merely regulatory. Sound trucks may be utilized in places such as parks or other open spaces off the streets. The constitutionality of the challenged ordinance as violative of appellant's right of free speech does not depend upon so narrow an issue as to whether its provisions are cast in the words of prohibition or regulation.10 The question is whether or not there is a real abridgment of the rights of free speech. 20 Of course, even the fundamental rights of the Bill of Rights are not absolute. The Saia case recognized that in this field by stating 'The hours and place of public discussion can be controlled.'11 It was said decades ago in an opinion of this Court delivered by Mr. Justice Holmes, Schenck v. United States, 249 U.S. 47, 52, 39 S.Ct. 247, 249, 63 L.Ed. 470, that: 21 'The most stringent protection of free speech would not protect a man in falsely shouting fire in a theatre and causing a panic. It does not even protect a man from an injunction against uttering words that may have all the effect of force.' 22 Hecklers may be expelled from assemblies and religious worship may not be disturbed by those anxious to preach a doctrine of atheism. The right to speak one's mind would often be an empty privilege in a place and at a time beyond the protecting hand of the guardians of public order. 23 While this Court, in enforcing the broad protection the Constitution gives to the dissemination of ideas, has invalidated an ordinance forbidding a distributor of pamphlets or handbills from summoning householders to their doors to receive the distributor's writings, this was on the ground that the home owner could protect himself from such intrusion by an appropriate sign 'that he is unwilling to be disturbed.' The Court never intimated that the visitor could insert a foot in the door and insist on a hearing. Martin v. City of Struthers, 319 U.S. 141, 143, 148, 63 S.Ct. 862, 863, 865, 87 L.Ed. 1313. We do not think that the Struthers case requires us to expand this interdiction of legislation to include ordinance against obtaining an audience for the broadcaster's ideas by way of sound trucks with loud and raucous noises on city streets. The unwilling listener is not like the passer-by who may be offered a pamphlet in the street but cannot be made to take it.12 In his home or on the street he is practically helpless to escape this interference with his privacy by loud speakers except through the protection of the municipality. 24 City streets are recognized as a normal place for the exchange of ideas by speech or paper. But this does not mean the freedom is beyond all control. We think it is a permissible exercise of legislative discretion to bar sound trucks with broadcasts of public interest, amplified to a loud and raucous volume, from the public ways of municipalities. On the business streets of cities like Trenton, with its more than 125,000 people, such distractions would be dangerous to traffic at all hours useful for the dissemination of information, and in the residential thoroughfares the quiet and tranquility so desirable for city dwellers would likewise be at the mercy of advocates of particular religious, social or political persuasions. We cannot believe that rights of free speech compel a municipality to allow such mechanical voice amplification on any of its streets. 25 The right of free speech is guaranteed every citizen that he may reach the minds of willing listeners and to do so there must be opportunity to win their attention. This is the phase of freedom of speech that is involved here. We do not think the Trenton ordinance abridges that freedom. It is an extravagant extension of due process to say that because of it a city cannot forbid talking on the streets through a loud speaker in a loud and raucous tone. Surely such an ordinance does not violate our people's 'concept of ordered liberty' so as to require federal intervention to protect a citizen from the action of his own local government. Cf. Palko v. Connecticut, 302 U.S. 319, 325, 58 S.Ct. 149, 152, 82 L.Ed. 288. Opportunity to gain the public's ears by objectionab y amplified sound on the streets is no more assured by the right of free speech than is the unlimited opportunity to address gatherings on the streets.13 The preferred position14 of freedom of speech in a society that cherishes liberty for all does not require legislators to be insensible to claims by citizens to comfort and convenience. To enforce freedom of speech in disregard of the rights of others would be harsh and arbitrary in itself. That more people may be more easily and cheaply reached by sound trucks, perhaps borrowed without cost from some zealous supporter, is not enough to call forth constitutional protection for what those charged with public welfare reasonably think is a nuisance when easy means of publicity are open. Section 4 of the ordinance bars sound trucks from broadcasting in a loud and raucous manner on the streets. There is no restriction upon the communication of ideas or discussion of issues by the human voice, by newspapers, by pamphlets, by dodgers. We think that the need for reasonable protection in the homes or business houses from the distracting noises of vehicles equipped with such sound amplifying devices justifies the ordinance. 26 Affirmed. 27 Mr. Justice MURPHY dissents. 28 Mr. Justice FRANKFURTER, concurring. 29 Wise accommodation between liberty and order always has been, and ever will be, indispensable for a democratic society. Insofar as the Constitution commits the duty of making this accommodation to this Court, it demands vigilant judicial self-restraint. A single decision by a closely divided court, unsupported by the confirmation of time, cannot check the living process of striking a wise balance between liberty and order as new cases come here for adjudication. To dispose of this case on the assumption that the Saia case, 334 U.S. 558, 68 S.Ct. 1148, decided only the other day, was rightly decided, would be for me to start with an unreality. While I am not unaware of the circumstances that differentiate this case from what was ruled in Saia, further reflection has only served to r inforce the dissenting views I expressed in that case. Id., 334 U.S. at page 562, 68 S.Ct. at page 1150. In the light of them I conclude that there is nothing in the Constitution of the United States to bar New Jersey from authorizing the City of Trenton to deal in the manner chosen by the City with the aural aggressions implicit in the use of sound trucks. 30 The opinions in this case prompt me to make some additional observations. My brother REED speaks of 'The preferred position of freedom of speech,' though, to be sure, he finds that the Trenton ordinance does not disregard it. This is a phrase that has uncritically crept into some recent opinions of this Court. I deem it a mischievous phrase, if it carries the thought, which it may subtly imply, that any law touching communication is infected with presumptive invalidity. It is not the first time in the history of constitutional adjudication that such a doctrinaire attitude has disregarded the admonition most to be observed in exercising the Court's reviewing power over legislation, 'that it is a constitution we are expounding,' McCulloch v. Maryland, 4 Wheat. 316, 407, 4 L.Ed. 579. I say the phrase is mischievous because it radiates a constitutional doctrine without avowing it. Clarity and candor in these matters, so as to avoid gliding unwittingly into error, make it appropriate to trace the history of the phrase 'preferred position.' The following is a chronological account of the evolution of talk about 'preferred position' except where the thread of derivation is plain enough to be indicated. 31 1. Herndon v. Lowry, 301 U.S. 242, 258, 57 S.Ct. 732, 739, 81 L.Ed. 1066: 'The power of a state to abridge freedom of speech and of assembly is the exception rather than the rule and the penalizing even of utterances of a defined character must find its justification in a reasonable apprehension of danger to organized government. The judgment of the Legislature is not unfettered. The limitation upon individual liberty must have appropriate relation to the safety of the state.' 32 2. United States v. Carolene Products Co., 304 U.S. 144, 151 note 4, 58 S.Ct. 778, 783, 82 L.Ed. 1234, set forth in the margin.1 A footnote hardly seems to be an appropriate way of announcing a new constitutional doctrine, and the Carolene footnote did not purport to announce any new doctrine; incidentally, it did not have the concurrence of a majority of the Court. It merely rephrased and expanded what was said in Herndon v. Lowry, supra, and elsewhere. It certainly did not assert a presumption of invalidity against all legislation touching matters related to liberties protected by the Bill of Rights and the Fourteenth Amendment. It merely stirred inquiry whether as to such matters there may be 'narrower scope for operation of the presumption of constitutionality' and legislation regarding them is therefore 'to be subjected to more exacting judicial scrutiny'. 33 The Carolene footnote is cited in Thornhill v. Alabama, 310 U.S. 88, 95, 60 S.Ct. 736, 741, 84 L.Ed. 1093, in an opinion which thus proceeds: 'Mere legislative preference for one rather than another means for combating substantive evils, therefore, may well prove an inadequate foundation on which to rest regulations which are aimed at or in their operation diminish the effective exercise of rights so necessary to the maintenance of democratic institutions. It is imperative that, when the effective exercise of these rights is claimed to be abridged, the courts should 'weigh the circumstances' and 'appraise the substantiality of the reasons advanced' in support of the challenged regulations. Schneider v. State * * *.' 34 It is cited again in the opinion of the Court in American Federation of Labor v. Swing, 312 U.S. 321, 325, 61 S.Ct. 568, 569, 85 L.Ed. 855, together with the Herndon and Schneider cases, in support of the statement that the 'right to free discussion' 'is to be guarded with a jealous eye.' 35 The Carolene footnote was last cited in an opinion of this Court in the passage of Thomas v. Collins, 323 U.S. 516, 530, 65 S.Ct. 315, 322, 89 L.Ed. 430, quoted below. 36 (3) Schneider v. State of New Jersey, 308 U.S. 147, 161, 60 S.Ct. 146, 151, 84 L.Ed. 155: 'In every case, therefore, where legislative abridgment of the rights (freedom of speech and of the press) is asserted, the courts should be astute to examine the effect of the challenged legislation. Mere legislative preferences or beliefs respecting matters of public convenience may well support regulation directed at other personal activities, but be insufficient to justify such as diminishes the exercise of rights so vital to the maintenance of democratic institutions. And so, as cases arise, the delicate and difficult task falls upon the courts to weigh the circumstances and to appraise the substantiality of the reasons advanced in support of the regulation of the free enjoyment of the rights.' 37 (4) Bridges v. California, 314 U.S. 252, 262, 263, 62 S.Ct. 190, 193, 194, 86 L.Ed. 192, 159 A.L.R. 1346: 'Moreover, the likelihood, however great that a substantive evil will result cannot alone justify a restriction upon freedom of speech or the press. The evil itself must be substantial', Brandeis, J., concurring in Whitney v. California, supra, 274 U.S. (357) at page 374, 47 S.Ct. (641) at page 647, 71 L.Ed. 1095; it must be 'serious,' Id., 274 U.S. at page 376, 47 S.Ct. at page 648, 71 L.Ed. 1095. And even the expression of 'legislative preferences or beliefs' cannot transform minor matters of public inconvenience or annoyance into substantive evils of sufficient weight to warrant the curtailment of liberty of expression. Schneider v. State * * *. 38 'What finally emerges from the 'clear and present danger' cases is a working principle that the substantive evil must be extremely serious and the degree of imminence extremely high before utterances can be punished.' 39 This formulation of the 'clear-and-present-danger' test was quoted and endorsed in Pennekamp v. Florida, 328 U.S. 331, 334, 66 S.Ct. 1029, 1030, 90 L.Ed. 1295. 40 (5) A number of Jehovah's Witnesses cases refer to the freedoms specified by the First Amendment, as in a 'preferred position.' The phrase was apparently first used in the dissent of Chief Justice Stone in Jones v. Opelika, 316 U.S. 584, 600, 608 62 S.Ct. 1231, 1240, 1244, 86 L.Ed. 1691, 141 A.L.R. 514. It reappears in Murdock v. Pennsylvania, 319 U.S. 105, 115, 63 S.Ct. 870, 876, 87 L.Ed. 1292, 146 A.L.R. 81; Prince v. Massachusetts, 321 U.S. 158, 164, 64 S.Ct. 438, 441, 88 L.Ed. 645; Follett v. Town of McCormick, 321 U.S. 573, 575, 64 S.Ct. 717, 718, 88 L.Ed. 938, 152 A.L.R. 317; Marsh v. Alabama, 326 U.S. 501, 509, 66 S.Ct. 276, 280, 90 L.Ed. 265; Saia v. New York, 334 U.S. 558, 562, 68 S.Ct. 1148, 1150. 41 (6) West Virginia State Board of Education v. Barnette, 319 U.S. 624, 639, 63 S.Ct. 1178, 1186, 87 L.Ed. 1628, 147 A.L.R. 674: 'The test of legislation which collides with the Fourteenth Amendment, because it also collides with the principles of the First, is much more definite than the test when only the Fourteenth is involved. Much of the vagueness of the due process clause disappears when the specific prohibitions of the First become its standard. The right of a State to regulate, for example, a public utility may well include, so far as the due process test is concerned, power to impose all of the restrictions which a legislature may have a 'rational basis' for adopting. But freedoms of speech and of press, of assembly, and of worship may not be infringed on such slender grounds. They are susceptible of restriction only to prevent grave and immediate danger to interests which the state may lawfully protect.' 42 (7) Thomas v. Collins, 323 U.S. 516, 530, 65 S.Ct. 315, 322, 89 L.Ed. 430: 'For these reasons any attempt to restrict those liberties must be justified by clear public interest, threatened not doubtfully or remotely, but by clear and present danger. The rational connection between the remedy provided and the evil to be curbed, which in other contexts might support legislation against attack on due process grounds, will not suffice. These rights rest on firmer foundation. Accordingly, whatever occasion would restrain orderly discussion and persuasion, at appropriate time and place, must have clear support in public danger, actual or impending. Only the gravest abuses, endangering paramount interests, give occasion for permissible limitation.' This is perhaps the strongest language dealing with the constitutional aspect of legislation touching utterance. But it was the opinion of only four members of the Court, since Mr. Justice Jackson, in a separate concurring opinion, referred to the opinion of Mr. Justice Rutledge only to say that he agreed that the case fell into 'the category of a public speech, rather than that of practicing a vocation as solicitor.' Id., 323 U.S. at page 548, 65 S.Ct. at page 331, 89 L.Ed. 430. 43 In short, the claim that any legislation is presumptively unconstitutional which touches the field of the First Amendment and the Fourteenth Amendment, insofar as the latter's concept of 'liberty' contains what is specifically protected by the First, has never commen ed itself to a majority of this Court. 44 Behind the notion sought to be expressed by the formula as to 'the preferred position of freedom of speech' lies a relevant consideration in determining whether an enactment relating to the liberties protected by the Due Process Clause of the Fourteenth Amendment is violative of it. In law also, doctrine is illuminated by history. The ideas now governing the constitutional protection of freedom of speech derive essentially from the opinions of Mr. Justice Holmes. 45 The philosophy of his opinions on that subject arose from a deep awareness of the extent to which sociological conclusions are conditioned by time and circumstance. Because of this awareness Mr. Justice Holmes seldom felt justified in opposing his own opinion to economic views which the legislature embodied in law. But since he also realized that the progress of civilization is to a considerable extent the displacement of error which once held sway as official truth by beliefs which in turn have yielded to other beliefs, for him the right to search for truth was of a different order than some transient economic dogma. And without freedom of expression, thought becomes checked and atrophied. Therefore, in considering what interests are so fundamental as to be enshrined in the Due Process Clause, those liberties of the individual which history has attested as the indispensable conditions of an open as against a closed society come to this Court with a momentum for respect lacking when appeal is made to liberties which derive merely from shifting economic arrangements. Accordingly, Mr. Justice Holmes was far more ready to find legislative invasion where free inquiry was involved than in the debatable area of economics. See my Mr. Justice Holmes and the Supreme Court, 58 et seq. 46 The objection to summarizing this line of thought by the phrase 'the preferred position of freedom of speech' is that it expresses a complicated process of constitutional adjudication by a deceptive formula. And it was Mr. Justice Holmes who admonished us that 'To rest upon a formula is a slumber that, prolonged, means death.' Collected Legal Papers, 306. Such a formula makes for mechanical jurisprudence. 47 Some of the arguments made in this case strikingly illustrate how easy it is to fall into the ways of mechanical jurisprudence through the use of oversimplified formulas. It is argued that the Constitution protects freedom of speech: Freedom of speech means the right to communicate, whatever the physical means for so doing; sound trucks are one form of communication; ergo that form is entitled to the same protection as any other means of communication, whether by tongue or pen. Such sterile argumentation treats society as though it consisted of bloodless categories. The various forms of modern so-called 'mass communications' raise issues that were not implied in the means of communication known or contemplated by Franklin and Jefferson and Madison. Cf. Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013. Movies have created problems not presented by the circulation of books, pamphlets, or newspapers, and so the movies have been constitutionally regulated. Mutual Film Corporation v. Industrial Commission, 236 U.S. 230, 35 S.Ct. 387, 59 L.Ed. 552, Ann.Cas. 1916C, 296. Broadcasting in turn has produced its brood of complicated problems hardly to be solved by an easy formula about the preferred position of free speech. See National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344. 48 Only a disregard of vital differences between natural speech, even of the loudest spellbinders, and the noise of sound trucks would give sound trucks the constitutional rights accorded to the unaided human voice. Nor is it for this Court to devise the terms on which sound trucks should be allowed to operate, if at all. These are matters for the legislative judgment controlled by public opinion. So long as a legislature does not prescribe what ideas may be noisily expre sed and what may not be, nor discriminate among those who would make inroads upon the public peace, it is not for us to supervise the limits the legislature may impose in safeguarding the steadily narrowing opportunities for serenity and reflection. Without such opportunities freedom of thought becomes a mocking phrase, and without freedom of thought there can be no free society. 49 Mr. Justice JACKSON, concurring. 50 I join the judgment sustaining the Trenton ordinance because I believe that operation of mechanical sound-amplifying devices conflicts with quiet enjoyment of home and park and with safe and legitimate use of street and market place, and that it is constitutionally subject to regulation or prohibition by the state or municipal authority. No violation of the Due Process Clause of the Fourteenth Amendment by reason of infringement of free speech arises unless such regulation or prohibition undertakes to censor the contents of the broadcasting. Freedom of speech for Kovacs does not, in my view, include freedom to use sound amplifiers to drown out the natural speech of others. 51 I do not agree that, if we sustain regulations or prohibitions of sound trucks, they must therefore be valid if applied to other methods of 'communication of ideas.' The moving picture screen, the radio, the newspaper, the handbill, the sound truck and the street corner orator have differing natures, values, abuses and dangers. Each, in my view, is a law unto itself, and all we are dealing with now is the sound truck. 52 But I agree with Mr. Justice BLACK that this decision is a repudiation of that in Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148. Like him, I am unable to find anything in this record to warrant a distinction because of 'loud and raucous' tones of this machine. The Saia decision struck down a more moderate exercise of the state's police power than the one now sustained. Trenton, as the ordinance reads to me, unconditionally bans all sound trucks from the city streets. Lockport relaxed its prohibition with a proviso to allow their use, even in areas set aside for public recreation, when and where the Chief of Police saw no objection. Comparison of this our 1949 decision with our 1948 decision, I think, will pretty hopelessly confuse municipal authorities as to what they may or may not do. 53 I concur in the present result only for the reasons stated in dissent in Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148. 54 Mr. Justice BLACK, with whom Mr. Justice DOUGLAS, and Mr. Justice RUTLEDGE concur, dissenting. 55 The question in this case is not whether appellant may constitutionally be convicted of operating a sound truck that emits 'loud and raucous noises.' The appellant was neither charged with nor convicted of operating a sound truck that emitted 'loud and raucous noises.' The charge against him in the police court was that he violated the city ordinance 'in that he did, on South Stockton Street, in said City, play, use and operate a devise known as a sound truck.' The record reflects not even a shadow of evidence to prove that the noise was either 'loud or raucous,' unless these words of the ordinance refer to any noise coming from an amplifier whatever its volume or tone. 56 After appellant's conviction in the police court, the case was taken to the Supreme Court of New Jersey for review. That court, composed of three judges, stated with reference to the ordinance and charge: 'In simple, unambiguous language it prohibits the use upon the public streets of any device known as a sound truck, loud speaker or sound amplifier. This is the only charge made against the defendant in the complaint.' Kovacs v. Cooper, 135 N.J.L. 64, 69, 50 A.2d 451, 453. That this court construed the ordinance as an absolute prohibition of all amplifiers on any public street at any time and without regard to volume of sound is emphasized by its further statement that 'the ordinance leaves untouched the right of the prosecutor to express his views orally w thout the aid of an amplifier.' Id., 135 N.J.L. at page 66, 50 A.2d at page 452. (Emphasis supplied.) Thus the New Jersey Supreme Court affirmed the conviction on the ground that the appellant was shown guilty of the only offense of which he was charged—speaking through an amplifier on a public street. If as some members of this Court now assume, he was actually convicted for operating a machine that emitted 'loud and raucous noises,' then he was convicted on a charge for which he was never tried. 'It is as much a violation of due process to send an accused to prison following conviction of a charge on which he was never tried as it would be to convict him upon a charge that was never made.' Cole v. Arkansas, 333 U.S. 196, 201, 68 S.Ct. 514, 517. 57 Furthermore, when the conviction was later affirmed in the New Jersey Court of Errors and Appeals by an equally divided court, no one of that court's judges who voted to affirm expressed any doubt as to the correctness of the New Jersey Supreme Court's interpretation; indeed those judges wrote no opinion at all. One of the six who voted to reverse did base his judgment on the fact that there was not 'a scintilla of evidence that the music or voice was loud or raucous' and that under the wording of the ordinance such proof was essential. Kovacs v. Cooper, 135 N.J.L. 584, 585, 52 A.2d 806, 809. In construing the statute as requiring a proof of loud and raucous noises, the dissenting judge made the initial mistake of the majority of this Court, but he conceded that under this construction of the statute there was a fatal absence of proof to convict. The other five judges who were for reversal concluded that the ordinance represented 'an attempt by the municipality under the guise of regulation, to prohibit and outlaw, under all circumstances and conditions, the use of sound amplifying systems.' Kovacs v. Cooper, supra, 135 N.J.L. at page 590, 52 A.2d at page 809. 58 It thus appears that the appellant was charged and convicted by interpreting the ordinance as an absolute prohibition against the use of sound amplifying devices. The New Jersey Supreme Court affirmed only on that interpretation of the ordinance. There is no indication whatever that there was a different view entertained by the six judges of the Court of Errors and Appeals who affirmed the conviction. And it strains the imagination to say that the ordinance itself would warrant any other interpretation. 59 Nevertheless, in this Court the requisite majority for affirmance of appellant's conviction is composed in part of Justices who give the New Jersey ordinance a construction different from that given it by the state courts. That is not all. Affirmance here means that the appellant will be punished for an offense with which he was not charged, to prove which no evidence was offered, and of which he was not convicted, according to the only New Jersey court which affirmed with opinion. At the last term of court we held that the Arkansas Supreme Court had denied an appellant due process because it had failed to appraise the validity of a conviction 'on consideration of the case as it was tried and as the issues were determined in the trial court.' Cole v. Arkansas, supra, 333 U.S. at page 202, 68 S.Ct. at page 517. I am unable to distinguish the action taken by this Court today from the action of the Arkansas Supreme Court which we declared denied a defendant due process of law. 60 The New Jersey ordinance is on its face, and as construed and applied in this case by that state's courts, an absolute and unqualified prohibition of amplifying devices on any of Trenton's streets at any time, at any place, for any purpose, and without regard to how noisy they may be. 61 In Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148, we had before us an ordinance of the City of Lockport, New York, which forbade the use of sound amplification devices except with permission of the chief of police. The ordinance was applied to keep a minister from using an amplifier while preaching in a public p rk. We held that the ordinance, aimed at the use of an amplifying device, invaded the area of free speech guaranteed the people by the First and Fourteenth Amendments. The ordinance, so we decided, amounted to censorship in its baldest form. And our conclusion rested on the fact that the chief of police was given arbitrary power to prevent the use of speech amplifying devices at all times and places in the city, without regard to the volume of the sound. We pointed out the indispensable function performed by loud speakers in modern public speaking. We then placed use of loud speakers in public streets and parks on the same constitutional level as freedom to speak on streets without such devices, freedom to speak over radio, and freedom to distribute literature. 62 In this case the Court denies speech amplifiers the constitutional shelter recognized by our decisions and holding in the Saia case. This is true because the Trenton, New Jersey, ordinance here sustained goes beyond a mere prior censorship of all loud speakers with authority in the censor to prohibit some of them. This Trenton ordinance wholly bars the use of all loud speakers mounted upon any vehicle in any of the city's public streets. 63 In my view this repudiation of the prior Saia opinion makes a dangerous and unjustifiable breach in the constitutional barriers designed to insure freedom of expression. Ideas and beliefs are today chiefly disseminated to the masses of people through the press, radio, moving pictures, and public address systems. To some extent at least there is competition of ideas between and within these groups. The basic premise of the First Amendment is that all present instruments of communication, as well as others that inventive genius may bring into being, shall be free from governmental censorship or prohibition. Laws which hamper the free use of some instruments of communication thereby favor competing channels. Thus unless constitutionally prohibited, laws like this Trenton ordinance can give an overpowering influence to views of owners of legally favored instruments of communication. This favoritism, it seems to me, is the inevitable result of today's decision. For the result of today's opinion in upholding this statutory prohibition of amplifiers would surely not be reached by this Court if such channels of communication as the press, radio, or moving pictures were similarly attacked. 64 There are many people who have ideas that they wish to disseminate but who do not have enough money to own or control publishing plants, newspapers, radios, moving picture studios, or chains of show places. Yet everybody knows the vast reaches of these powerful channels of communication which from the very nature of our economic system must be under the control and guidance of comparatively few people. On the other hand, public speaking is done by many men of divergent minds with no centralized control over the ideas they entertain so as to limit the causes they espouse. It is no reflection on the value of preserving freedom for dissemination of the ideas of publishers of newspapers, magazines, and other literature, to believe that transmission of ideas through public speaking is also essential to the sound thinking of a fully informed citizenry. 65 It is of particular importance in a government where people elect their officials that the fullest opportunity be afforded candidates to express and voters to hear their views. It is of equal importance that criticism of governmental action not be limited to criticisms by press, radio, and moving pictures. In no other way except public speaking can the desirable objective of widespread public discussion be assured. For the press, the radio, and the moving picture owners have their favorites, and it assumes the impossible to suppose that these agencies will at all times be equally fair as between the candidates and officials they favor and those whom they vigorously oppose. And it is an obvious fact that public speaking today witho t sound amplifiers is a wholly inadequate way to reach the people on a large scale. Consequently, to tip the scales against transmission of ideas through public speaking as the Court does today, is to deprive the people of a large part of the basic advantages of the receipt of ideas that the First Amendment was designed to protect. 66 There is no more reason that I can see for wholly prohibiting one useful instrument of communication that another. If Trenton can completely bar the streets to the advantageous use of loud speakers, all cities can do the same. In that event preference in the dissemination of ideas is given those who can obtain the support of newspapers, etc., or those who have money enough to buy advertising from newspapers, radios, or moving pictures. This Court should no more permit this invidious prohibition against the dissemination of ideas by speaking than it would permit a complete blackout of the press, the radio, or moving pictures. It is wise for all who cherish freedom of expression to reflect upon the plain fact that a holding that the audiences of public speakers can be constitutionally prohibited is not unrelated to a like prohibition in other fields. And the right to freedom of expression should be protected from absolute censorship for persons without, as for persons with, wealth and power. At least, such is the theory of our society. 67 I am aware that the 'blare' of this new method of carrying ideas is susceptible of abuse and may under certain circumstances constitute an intolerable nuisance. But ordinances can be drawn which adequately protect a community from unreasonable use of public speaking devices without absolutely denying to the community's citizens all information that may be disseminated or received through this new avenue for trade in ideas. I would agree without reservation to the sentiment that 'unrestrained use throughout a municipality of all sound amplifying devices would be intolerable.' And of course cities may restrict or absolutely ban the use of amplifiers on busy streets in the business area. A city ordinance that reasonably restricts the volume of sound, or the hours during which an amplifier may be used, does not, in my mind, infringe the constitutionally protected area of free speech. It is because this ordinance does none of these things, but is instead an absolute prohibition of all uses of an amplifier on any of the streets of Trenton at any time that I must dissent. 68 I would reverse the judgment. 69 Mr. Justice RUTLEDGE, dissenting. 70 I am in accord with the views expressed by my brother BLACK. I think it important, however, to point out that a majority here agree with him that the issue presented is whether a state (here a municipality) may forbid all use of sound trucks or amplifying devices in public streets, without reference to whether 'loud and raucous noises' are emitted. Only a minority take the view that the Trenton ordinance merely forbids using amplifying instruments emitting loud and raucous noises. 71 Yet a different majority, one including that minority and two other justices, sustain the ordinance and its application. In effect Kovacs stands convicted, but of what it is impossible to tell, because the majority upholding the conviction do not agree upon what constituted the crime. How, on such a hashing of different views of the thing forbidden, Kovacs could have known with what he was charged or could have prepared a defense, I am unable to see. How anyone can do either in the future, under this decision, I am equally at loss to say. 72 In my view an ordinance drawn so ambiguously and inconsistently as to reflect the differing views of its meaning taken by the two groups who compose the majority sustaining it, would violate Fourteenth Amendment due process even if no question of free speech were involved. No man should be subject to punishment under a statute when even a bare majority of judges upholding the conviction cannot agree upon what acts the statute denounces. What the effect of this decision may be I cannot foretell, except that Kovacs will stand convicted and the division among the majority voting to affirm leaves open for future determination whether absolute and total state prohibition of sound trucks in public places can stand consistently with the First Amendment. For myself, I have no doubt of state power to regulate their abuse in reasonable accommodation, by narrowly drawn statutes, to other interests concerned in use of the streets and in freedom from public nuisance. But that the First Amendment limited its protections of speech to the natural range of the human voice as it existed in 1790 would be, for me, like saying that the commerce power remains limited to navigation by sail and travel by the use of horses and oxen in accordance with the principal modes of carrying on commerce in 1789. The Constitution was not drawn with any such limited vision of time, space and mechanics. It is one thing to hold that the states may regulate the use of sound trucks by appropriately limited measures. It is entirely another to say their use can be forbidden altogether. 73 To what has been said above and by Mr. Justice BLACK, I would add only that I think my brother FRANKFURTER demonstrates the conclusion opposite to that which he draws, namely, that the First Amendment guaranties of the freedoms of speech, press, assembly and religion occupy preferred position not only in the Bill of Rights but also in the repeated decisions of this Court. 1 See Judicial Code § 237(a), 28 U.S.C. § 344(a), now 28 U.S.C. § 1257(2), 28 U.S.C.A. § 1257(2); Lovell v. City of Griffin, 303 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949; New Orleans Water Works Co. v. New Orleans, 164 U.S. 471, 17 S.Ct. 161, 41 L.Ed. 518. 2 Ordinances regulating or prohibiting sound devices were upheld in People v. Phillips, 147 Misc. 11, 263 N.Y.S. 158; Maupin v. City of Louisville, 284 Ky. 195, 144 S.W.2d 237; Hamilton v. City of Montrose, 109 Colo. 228, 124 P.2d 757. Injunctions have also dealt with nuisances from the playing of mechanical music for advertising purposes. Weber v. Mann, Tex.Civ.App., 42 S.W.2d 492; Stodder v. Rosen Talking Machine Co., 241 Mass. 245, 135 N.E. 251, 22 A.L.R. 1197; Id., 247 Mass. 60, 141 N.E. 569. 3 Lovell v. City of Griffin, 3 3 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949; Hague v. C.I.O., 307 U.S. 496, 59 S.Ct. 954, 83 L.Ed. 1423; Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352. 4 Chicago, B. & Q.R. Co. v. State of Illinois ex rel. Drainage Com'rs, 200 U.S. 561, 592, 26 S.Ct. 341, 349, 50 L.Ed. 596, 4 Ann.Cas. 1175; Nebbia v. New York, 291 U.S. 502, 525, 54 S.Ct. 505, 510, 78 L.Ed. 940, 89 A.L.R. 1469; Queenside Hills Realty Co. v. Saxl, 328 U.S. 80, 82, 66 S.Ct. 850, 851, 90 L.Ed. 1096. 5 The Court of Errors and Appeals was cognizant of the difficulties. Evening Times Printing & Publishing Co. v. American Newspaper Guild, 124 N.J.Eq. 71, 78, 199 A. 598. 6 135 N.J.L. 584, 52 A.2d 806, 809: 'Colie, Justice (For reversal.) I am of the opinion that the judgment under review should be reversed but I do not agree that Section 4 of the ordinance is an unconstitutional exercise of the police power. The privilege of a citizen to use the streets for the communication of ideas is not absolute but must be exercised in subordination to the general comfort and convenience. Most assuredly the prohibition against making 'loud and raucous' noises is a reasonable regulation.' Id., 135 N.J.L. at page 585, 52 A.2d at page 809: 'There is not a scintilla of evidence that the music or voice was loud or raucous, and under the wording of Section 4 such proof is an essential prerequisite to a finding of guilt of a violation.' The New Jersey courts may have concluded that the necessity of search by the patrolman to locate the sound truck on a street was sufficient evidence of loudness and raucousness. 135 N.J.L. 584, at pages 588, 589, 52 A.2d 806, at page 808, Eastwood, J., for reversal, speaking for himself and three other members said: 'It appears to us, and we so hold, that the primary aim of Section 4 of the Ordinance, under review, is to prohibit 'loud and raucous noises', at all times and in all places in the City of Trenton, emanating from sound trucks, loud speakers, sound amplifiers, radios or phonographs, equipped with loud speakers or sound amplifiers, or other similar instruments. It is thus clear that Section 4 of the Ordinance is not regulatory within a proper exercise of the police power of the municipality.' Id., 135 N.J.L. at page 590, 52 A.2d at page 809: 'We conclude that Section 4 of the Ordinance under attack represents an attempt by the municipality under the guise of regulation, to prohibit and outlaw, under all circumstances and conditions, the use of sound amplifying systems.' Perhaps the last-quoted paragraph assumes that all sound trucks emit loud and raucous noises. 7 He wrote: 'Section 4 of the Ordinance, under which appellant was charged, prohibits any person from using for any purpose whatsoever, a loud speaker or sound amplifier which emits therefrom 'loud and raucous noises' and is attached to any vehicle operated or standing upon the streets of the City of Trenton.' In the brief this appears: 'This ordinance does not purport to prohibit loud and raucous noises. It attempts to prohibit sound devices which emit therefrom loud and raucous noises. This does not validate the ordinance or save it. In order to be a valid regulation the law must deal with the abuse and not with the use of the thing.' 8 Lovell v. City of Griffin, 303 U.S. 444, 450, 58 S.Ct. 666, 668, 82 L.Ed. 949. 9 Saia v. New York, 334 U.S. 558, 68 S.Ct. 1148; Cox v. New Hampshire, 312 U.S. 569, 574, 61 S.Ct. 762, 765, 85 L.Ed. 1049, 133 A.L.R. 1396; Winters v. New York, 333 U.S. 507, 514, 68 S.Ct. 665, 669. 10 In the exercise of the police power acts or things which could not be barred completely from use may be prohibited under some conditions and circumstances when they interfere with the rights of others. Cox v. New Hampshire, 312 U.S. 569, 574, 61 S.Ct. 762, 765, 85 L.Ed. 1049, 133 A.L.R. 1396; Chaplinsky v. New Hampshire, 315 U.S. 568, 62 S.Ct. 766, 86 L.Ed. 1031; Sage Stores Co. v. Kansas, 323 U.S. 32, 36, 65 S.Ct. 9, 10, 89 L.Ed. 25; Hutchinson Ice Cream Co. v. Iowa, 242 U.S. 153, 159, compare 160, 37 S.Ct. 28—30, 61 L.Ed. 217, Ann.Cas. 1917B, 643; Powell v. Pennsylvania, 127 U.S. 678, 682, 683, 8 S.Ct. 992, 994, 1257, 32 L.Ed. 253; Mugler v. Kansas, 123 U.S. 623, 657—663, 8 S.Ct. 273, 294—298, 31 L.Ed. 205. For examples of federal prohibitions, see Carolene Products Co. v. United States, 323 U.S. 18, 27, Third, 65 S.Ct. 1, 6, 89 L.Ed. 15, 155 A.L.R. 1371; United States v. Darby, 312 U.S. 100, 113, 116, 61 S.Ct. 451, 456, 458, 85 L.Ed. 609, 132 A.L.R. 1430; Kentucky Whip & Collar Co. v. Illinois Cent. R. Co., 299 U.S. 334, 348, 57 S.Ct. 277, 281, 81 L.Ed. 270; Butifield v. Stranahan, 192 U.S. 470, 492, 493, 24 S.Ct. 349, 353, 354, 48 L.Ed. 525. 11 Saia v. New York, 334 U.S. 558, 562, 68 S.Ct. 1148, 1150; Prince v. Massachusetts, 321 U.S. 158, 166, 64 S.Ct. 438, 442, 88 L.Ed. 645; Murdock v. Pennsylvania, 319 U.S. 105, 109, 63 S.Ct. 870, 873, 87 L.Ed. 1292, 146 A.L.R. 81; Cox v. New Hampshire, 312 U.S. 569, 61 S.Ct. 762, 85 L.Ed. 1049, 133 A.L.R. 1396; Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S.Ct. 900, 903, 84 L.Ed. 1213, 128 A.L.R. 1352; Whitney v. California, 274 U.S. 357, 371, 373, 47 S.Ct. 641, 646, 647, 71 L.Ed. 1095; Reynolds v. United States, 98 U.S. 145, 166, 25 L.Ed. 244. 12 See Schneider v. State of New Jersey, 308 U.S. 147, 162, 60 S.Ct. 146, 151, 84 L.Ed. 155. 13 Schneider v. State of New Jersey, 308 U.S. 147, 160, 161, 60 S.Ct. 146, 150, 84 L.Ed. 155: 'Municipal authorities, as trustees for the public, have the duty to keep their communities' streets open and available for movement of people and property, the primary purpose to which the streets are dedicated. So long as legislation to this end does not abridge the constitutional liberty of one rightfully upon the street to impart information through speech or the distribution of literature, it may lawfully regulate the conduct of those using the streets. For example, a person could not exercise this liberty by taking his stand in the middle of a crowded street, contrary to traffic regulations, and maintain his position to the stoppage of all traffic; a group of distributors could not insist upon a constitutional right to form a cordon across the street and to allow no pedestrian to pass who did not accept a tendered leaflet; nor does the guarantee of freedom of speech or of the press deprive a municipality of power to enact regulations against throwing literature broadcast in the streets. Prohibition of such conduct would not abridge the constitutional liberty since such activity bears no necessary relationship to the freedom to speak, write, print or distribute information or opinion.' Cantwell v. Connecticut, 310 U.S. 296, 308, 60 S.Ct. 900, 905, 84 L.Ed. 1213, 128 A.L.R. 1352: 'When clear and present danger of riot, disorder, interference with traffic upon the public streets, or other immediate threat to public safety, peace, or order, appears, the power of the state to prevent or punish is obvious. Equally obvious is it that a state may not unduly suppress free communication of views, religious or other, under the guise of conserving desirable conditions.' 14 Thomas v. Collins, 323 U.S. 516, 527, note 12, 530, 65 S.Ct. 315, 321, 322, 89 L.Ed. 430; Murdock v. Pennsylvania, 319 U.S. 105, 63 S.Ct. 870, 87 L.Ed. 1292, 146 A.L.R. 81 1 'There may be narrower scope for operation of the presumption of constitutionality when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten Amendments, which are deemed equally specific when held to be embraced within the Fourteenth. See Stromberg v. California, 283 U.S. 359, 369, 370, 51 S.Ct. 532, 535, 536, 75 L.Ed. 1117, 73 A.L.R. 1484; Lovell v. Griffin, 303 U.S. 444 (452), 58 S.Ct. 666 (669), 82 L.Ed. 949. 'It is unnecessary to consider now whether legislation which restricts those political processes which can ordinarily be expected to bring about repeal of undesirable legislation, is to be subjected to more exacting judicial scrutiny under the general prohibitions of the Fourteenth Amendment than are most other types of legislation. On restrictions upon the right to vote, see Nixon v. Herndon, 273 U.S. 536, 47 S.Ct. 446, 71 L.Ed. 759; Nixon v. Condon, 286 U.S. 73, 52 S.Ct. 484, 76 L.Ed. 984, 88 A.L.R. 458; on restraints upon the dissemination of information, see N ar v. Minnesota (ex rel. Olson), 283 U.S. 697, 713, 714, 718—720, 722, 51 S.Ct. 625, 630—633, 75 L.Ed. 1357; Grosjean v. American Press Co., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660; Lovell v. Griffin, supra; on interferences with political organizations, see Stromberg v. California, supra, 283 U.S. 359, 369, 51 S.Ct. 532, 535, 75 L.Ed. 1117, 73 A.L.R. 1484; Fiske v. Kansas, 274 U.S. 380, 47 S.Ct. 655, 71 L.Ed. 1108; Whitney v. California, 274 U.S. 357, 373—378, 47 S.Ct. 641, 647—649, 71 L.Ed. 1095; Herndon v. Lowry, 301 U.S. 242, 57 S.Ct. 732, 81 L.Ed. 1066; and see Holmes, J., in Gitlow v. New York, 268 U.S. 652, 673, 45 S.Ct. 625, (632), 69 L.Ed. 1138; as to prohibition of peaceable assembly, see De Jonge v. Oregon, 299 U.S. 353, 365, 57 S.Ct. 255, 260, 81 L.Ed. 278. 'Nor need we enquire whether similar considerations enter into the review of statutes directed at particular religious, Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070, 39 A.L.R. 468, or national, Meyer v. Nebraska, 262 U.S. 390, 43 S.Ct. 625, 67 L.Ed. 1042, 29 A.L.R. 1446; Bartels v. Iowa, 262 U.S. 404, 43 S.Ct. 628, 67 L.Ed. 1047; Farrington v. T. Tokushige, 273 U.S. 284, 47 S.Ct. 406, 71 L.Ed. 646, or racial minorities, Nixon v. Herndon, supra; Nixon v. Condon, supra: whether prejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry. Compare McCulloch v. Maryland, 4 Wheat. 316, 428, 4 L.Ed. 579; South Carolina State Highway Department v. Barnwell Bros., 303 U.S. 177 (184, n. 2), 58 S.Ct. 510 (513), 82 L.Ed. 734, and cases cited.'
23
336 U.S. 106 69 S.Ct. 463 93 L.Ed. 533 RAILWAY EXPRESS AGENCY, Inc., et al.v.PEOPLE OF STATE OF NEW YORK. No. 51. Argued Dec. 6, 1948. Decided Jan. 31, 1949. Appeal from the Court of Appeals of the State of New York. Mr. Ralph M. Carson, of New York City, for appellants. Mr. Stanley Buchsbaum, of New York City, for appellee. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Section 124 of the Traffic Regulations of the City of New York1 promulgated by the Police Commissioner provides: 2 'No person shall operate, or cause to be operated, in or upon any street an advertising vehicle; provided that nothing herein contained shall prevent the putting of business notices upon business delivery vehicles, so long as such vehicles are engaged in the usual business or regular work of the owner and not used merely or mainly for advertising.' 3 Appellant is engaged in a nation-wide express business. It operates about 1,900 trucks in New York City and sells the space on the exterior sides of these trucks for advertising. That advertising is for the most part unconnected with its own business.2 It was convicted in the magistrates court and fined. The judgment of conviction was sustained in the Court of Special Sessions. 188 Misc. 342, 67 N.Y.S.2d 732. The Court of Appeals affirmed without opinion by a divided vote. 297 N.Y. 703, 77 N.E.2d 13. The case is here on appeal. Judicial Code § 237(a), 28 U.S.C. § 344(a), as amended, 28 U.S.C.A. § 344(a) (now § 1257). 4 The Court in Fifth Ave. Coach Co. v. City of New York, 221 U.S. 467, 31 S.Ct. 709, 55 L.Ed. 815, sustained the predecessor ordinance to the present regulation over the objection that it violated the due process and equal protection clauses of the Fourteenth Amendment. It is true that that was a municipal ordinance resting on the broad base of the police power, while the present regulation stands or falls merely as a traffic regulation. But we do not believe that distinction warrants a different result in the two cases. 5 The Court of Special Sessions concluded that advertising on vehicles using the streets of New York City constitutes a distraction to vehicle drivers and to pedestrians alike and therefore affects the safety of the public in the use of the streets.3 We do not sit to weigh evidence on the due process issue in order to determine whether the regulation is sound or appropriate; nor is it our function to pass judgment on its wisdom. See Olsen v. State of Nebraska, 313 U.S. 236, 61 S.Ct. 862, 85 L.Ed. 1305, 133 A.L.R. 1500. We would be trespassing on one of the most intensely local and specialized of all municipal problems if we held that this regulation had no relation to the traffic problem of New York City. It is the judgment of the local authorities that it does have such a relation. And nothing has been advanced which shows that to be palpably false. 6 The question of equal protection of the laws is pressed more strenuously on us. It is pointed out that the regulation draws the line between advertisements of products sold by the owner of the truck and general advertisements. It is argued that unequal treatment on the basis of such a distinction is not justified by the aim and purpose of the regulation. It is said, for example, that one of appellant's trucks carrying the advertisement of a commercial house would not cause any greater distraction of pedestrians and vehicle drivers than if the commercial house carried the same advertisement on its own truck. Yet the regulation allows the latter to do what the former is forbidden from doing. It is therefore contended that the classification which the regulation makes has no relation to the traffic problem since a violation turns not on what kind of advertisements are carried on trucks but on whose trucks they are carried. 7 That, however, is a superficial way of analyzing the problem, even if we assume that it is premised on the correct construction of the regulation. The local authorities may well have concluded that those who advertised their own wares on their trucks do not present the same traffic problem in view of the nature or extent of the advertising which they use. It would take a degree of omniscience which we lack to say that such is not the case. If that judgment is correct, the advertising displays that are exempt have less incidence on traffic than those of appellants. 8 We cannot say that that judgment is not an allowable one. Yet if it is, the classification has relation to the purpose for which it is made and does not contain the kind of discrimination against which the Equal Protection Clause affords protection. It is by such practical considerations based on experience rather than by theoretical inconsistencies that the question of equal protection is to be answered. Patsone v. Commonwealth of Pennsylvania, 232 U.S. 138, 1 4, 34 S.Ct. 281, 282, 58 L.Ed. 539; Marcus Brown Holding Co. v. Feldman, 256 U.S. 170, 198, 199, 41 S.Ct. 465, 466, 65 L.Ed. 877; Metropolitan Casualty Co. of New York v. Brownell, 294 U.S. 580, 585, 586, 55 S.Ct. 538, 540, 541, 79 L.Ed. 1070. And the fact that New York City sees fit to eliminate from traffic this kind of distraction but does not touch what may be even greater ones in a different category, such as the vivid displays on Times Square, is immaterial. It is no requirement of equal protection that all evils of the same genus be eradicated or none at all. Central Lumber Co. v. State of South Dakota, 226 U.S. 157, 160, 33 S.Ct. 66, 67, 57 L.Ed. 164. 9 It is finally contended that the regulation is a burden on interstate commerce in violation of Art. I, § 8 of the Constitution. Many of these trucks are engaged in delivering goods in interstate commerce from New Jersey to New York. Where traffic control and the use of highways are involved and where there is no conflicting federal regulation, great leeway is allowed local authorities, even though the local regulation materially interferes with interstate commerce. The case in that posture is controlled by South Carolina State Highway Department v. Barnwell Bros., 303 U.S. 177, 187 et seq., 58 S.Ct. 510, 514, 82 L.Ed. 734. And see Maurer v. Hamilton, 309 U.S. 598, 60 S.Ct. 726, 84 L.Ed. 969, 135 A.L.R. 1347. 10 Affirmed. 11 Mr. Justice RUTLEDGE acquiesces in the Court's opinion and judgment, dubitante on the question of equal protection of the laws. 12 Mr. Justice JACKSON, concurring. 13 There are two clauses of the Fourteenth Amendment which this Court may invoke to invalidate ordinances by which municipal governments seek to solve their local problems. One says that no state shall 'deprive any person of life, liberty, or property, without due process of law'. The other declares that no state shall 'deny to any person within its jurisdiction the equal protection of the laws.' 14 My philosophy as to the relative readiness with which we should resort to these two clauses is almost diametrically opposed to the philosophy which prevails on this Court. While claims of denial of equal protection are frequently asserted, they are rarely sustained. But the Court frequently uses the due process clause to strike down measures taken by municipalities to deal with activities in their streets and public places which the local authorities consider to create hazards, annoyances or discomforts to their inhabitants. And I have frequently dissented when I thought local power was improperly denied. See, for example, opinion in Douglas v. City of Jeannette and companion cases, 319 U.S. 157, 166, 63 S.Ct. 877, 882, 87 L.Ed. 1324; and dissents in Saia v. People of State of New York, 334 U.S. 558, 566, 68 S.Ct. 1148; Prince v. Commonwealth of Massachusetts, 321 U.S. 158, 176, 64 S.Ct. 438, 447, 88 L.Ed. 645. 15 The burden should rest heavily upon one who would persuade us to use the due process clause to strike down a substantive law or ordinance. Even its provident use against municipal regulations frequently disables all government—state, municipal and federal from dealing with the conduct in question because the requirement of due process is also applicable to State and Federal Governments. Invalidation of a statute or an ordinance on due process grounds leaves ungoverned and ungovernable conduct which many people find objectionable. 16 Invocation of the equal protection clause, on the other hand, does not disable any governmental body from dealing with the subject at hand. It merely means that the prohibition or regulation must have a broader impact. I regard it as a salutary doctrine that cities, states and the Federal Government must exercise their powers so as not to discriminate between their inhabitants except upon some reasonable differentiation fairly related to the object of regulation. This equality is not merely abstract justice. The framers of the Constitution knew, and we should not forget today, hat there is no more effective practical guaranty against arbitrary and unreasonable government than to require that the principles of law which officials would impose upon a minority must be imposed generally. Conversely, nothing opens the door to arbitrary action so effectively as to allow those officials to pick and choose only a few to whom they will apply legislation and thus to escape the political retribution that might be visited upon them if larger numbers were affected. Courts can take no better measure to assure that laws will be just than to require that laws be equal in operation. 17 This case affords an illustration. Even casual observations from the sidewalks of New York will show that an ordinance which would forbid all advertising on vehicles would run into conflict with many interests, including some, if not all, of the great metropolitan newspapers, which use that advertising extensively. Their blandishment of the latest sensations is not less a cause of diverted attention and traffic hazard than the commonplace cigarette advertisement which this truck-owner is forbidden to display. But any regulation applicable to all such advertising would require much clearer justification in local conditions to enable its enactment than does some regulation applicable to a few. I do not mention this to criticize the motives of those who enacted this ordinance, but it dramatizes the point that we are much more likely to find arbitrariness in the regulation of the few than of the many. Hence, for my part, I am more receptive to attack on local ordinances for denial of equal protection than for denial of due process, while the Court has more often used the latter clause. 18 In this case, if the City of New York should assume that display of any advertising on vehicles tends and intends to distract the attention of persons using the highways and to increase the dangers of its traffic, I should think it fully within its constitutional powers to forbid it all. The same would be true if the City should undertake to eliminate or minimize the hazard by any generally applicable restraint, such as limiting the size, color, shape or perhaps to some extent the contents of vehicular advertising. Instead of such general regulation of advertising, however, the City seeks to reduce the hazard only by saying that while some may, others may not exhibit such appeals. The same display, for example, advertising cigarettes, which this appellant is forbidden to carry on its trucks, may be carried on the trucks of a cigarette dealer and might on the trucks of this appellant if it dealt in cigarettes. And almost an identical advertisement, certainly one of equal size, shape, color and appearance, may be carried by this appellant if it proclaims its own offer to transport cigarettes. But it may not be carried so long as the message is not its own but a cigarette dealer's offer to sell the same cigarettes. 19 The City urges that this applies equally to all persons of a permissible classification, because all that it does is (1) forbid all inhabitants of New York City from engaging in the business of selling advertising space on trucks which move as part of the city traffic; (2) forbid all truck owners from incidentally employing their vehicles for such purpose, with the exception that all truck owners can advertise their own business on their own trucks. It is argued that, while this does not eliminate vehicular advertising, it does eliminate such advertising for hire and to this extent cuts down the hazard sought to be controlled. 20 That the difference between carrying on any business for hire and engaging in the same activity on one's own is a sufficient one to sustain some types of regulations of the one that is not applied to the other, is almost elementary. But it is usual to find such regulations applied to the very incidents wherein the two classes present different problems, such as in charges, liability and quality of service. 21 The difference, however, is invok d here to sustain a discrimination in a problem in which the two classes present identical dangers. The courts of New York have declared that the sole nature and purpose of the regulation before us is to reduce traffic hazards. There is not even a pretense here that the traffic hazard created by the advertising which is forbidden is in any manner or degree more hazardous than that which is permitted. It is urged with considerable force that this local regulation does not comply with the equal protection clause because it applies unequally upon classes whose differentiation is in no way relevant to the objects of the regulation. 22 As a matter of principle and in view of my attitude toward the equal protection clause, I do not think differences of treatment under law should be approved on classification because of differences unrelated to the legislative purpose. The equal protection clause ceases to assure either equality or protection if it is avoided by any conceivable difference that can be pointed out between those bound and those left free. This Court has often announced the principle that the differentiation must have an appropriate relation to the object of the legislation or ordinance. See, for example, Mayflower Farms v. Ten Eyck, 297 U.S. 266, 56 S.Ct. 457, 80 L.Ed. 675; Smith v. Cahoon, 283 U.S. 553, 51 S.Ct. 582, 75 L.Ed. 1264. In the latter case a motor vehicle regulation was struck down upon citation of many authorities because 'such a classification is not based on anything having relation to the purpose for which it is made.' 283 U.S. 553, 567, 51 S.Ct. 582, 587. If that were the situation here, I should think we should reach a similar conclusion. 23 The question in my mind comes to this. Where individuals contribute to an evil or danger in the same way and to the same degree, may those who do so for hire be prohibited, while those who do so for their own commercial ends but not for hire be allowed to continue? I think the answer has to be that the hireling may be put in a class by himself and may be dealt with differently than those who act on their own. But this is not merely because such a discrimination will enable the lawmaker to diminish the evil. That might be done by many classifications, which I should think wholly unsustainable. It is rather because there is a real difference between doing in self-interest and doing for hire, so that it is one thing to tolerate action from those who act on their own and it is another thing to permit the same action to be promoted for a price. 24 Certainly the presence of absence of hire has been the hook by which much highway regulations has been supported. Rights usual to passengers may be denied to the nonpaying guest in an automobile to limit vexatious litigation. Silver v. Silver, 280 U.S. 117, 50 S.Ct. 57, 74 L.Ed. 221, 65 A.L.R. 939. A state may require security against injuries from one using the highways for hire that it does not exact from others because, as Mr. Justice Sutherland put it, 'The streets belong to the public and are primarily for the use of the public in the ordinary way. Their use for the purposes of gain is special and extraordinary, and, generally at least, may be prohibited or conditioned as the Legislature deems proper.' Packard v. Banton, 264 U.S. 140, 144, 44 S.Ct. 257, 259, 68 L.Ed. 596. In the case of those who let out automobiles to those who drive them, the Court, through Mr. Justice Butler, said of the State, 'It may prohibit or condition as it deems proper the use of city streets as a place for the carrying on of private business.' Hodge Drive-It-Yourself Co. v. City of Cincinnati, 284 U.S. 335, 337, 52 S.Ct. 144, 145, 76 L.Ed. 323. See also Sproles v. Binford, 286 U.S. 374, 393, 52 S.Ct. 581, 586, 76 L.Ed. 1167; Stephenson v. Binford, 287 U.S. 251, 278, 53 S.Ct. 181, 189, 77 L.Ed. 288, 87 A.L.R. 721; Hicklin v. Coney, 290 U.S. 169, 54 S.Ct. 142, 78 L.Ed. 247; Stanley v. Public Utilities Commission, 295 U.S. 76, 55 S.Ct. 628, 79 L.Ed. 1311; Aero Mayflower T ansit Co. v. Georgia Public Service Commission, 295 U.S. 285, 55 S.Ct. 709, 79 L.Ed. 1439; Dixie Ohio Express Co. v. State Revenue Commission, 306 U.S. 72, 59 S.Ct. 435, 83 L.Ed. 495. The rule was flatly stated for the Court by Mr. Justice Brandeis: 'In dealing with the problem of safety of the highways, as in other problems of motor transportation, the state may adopt measures which favor vehicles used solely in the business of their owners, as distinguished from those which are operated for hire by carriers who use the highways as their place of business.' Bradley v. Public Utilitics Commission, 289 U.S. 92, 97, 53 S.Ct. 577, 579, 77 L.Ed. 1053, 85 A.L.R. 1131. However, it is otherwise if the discriminations within the regulates class are based on arbitrary differences as to commodities carried having no relation to the object of the regulation. Smith v. Cahoon, 283 U.S. 553, 51 S.Ct. 582, 75 L.Ed. 1264. See also Quaker City Cab Co. v. Commonwealth of Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927. 25 Of course, this appellant did not hold itself out to carry or display everybody's advertising, and its rental of space on the sides of its trucks was only incidental to the main business which brought its trucks into the streets. But it is not difficult to see that, in a day of extravagant advertising more or less subsidized by tax deduction, the rental of truck space could become an obnoxious enterprise. While I do not think highly of this type of regulation, that is not my business, and in view of the control I would concede to cities to protect citizens in quiet and orderly use for their proper purposes of the highways and public places, see dissent in Saia v. People of State of New York, 334 U.S. 558, 68 S.Ct. 1148, I think the judgment below must be affirmed. 1 This regulation was promulgated by the Police Commissioner pursuant to the power granted the police department under § 435 of the New York City Charter which provides as follows: 'The police department and force shall have the power and it shall be their duty to * * * regulate, direct, control and restrict the movement of vehicular and pedestrian traffic for the facilitation of traffic, and the convenience of the public as well as the proper protection of human life and health; * * * The commissioner shall make such rules and regulations for the conduct of pedestrian and vehicular traffic in the use of the public streets, squares and avenues as he may deem necessary * * *.' 2 The advertisements for which appellant was convicted consisted of posters from three by seven feet to four by ten feet portaying Camel Cigarettes, Ringling Brothers and Barnum & Bailey Circus, and radio tation WOR. Drivers of appellant's trucks carrying advertisements of Prince Albert Smoking Tobacco and U.S. Navy were also convicted. 3 The element of safety was held to be one of the standards by which the regulations of the Police Commissioner were to be judged. We accept that construction of the authority of the Police Commissioner under § 435 of the Charter, note 1, supra. See Price v. State of Illinois, 238 U.S. 446, 451, 35 S.Ct. 892, 894, 59 L.Ed. 1400; Hartford Accident & Indemnity Co. v. N. O. Nelson Co., 291 U.S. 352, 358, 54 S.Ct. 392, 394, 78 L.Ed. 840; Central Hanover Bank & Trust Co. v. Kelly, 319 U.S. 94, 97, 63 S.Ct. 945, 947, 87 L.Ed. 1282.
23
336 U.S. 169 69 S.Ct. 432 93 L.Ed. 585 OTTv.MISSISSIPPI VALLEY BARGE LINE CO. et al. No. 244. Argued Jan. 5, 1949. Decided Feb. 7, 1949. Rehearing Denied March 7, 1949. See 336 U.S. 928, 69 S.Ct. 653. Appeal from the United States Court of Appeals for the Fifth circuit. Mr. Howard W. Lenfant, of New Orleans, La., for appellants. Mr. Arthur A. Moreno, of New Orleans, La., for appellees. Mr. Justice DOUGLAS delivered the opinion of the Court. 1 Appellees are foreign corporations which transport freight in interstate commerce up and down the Mississippi and Ohio Rivers under certificates of public convenience and necessity issued by the Interstate Commerce Commission. Each has an office or agent in Louisiana but its principal place of business is elsewhere. The barges and towboats which they use in this commerce are enrolled at ports outside Louisiana; but they are not taxed by the states of incorporation. 2 In the trips to Louisiana a tugboat brings a line of barges to New Orleans where the barges are left for unloading and reloading. Then the tugboat pickes up loaded barges for return trips to ports outside that state. There is no fixed schedule for movement of the barges. But the turn-arounds are accomplished as quickly as possible with the result that the vessels are within Louisiana for such comparatively short periods of time as are required to discharge and take on cargo and to make necessary and temporary repairs.1 3 Louisiana and the City of New Orleans levied ad valorem taxes under assessments based on the ratio between the total number of miles of appellees' lines in Louisiana and the total number of miles of the entire line.2 The taxes were paid under protest and various suits, which have been consolidated, were instituted in the District Court by reason of diversity of citizenship for their return, the contention being that the taxes violated the Due Process Clause of the Fourteenth Amendment and the Commerce Clause. Const. art. 1, § 8. The District Court gave judgment for the appellees holding that the taxes violated the Due Process Clause of the Fourteenth Amendment because the vessels had acquired no tax situs in Louisiana. D.C., 68 F.Supp 30. The Court of Appeals affirmed. 5 Cir., 166 F.2d 509. Certiorari having been denied, 334 U.S. 859, 68 S.Ct. 1530, the case was brought here by appeal. Judicial Code § 240, 28 U.S.C. § 347(b), 28 U.S.C.A. § 347(b) (now § 1254). 4 It is argued that the rule of tax apportionment for rolling stock of railroads in interstate commerce which was introduced by Pullman's Palace-Car Co. v. Commonwealth of Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613, should be applied here. In that case a nondomiciliary State was allowed to tax an interstate rail carrier by taking as the basis of assessment such proportion of its capital stock as the number of miles of railroad over which its cars ran within the State bore to the total number of miles in all the States.3 The Court of Appeals thought that case and its offspring inapplicable because of our decisions in Hays v. Pacific Mail S. Co., 17 How. 596, 15 L.Ed. 254; City of St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 20 L.Ed. 192; Morgan v. Parham, 16 Wall. 471, 21 L.Ed. 302; Ayer & Lord Tie Co. v. Commonwealth of Kentucky, 202 U.S. 409, 26 S.Ct. 679, 50 L.Ed. 1082, 6 Ann.Cas. 205; and Southern Pacific Co. v. Commonwealth of Kentucky, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96. Some of these cases involved vessels which moved on the high seas. Hays v. Pacific Mail S. Co., supra; Morgan v. Parham, supra; Southern Pacific Co. v. Commonwealth of Kentucky, supra. Others involved vessels moving in our inland waters, St. Louis v. Wiggins Ferry Co., supra; Ayer & Lord Tie Co. v. Commonwealth of Kentucky, supra. In each situation the Court evolved the rule that the vessels were taxable solely at the domicile of the owner, save where they had acquired an actual situs elsewhere as they did when they operated wholly on the waters within one Sta e. Old Dominion S. Co. v. Commonwealth of Virginia, 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059, 3 Ann.Cas. 1100. So far as ships of American ownership and registry sailing the high seas are concerned, it was thought that if they were not taxable at the domicile they might not be taxable at all. See Southern Pacific Co. v. Commonwealth of Kentucky, supra, 222 U.S. at page 75, 32 S.Ct. at page 17, 56 L.Ed. 96. But in neither situation was the element of apportionment involved or considered. 5 We do not reach the question of taxability of ocean carriage but confine our decision to transportation on inland waters. We see no practical difference so far as either the Due Process Clause or the Commerce Clause is concerned whether it is vessels or railroad cars that are moving in interstate commerce. The problem under the Commerce Clause is to determine 'what portion of an interstate organism may appropriately be attributed to each of the various states in which it functions.' Nashville, C. & St. L.R. Co. v. Browning, 310 U.S. 362, 365, 60 S.Ct. 968, 970, 84 L.Ed. 1254. So far as due process is concerned the only question is whether the tax in practical operation has relation to opportunities, benefits, or protection conferred or afforded by the taxing State. See Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444, 61 S.Ct. 246, 249, 85 L.Ed. 267, 130 A.L.R. 1229. Those requirements are satisfied if the tax is fairly apportioned to the commerce carried on within the State. 6 There is such an apportionment under the formula of the Pullman case. Moreover, that tax, like taxes on property, taxes on activities confined solely to the taxing State,4 or taxes on gross receipts apportioned to the business carried on there,5 has no cumulative effect caused by the interstate character of the business. Hence there is no risk of multiple taxation. Finally, there is no claim in this case that Louisiana's tax discriminates against interstate commerce. It seems therefore to square with our decisions holding that interstate commerce can be made to pay its way by bearing a nondiscriminatory share of the tax burden which each State may impose on the activities or property within it borders. See Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254, 255, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944, and cases cited. We can see no reason which should put water transportation on a different constitutional footing than other interstate enterprises. 7 It is argued that the doctrine of the Pullman case is inapplicable here because its basis is the continuous protection afforded by the taxing State throughout the tax year to a portion of the commerce. See 141 U.S. at page 26, 11 S.Ct. at page 879, 35 L.Ed. 613; Union Refrigerator Transit Co. v. State of Kentucky, 199 U.S. 194, 206, 26 S.Ct. 36, 38, 50 L.Ed. 550, 4 Ann.Cas. 943; New York Central R. Co. v. Miller, 202 U.S. 584, 597, 598, 26 S.Ct. 714, 717, 50 L.Ed. 1155; Northwest Airlines v. State of Minnesota, 322 U.S. 292, 297, 64 S.Ct. 950, 953, 88 L.Ed. 1283, 153 A.L.R. 245. It is said in this case that the visits of the vessels to Louisiana were sporadic and for fractional periods of the year only and that there was no average number of vessels in the state every day. The District Court indeed said that there was no showing that the particular portion of the property sought to be taxed was regularly and habitually used and employed in Louisiana for the whole of the taxable year. 8 We do not stop to resolve the question. Louisiana's Attorney General states in his brief that the statute 'was intended to cover and actually covers here, an average portion of property permanently within the State—and by permanently is meant throughout the taxing year.' Appellees do not suggest an absence of any administrative or judicial remedy in Louisiana to correct errors in the assessment. Cf. Township of Hillsborough v. Cromwell, 326 U.S. 620, 66 S.Ct. 445, 90 L.Ed. 358. The District Court does not sit to police them. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407; Arkansas Corp. Commission v. Thompson, 313 U.S. 132, 61 S.Ct. 888, 85 L.Ed. 1244; Gardner v. State of New Jersey, 329 U.S. 565, 578, 579, 67 S.Ct. 467, 474, 91 L.Ed. 504. 9 Reversed. 10 Mr. Justice JACKSON dissents. 1 The District Court found that of the total time covered by appellees' interstate commerce operations in 1943, the amount spent by their vessels in Louisiana or in New Orleans was approximately as follows: Per cent American's tugboats.............. 3.8 Mississippi Valley's tugboats.. 17.25 Mississippi Valley's barges..... 12.7 Similar findings for 1944 were: Mississippi Valley's tugboats. 10.2 Mississippi Valley's barges... 17.5 Union's tugboats............... 2.2 Union's barges................. 4.3 2 The statute, 6 Dart's La.Gen.Stat. § 8370, Act No. 170 of 1898, § 29, as amended, Act No. 59 of 1944, § 1, provides in part as follows: '(a) * * * All movable and regularly moved locomotives, cars, vehicles, craft, barges, boats and similar things, which have not the character of immovables by their nature or by the disposition of law, either owned or leased for a definite and specific term stated and operated (such, illustratively but not exclusively, as the engines, cars and all rolling stock of railroads; the boats, barges and other water craft and floating equipment of water transportation lines); * * * '(f) The 'movable personal property' of such persons, firms, or corporations, whose line, route, or system is partly within this State and partly within another state or states, shall be by the Commission valued for the purposes of taxation and by it assessed; and such assessment by it fairly divided, allocated and certified to each such parish and municipality as herein defined, within this State, within, through or under which same be operated; said division, allocation and certification to be determined in the following manner and according to the following method; such assessment to be there subject to all state taxes and to all parish taxes and to all municipal taxes, as same are herein defined and to none other. '1. The portion of all of such property of such person, firm or corporation shall be assessed in the State of Louisiana, wheresoever, in the ratio which the number of miles of the line, within the State bears to the total number of miles of the entire line, route or system, here and elsewhere, over which such movable personal property is so operated or so used by such person, firm or corporation. '(g) For the purposes of such valuation, assessment and taxation in Louisiana such parishes and municipalities shall be and the same are hereby fixed and declared, respectively, to be a taxable situs in this State of such movable personal property, whether same be operated entirely within or partly within and partly without this State and whether said taxpayer be a resident or a nonresident of Louisiana and irrespective of whether or not here domiciled locally or otherwise.' 3 And see Pittsburgh C.C. & St. L.R. Co. v. Backus, 154 U.S. 421, 14 S.Ct. 1114, 38 L.Ed. 1031; Adams Express Co. v. Ohio State Auditor, 165 U.S. 194, 17 S.Ct. 305, 41 L.Ed. 683; 166 U.S. 185, 17 S.Ct. 604, 41 L.Ed. 965; American Express Co. v. State of Indiana, 165 U.S. 255, 17 S.Ct. 991, 41 L.Ed. 707; Adams Express Co. v. Commonwealth of Kentucky, 166 U.S. 171, 17 S.Ct. 527, 41 L.Ed. 960; Union Refrigerator Transit Co. v. Commonwealth of Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150, 4 Ann.Cas. 493; New York Central R. Co. v. Miller, 202 U.S. 584, 26 S.Ct. 714, 50 L.Ed. 1155; Wells, Fargo & Co. v. State of Nevada, 248 U.S. 165, 39 S.Ct. 62, 63 L.Ed. 190; St. Louis & E. St. L.R. Co. v. Hagerman, 256 U.S. 314, 41 S.Ct. 488, 65 L.Ed. 946; Southern R. Co. v. Watts, 260 U.S. 519, 43 S.Ct. 192, 67 L.Ed. 375; Rowley v. Chicago & N.W.R. Co., 293 U.S. 102, 55 S.Ct. 55, 79 L.Ed. 222; Nashville, C. & St. L.R. Co. v. Browning, 310 U.S. 362, 60 S.Ct. 968, 84 L.Ed. 1254. 4 New York, L.E. & W.R. Co. v. Commonwealth of Pennsylvania, 158 U.S. 431, 15 S.Ct. 896, 39 L.Ed. 1043; Utah Power & Light Co. v. Pfost, 286 U.S. 165, 52 S.Ct. 548, 76 L.Ed. 1038; Coverdale v. Arkansas-Louisiana Pipe L. Co., 303 U.S. 604, 58 S.cT. 736, 82 L.Ed. 1043. 5 State of Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 163, 35 L.Ed. 994; Wisconsin & M.R. Co. v. Powers, 191 U.S. 379, 24 S.Ct. 107, 48 L.Ed. 229; United States Express Co. v. State of Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459; Cudahy Packing Co. v. State of Minnesota, 46 U.S. 450, 38 S.Ct. 373, 62 L.Ed. 827; Illinois Central R. Co. v. State of Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670.
78
336 U.S. 155 69 S.Ct. 425 93 L.Ed. 569 FISHERv.PACE, Sheriff. No. 45. Argued and Submitted Dec. 9, 1948. Decided Feb. 7, 1949. Rehearing Denied March 7, 1949. See 336 U.S. 928, 69 S.Ct. 653. Mr. R. Dean Moorhead, of Austin, Tex., for petitioner. Mr. Quentin Keith, of Beaumont, Tex., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 While participating as counsel in the trial of a cause the petitioner, Joe J. Fisher, was adjudged guilty of contempt committed in the presence of the court by the District Court of Jasper County, Texas. The petitioner's client was the plaintiff in an action under the state Workmen's Compensation Law. Vernon's Ann.Civ.St.Tex. art. 8306 et seq. The case was being tried before a jury and the parties had stipulated as to the average weekly wage of the claimant and the rate of compensation per week. The only remaining questions to be determined were as to the extent and duration of the incapacity resulting from an injury to the claimant's foot. Seven special issues, designed to furnish an answer to these problems and limited to them, were submitted to the jury. 2 Thereafter petitioner began his opening argument to the jury during which the following occurrence took place, as shown by the trial court's order of contempt and commitment: 3 'Opening Argument to Jury of Plaintiff's Attorney, Joe J. Fisher 4 'Now, bear in mind, gentlemen, that this is what we call a specific injury. A general injury is an injury to the entire body. This is what is known as a specific injury, and it is confined to the left foot. We have specific injuries where you have injuries to the eye, to your hand, and to your foot; this is an injury to the foot, to the left foot; and the law states the amount of maximum compensation which a person can receive for such an injury, that is, one hundred and twenty-five weeks. That is the most compensation Anderson Godfrey could receive, would be one hundred and twenty-five weeks, because his injury is confined to his left foot. That is all we are asking. Now, that means one hundred and twenty-five weeks times the average weekly compensation rate. 5 'By Mr. Cox: Your Honor please— 6 'By the Court: Wait a minute. 7 'By Mr. Cox: The jury is not concerned with the computation; it has only one series of issues. That is not before the jury. 8 'By the Court: That has all been agreed upon. 9 'By Mr. Fisher: I think it is material, Your Honor, to tell the jury what the average weekly compensation is of this claimant so they can tell where he is. 10 'By the Court: They are not interested in dollars and cents. 11 'By Mr. Fisher: They are interested to this extent— 12 'By the Court: Don't argue with me. Go ahead. I will give you your exception to it. 13 'By Mr. Fisher: Note our exception. 14 'By the Court: All right. 15 '(By Mr. Fisher:) This negro, as I stated, can onl recover one hundred and twenty-five weeks compensation, at whatever compensation the rate will figure under the law. 16 'By Mr. Cox: I am objecting to that discussion, Your Honor, as to what the plaintiff can recover. 17 'By the Court: Gentlemen! Mr. Fisher, you know the rule, and I have sustained his objection. 18 'By Mr. Fisher: I am asking— 19 'By the Court: Don't argue with me. Gentlemen, don't give any consideration to the statement of Mr. Fisher. 20 'By Mr. Fisher: Note our exception. I think I have a right to explain whether it is a specific injury or general injury. 21 'By the Court: I will declare a mistrial if you mess with me two minutes and a half, and fine you besides. 22 'By Mr. Fisher: That is all right. We take exception to the conduct of the Court. 23 'By the Court: That is all right; I will fine you $25.00. 24 'By Mr. Fisher: If that will give you any satisfaction. 25 'By the Court: That is $50.00; that is $25.00 more. Mr. Sheriff come get it. Pay the clerk $50.00. 26 'By Mr. Fisher: You mean for trying to represent my client? 27 'By the Court: No, sir; for contempt of Court. Don't argue with me. 28 'By Mr. Fisher: I am making no effort to commit contempt, but merely trying to represent the plaintiff and stating in the argument— 29 'By the Court: Don't tell me. Mr. Sheriff, take him out of the courtroom. Go on out of the courtroom. I fine you three days in jail. 30 'By Mr. Fisher: If that will give you any satisfaction; you know you have all the advantage by you being on the bench. 31 'By the Court: That will be a hundred dollar fine and three days in jail. Take him out. 32 'By Mr. Fisher: I demand a right to state my position before the audience. 33 'By the Court: Don't let him stand there. Take him out.' 34 The sheriff held the petitioner in custody upon the verbal order of the court until an amended order in conformity with Texas law,1 setting forth in full the above proceedings together with a formal commitment, was filed later the same day. Upon his application for a writ of habeas corpus from the Supreme Court of Texas to secure his release from the commitment, the judgment for contempt was upheld and the petitioner was denied any relief by that court and was remanded to the custody of the sheriff to undergo the punishment adjudged by the trial court. Ex parte Fisher, Tex.Sup., 206 S.W.2d 1000. As the application alleged a denial of due process of law under the Fourteenth Amendment to the Constitution of the United States, we granted certiorari to consider its application to this conviction for contempt. 334 U.S. 827, 68 S.Ct. 1339. The claimed denial of due process consists of an alleged refusal to review the facts to ascertain whether a contempt was committed and in the alternative, if the facts were reviewed, due process was denied because no facts constituting contempt appear. 35 Historically and rationally the inherent power of courts to punish contempts in the face of the court without further proof of facts and without aid of jury is not open to question.2 This attribute of courts is essential to preserve their authority and to prevent the administration of justice from falling into disrepute. Such summary conviction and punishment accords due process of law.3 36 There must be adequate facts to support an order for contempt in the face of the court. Contrary to the contention of the petitioner the state Supreme Court evaluated the facts to decide whether there was sufficient evidence to support the judgment of the trial court and held that there was. The opinion of the Texas Supreme Court (206 S.W.2d 1003), states that the court set out to review the facts 'for the purpose of determining whether they constituted acts sufficient to confer jurisdiction upon the court' to enter the contempt order.4 In other words, the highest court of the state proposed to satisfy itself that there was substantial evidence to validate the judgment of contempt and to insure that petitioner was not 'restrained of his liberty without due process of law.' After a careful analysis of the facts as disclosed by the judgment of the trial court, the conclusion was reached that the conduct of the petitioner was clearly sufficient to support the power of the court to punish summarily the contempt committed in its presence. 37 The judgment of the Supreme Court of Texas must be affirmed. In a case of this type the transcript of the record cannot convey to us the complete picture of the courtroom scene. It does not depict such elements of misbehavior as expression, manner of speaking, bearing, and attitude of the petitioner. Reliance must be placed upon the fairness and objectivity of the presiding judge. The occurrence must be viewed as a unit in order to appraise properly the misconduct, and the relationship of the petitioner as an officer of the court must not be lost sight of.5 38 The state Supreme Court pointed out that its practice of submitting special issues to the jury was adopted in order to remove from the jury's consideration the effect on the ultimate outcome of the case of their answers to questions of disputed facts.6 In this case, the jury might be tempted to find a long incapacity or a severe injury if they knew the amount of recovery was limited by the employee's wage and rate of compensation. Counsel are required to confine their arguments to the evidence and must not touch upon matters withdrawn from the consideration of the jury.7 Yet here, petitioner, a member of the Texas bar, ignored this rule and at the outset of his address to the jury exceeded the bounds of permissible argument by trying to tell the jury the maximum compensation which their answers to the special issues would allow his client. On objection of the opposing counsel petitioner was stopped by the trial judge, but in the face of the court's decision he persisted in trying to tell the jury the effect of their answers. He switched his explanation of the stipulated amou t of recovery from the words 'one hundred and twenty-five weeks times the average weekly compensation rate' to 'one hundred and twenty-five weeks compensation, at whatever compensation the rate will figure under the law.' The change obviously brought before the jury information on the limitation to the amount of recovery—a factor held by the trial judge inadmissible under the special issues. In addition to this stub-born effort to bring excluded matter to the knowledge of the jury, the petitioner twice refused to heed the court's admonition not to argue the point. As the Supreme Court said, 'It was the duty and power of the trial judge in the trial of the compensation suit to determine the type, manner and character of the argument before the jury. Of course his rulings thereon were subject to review in the appellate courts, but he has the power to make them whether right or wrong. If they are erroneous the injured party has the plain, simple and adequate remedy of appeal. It was thus the duty of counsel to abide by his decisions even if erroneous; and if any rights of his clients were violated the remedy was by exception and appeal. Any other procedure would result in mockery of our trial courts and would destroy every concept of orderly process in the administration of justice.'8 This judgment of the Supreme Court turned on their understanding of Texas law and practice. We see nothing in their opinion or conclusion that indicates any disregard of petitioner's rights. The conduct of a judge should be such as to command respect for himself as well as for his office. We cannot say, however, that mildly provocative language from the bench puts a constitutional protection around an attorney so as to allow him to show the contempt for judge and court manifested by this record, particularly the last few sentences of the altercation. 39 The judgment of the Supreme Court of Texas accordingly is 40 Affirmed. 41 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting. 42 The power to punish for contempt committed in open court was recognized long ago as a means of vindicating the dignity and authority of the court. See Ex parte Terry, 128 U.S. 289, 301—304, 9 S.Ct. 77, 78, 79, 32 L.Ed. 405 and cases cited. But its exercise must be narrowly confined lest it become an instrument of tyranny. Chief Justice Taft in Cooke v. United States, 267 U.S. 517, 539, 45 S.Ct. 390, 396, 69 L.Ed. 767, warned that its exercise by a federal court is 'a delicate one, and care is needed to avoid arbitrary or oppressive conclusions.' The same restraint is necessary under our constitutional scheme when state courts are claiming the right to take a person by the heels and fine or imprison him for contempt without a trial or an opportunity to defend. In Bridges v. State of California, 314 U.S. 252, 62 S.Ct. 190, 86 L.Ed. 192, 159 A.L.R. 1346; Pennekamp v. State of Florida, 328 U.S. 331, 66 S.Ct. 1029, 90 L.Ed. 1295; and Craig v. Harney, 331 U.S. 367, 67 S.Ct. 1249, 91 L.Ed. 1546, we narrowly restricted the power to punish summarily for constructive contempts in order to maintain freedom of press and of speech in their preferred position. Freedom of speech in the courtroom deserves the same protection. 43 Fisher's conviction is sustained because it is said that he persisted in trying to tell the jury what the judge held to be improper. I do not so read the record. The judge sustained an objection to Fisher's attempt to get the average weekly compensation of the injured person before the jury, as appears from the following colloquy: 44 'By Mr. Cox: The jury is not concerned with the computation; it has only one series of issues. That is not before the jury. 45 ' y the Court: That has all been agreed upon. 46 'By Mr. Fisher: I think it is material, Your Honor, to tell the jury what the average weekly compensation is of this claimant so that they can tell where he is. 47 'By the Court: They are not interested in dollars and cents. 48 'By Mr. Fisher: They are interested to this extent— 49 'By the Court: Don't argue with me. Go ahead. I will give you your exception to it. 50 'By Mr. Fisher: Note our exception. 51 'By the Court: All right.' 52 Fisher never again tried to get the amount of weekly compensation of the injured person into the record. He abided by the ruling of the judge. What next happened was as follows: 53 'By Mr. Fisher: This negro, as I stated, can only recover one hundred and twenty-five weeks compensation, at whatever compensation the rate will figure under the law. 54 'By Mr. Cox: I am objecting to that discussion, Your Honor, as to what the plaintiff can recover. 55 'By the Court: Gentlemen! Mr. Fisher, you know the rule, and I have sustained his objection. 56 'By Mr. Fisher: I am asking— 57 'By the Court: Don't argue with me. Gentlemen, don't give any consideration to the statement of Mr. Fisher. 58 'By Mr. Fisher: Note our exception. I think I have a right to explain whether it is a specific injury or general injury.' Fisher's statement that, 'This negro, as I stated, can only recover one hundred and twenty-five weeks compensation, at whatever compensation the rate will figure under the law,' did not mention the matter of 'dollars and cents' that the judge held irrelevant. It was not a new attempt by Fisher to get the 'average weekly compensation' before the jury. Yet the record can be read as meaning that they were the only specific matters on which the judge had ruled. As Justice Sharp, dissenting in the Texas Supreme Court, stated (206 S.W.2d 1008), 'This statement does not indicate that relator was disobeying the ruling of the court, but, on the contrary, shows that he was trying to obey same.' It also means to me that he was seeking to perfect the record so as to preserve all of his points. 59 It is said that the statement was improper under Texas practice. But it took a ruling of the Texas Supreme Court to make it so, and even then Justice Sharp dissented. If Texas law on the point is so uncertain that the highest judges of the State disagree as to what is the permissible practice, is a lawyer to be laid by the heels for pressing the point? Yet it was for pressing the point of law on which the Supreme Court of Texas divided that Fisher was held in contempt. 60 It is said, however, that such elements of misbehavior as expression, manner of speaking, bearing, and attitude of Fisher may have given the words a contemptuous flavor that the cold record does not reveal. I do not think freedom of speech should be so readily sacrificed, even in a courtroom. If that were the offense, it is not too much to ask that the judge make it the ground of his ruling. Certainly the judge did not purport to fine and imprison Fisher for the manner of making the objection, for the tone of his voice, or for this facial expression. The dispute was merely over the bounds of permissible comment before a jury. Fisher having been stopped at one point tried another strategy. He was acting the role of a resourceful lawyer. The decision which penalizes him for that zeal sanctions censorship inside a courthouse where the ideals of freedom of speech should flourish. 61 There is for me only one fair inference from the record—that the judge picked a quarrel with this lawyer and used his high position to wreak vengeance on him. It is shown, I think, by the commencement of the critical colloquy: 62 'By the Court: I will declare a mistrial if you mess with me two minutes and a half, and fine you besides. 63 'By Mr. Fisher: That is all right. We take exception to the conduct of the Court. 64 'By the Court: That is all right; I will fine you $25.00.' 65 This lawyer was the victim of the pique and hotheadedness of a judicial officer who is supposed to have a serenity that keeps him above the battle and the crowd. That is as much a perversion of the judicial function as if the judge who sat had a pecuniary interest in the outcome of the litigation. Tumey v. State of Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749, 50 A.L.R. 1243. 66 Mr. Justice MURPHY, dissenting. 67 Petitioner told the jury three times, without objection, that his client was entitled to compensation for one hundred and twenty-five weeks. He then began discussion of the 'average weekly compensation,' and the Court told him that the jury was 'not interested in dollars and cents.' To this ruling he excepted, believing that the amount of possible recovery should be considered by the jury. He then repeated what he had said three times before, without objection, on a different subject, and was told that he shouldn't 'mess with' the court. Quite naturally, he objected to the court's conduct; Texas decisions make it clear that remarks 'calculated to reflect upon the counsel and prejudice his client's case with the jury * * * constitute reversible error.' Dallas Consol. Electric St. R. Co. v. McAllister, 41 Tex.Civ.App. 131, 137, 90 S.W. 933, 936. But petitioner was held in contempt. And as he objected, his penalty was successively raised. Finally the court told the sheriff: 'Don't let him stand there. Take him out.' 68 A trial judge must be given wide latitude in punishing interference with the orderly administration of justice. See Ex parte Terry, 128 U.S. 289, 9 S.Ct. 77, 32 L.Ed. 405; Cooke v. United States, 267 U.S. 517, 45 S.Ct. 390, 69 L.Ed. 767. But the summary nature of contempt proceedings, the risk of imprisonment without jury, trial, or full hearing, make this the most drastic weapon entrusted to the trial judge. To sanction the procedure when it is patent that there has been no substantial interference with the trial, when a judge has used his position and power to successively increase the penalty for simple objections, is, I believe, a denial of due process of law. The contempt power is an extraordinary remedy, an exception to our tradition of fair and complete hearings. Its use should be carefully restricted to cases of actual obstruction. In my opinion, this record of petty disagreement does not approach that serious interference with the judicial process which justifies use of the contempt weapon. Whatever the situations making this weapon necessary, it is plain to me that this is not one of them. 69 An appellate court can rarely correct abuse such as this. 'If the judge intends to be unfair, the trial will be a farce no matter how many detailed rules we provide for him.' McElroy, Some Observations Concerning the Discretions Reposed in Trial Judges by the American Law Institute's Model Code of Evidence, Model Code of Evidence, pp. 356, 358. A printed record cannot reveal inflections and gestures, the tenor of a judge's conduct of a trial—matters which make his position the most responsible in the daily administration of a fair judicial system. See Rheinstein, Who Watches the Watchmen? in Interpretations of Modern Legal Philosophies (New York, 1947), p. 589. In recent years we have seen a pronounced tendency to leave many matters in the discretion of the trial judge. MrElroy, supra; Yankwich, Increasing Judicial Discretion in Criminal Proceedings, 1 F.R.D. 746. The movement, which rests on the assumption that the judge is wise and impartial, should make us quick to upset his determinations in the few cases which clearly demonstrate light regard for the principles that should guide a responsible jurist. 70 I would reverse the judgment. 71 Mr. Justice RUTLEDGE, dissenting. 72 Without recounting further than is done in other opinions the facts of this unfortunate episode, I have concluded that the record here discloses answers or remarks made by petitioner to the court which, in some instances, may well have justified punishment for contempt, but for one circumstance. That is, I regret to say, the con lusion to which I have been forced from the record as a whole that in the course of the colloquy and especially in the rapid succession of fines, commitment to jail, and order for removal from the courtroom, as well as in the unjudicial language employed by the judge, the trial court acted in the heat of temper and not in that calm control which the fair administration of judicial office commands under all circumstances. 73 Lawyers owe a large, but not an obsequious, duty of respect to the court in its presence. But their breach of this obligation in no case justifies correction by an act or acts from the bench intemperate in character, overriding judgment. Since the case comes here upon the sequence of events taken as an entirety, I do not undertake to separate one portion of the judgment from another. Accordingly, as the case stands here, I must take the entire sentence as infected with the fault I have noted. It follows, in my view, that the judgment should be reversed. Whatever the provocation, there can be no due process in trial in the absence of calm judgment and action,untinged with anger, from the bench. 1 Ex parte Kearby, 35 Tex.Cr.R. 531, 34 S.W. 635; Ex parte Ray, 101 Tex.Cr.R. 432, 276 S.W. 709. 2 4 Bl.Com. 286; Ex parte Terry, 128 U.S. 289, 302—304, 313, 314, 9 S.Ct. 77, 78, 79, 82, 83, 32 L.Ed. 405; Ex parte Savin, 131 U.S. 267, 277, 9 S.Ct. 699, 701, 33 L.Ed. 150; Eilenbecker v. District Court of Plymouth County, Iowa, 134 U.S. 31, 36, 37, 10 S.Ct. 424, 426, 33 L.Ed. 801; Cooke v. United States, 267 U.S. 517, 534, 536, 45 S.Ct. 390, 394, 69 L.Ed. 767; In re Oliver, 333 U.S. 257, 274, 275, 68 S.Ct. 499, 508. 3 Ex parte Terry, 128 U.S. 289, 313, 9 S.Ct. 77, 83, 32 L.Ed. 405: 'We have seen that it is a settled doctrine in the jurisprudence both of England and of this country, never supposed to be in conflict with he liberty of the citizen, that, for direct contempts committed in the face of the court, at least one of superior jurisdiction, the offender may, in its discretion, be instantly apprehended and immediately imprisoned, without trial or issue, and without other proof than its actual knowledge of what occurred; and that, according to an unbroken chain of authorities, reaching back to the earliest times, such power, although arbitrary in its nature and liable to abuse, is absolutely essential to the protection of the courts in the discharge of their functions. Without it, judicial tribunals would be at the mercy of the disorderly and violent, who respect neither the laws enacted for the vindication of public and private rights, nor the officers charged with the duty of administering them.' See also Cooke v. United States, supra, 267 U.S. 534, 45 S.Ct. 390, 394, 69 L.Ed. 767; Ex parte Hudgings, 249 U.S. 378, 383, 39 S.Ct. 337, 339, 63 L.Ed. 656, 11 A.L.R. 333. 4 This rule is well established in Texas. Ex parte Testard, 101 Tex. 250, 106 S.W. 319; Ex parte Dulaney, Tex.Sup., 203 S.W.2d 203. For other cases see the opinion in the instant case, Ex parte Fisher, Tex.Sup., 206 S.W.2d 1000, 1003. 5 Clark v. United States, 289 U.S. 1, 12, 53 S.Ct. 465, 468, 77 L.Ed. 993. 6 Ex parte Fisher, Tex.Sup., 206 S.W.2d 1000, 1004, 1005. 7 Rule 269, Vernon's Texas Rules of Civil Procedure; Ramirez v. Acker, 134 Tex. 647, 138 S.W.2d 1054. 8 206 S.W.2d 1000, 1005; cf. United States v. United Mine Workers of America, 330 U.S. 258, 293, 302, 303, 67 S.Ct. 677, 700, 701, 91 L.Ed. 884.
01
336 U.S. 132 69 S.Ct. 435 93 L.Ed. 553 CALLAWAY et al.v.BENTON et al. No. 21. Argued Oct. 19, 1948. Decided Feb. 7, 1949. [Syllabus from pages 132-134 intentionally omitted] Mr. T. M. Cunningham, of Savannah, Ga., for petitioners. Mr. Charles J. Bloch, of Macon, Ga., for respondent. Mr. Chief Justice VINSON delivered the opinion of the Court. 1 The Central of Georgia Railway Company, whose Trustee is the petitioner here, and its predecessor have leased and operated the property of the South Western Railroad Company since 1869. The Central went into receivership in 1932, and in 1940 entered reorganization under § 77 of the Bankruptcy Act, 49 Stat. 911, 11 U.S.C. § 205, 11 U.S.C.A. § 205. South Western's lease was adopted successively by Central's Receiver and Trustees. It has, in consequence, remained solvent, and no petition for reorganization has ever been filed in its behalf. 2 Under the plan of reorganization of the Central promulgated by the Interstate Commerce Commission and approved by the district court, South Western is given the alternative of selling its property to the reorganized company in return for a fixed amount of bonds of the latter, or of having the lease disaffirmed by the debtor and its property returned.1 South Western appeared specially in the reorganization proceedings and asked that its lease be adopted by the reorganized company, but on the basis of studies and estimates not now open to challenge, the Commission rejected the proposal and found that the amount offered for its properties appears 'fair and equitable and to equal the value of the transportation property, and (is) approved.'2 3 Following Commission and court approval of the plan, South Western's officers, reversing their previous stand, urged acceptance of the offer by its stockholders and signified their intention of conveying the company's property to the Central if a majority of the stockholders voted to accept. Thereupon the respondents, who are individual stockholders of South Western, brought an action in the Superior Court of Bibb County, Georgia, where South Western's principal office is located, asking for an injunction against South Western, its officers and directors, restraining them from certifying the company's acceptance of the offer to the Interstate Commerce Commission or from selling the railroad's property to the reorganized debtor if, upon a vote of the stockholders, a 'mere majority' of the stock was voted in favor of the plan. The basis of the petition for injunction was the contention that under the laws of Georgia, where South Western was incorporated, the entire assets of the company cannot be sold except upon unanimous approval of the stockholders. 4 Before a decision was reached in the state court action, a meeting of South Western's stockholders was held at which the offer of purchase incorporated in the Central's plan of reorganization was considered. 30,137 shares were voted in favor of acceptance against 9,057 shares favoring rejection. Petitioner, acting as Trustee of the Central which was not a party to the state court suit, then filed a petition in the bankruptcy court asking that respondents and other stockholders of South Western be enjoined from further prosecution of the state court action, and a temporary restraining order was entered as prayed. Thereupon the state court, of its own motion, entered an interlocutory injunction restraining the officers and directors of South Western from selling its property, on the ground that such a sale under Georgia law requires unanimous consent of the stockholders. Petitioner then amended his petition in the bankruptcy court by bringing to its attention the injunctive order of the state court, and, after holding hearings, the federal district court granted a permanent injunction restraining further prosecution of the state action and declared the state court's temporary injunction null and void as in excess of its jurisdiction. Upon appeal, the Court of Appeals for the Fifth Circuit, one judge dissenting, reversed the order of the district court, 165 F.2d 877. We granted the petition for a writ of certiorari3 because of the conflict between state and federal authority and the importance of the question in the administration of the Bankruptcy Act. 5 First. The district court's injunction was based primarily on the premise that the plan of reorganization requires the inclusion of South Western's lines within the system of the reorganized company. The state action is said to be an attempt on the part of respondents 'to prevent the consummation of the plan as respects South Western.' Again, the court held that 'the question of the consolidation, merger and sale, and under what conditions South Western may convey its property to the reorganized company, in consummation of the plan, is not a question of State law; it is a question of Bankruptcy law—a question which arises under the Bankruptcy Act and the Interstate Commerce Act.' The court's conclusion was, therefore, that although the question whether a Georgia railroad corporation can convey all of its properties without unanimous consent of its stockholders would ordinarily be one of state law congizable in the state's courts, under these circumstances the decision was one for the bankruptcy court applying federal law. 6 We do not agree. The language of the plan and the factors which the Commission took into consideration in arriving at the amount offered South Western for its properties indicate clearly that, so far as the reorganization plan contemplates acquisition of the lessor railroad, the ordinary rules of offer and acceptance were intended to apply. That has invariably been the practice. As a consequence, we have held that the amount which may be offered a lessor is a question of 'business judgment'; that 'if the Commission deems it desirable to keep the leased lines in the system, it must necessarily have rather broad discretion in providing modifications of the lease where, as here, the lessor is not being reorganized along with the debtor. For under that assumption the modification must be sufficiently attractive to insure acceptance by the lessor or its creditors.' Group of Institutional Investors v. Chicago, M., St. P. & P.R. Co., 1943, 318 U.S. 523, 550, 63 S.Ct. 727, 742, 87 L.Ed. 959. The plan itself recites that the leased lines are to be acquired only 'if they can be acquired on the terms hereinafter set forth.'4 Otherwise, the lease is to be disaffirmed and the property returned to the lessor. In addition, the record is replete with statements by the Commission, the court, and the parties that South Western's stockholders are to have the choice open to any offerce: an unfettered right to accept or reject.5 7 Under these circumstances, we can see no reason why the ordinary incidents of a sale of the assets of a corporation should not be applicable. One of the most important of these is, of course, the question of the proportion of a corporation's stock which must be voted in favor of accepting the offer of purchase in order to make its acceptance effective. Since, as the district court held, this would ordinarily be a question of Georgia law, we believe that substitution of any other rule of law is erroneous.6 8 Not the least of the difficulties with a contrary result is the fact that the Bankruptcy Act gives no clue to what proportion of the lessor's stockholders must vote to accept the offer if state law is not controlling. Section 77, sub. e provides that confirmation of a plan requires acceptance by creditors holding two-thirds in amount of the total allowed claims of each class voting on the plan, but that the judge may confirm the plan in any event 'if he is satisfied and finds, after hearing, that it makes adequate provision for fair and equitable treatment for the interests or claims of those rejecting it'. But neither the two-thirds vote provision nor the so-called 'cram-down' provision applies to a lessor not in reorganization or its stockholders. They apply to 'creditors of each class whose claims have been filed and allowed in accordance with the requirements of subsection c of this section,' which obviously does not include a lessor-offeree.7 And, although South Western is a 'creditor' under the specific terms of § 77, sub. b, its stockholders, individually, are not. 9 The district court sought to find a federal rule permitting acceptance by a simple majority vote of the shareholders in the provisions of § 5(11) of the Interstate Commerce Act.8 But that section relates to voluntary mergers, not to the purchase of a leased line as part of a plan of reorganization. The Commission can undoubtedly carry on § 5 proceedings simultaneously with § 77 reorganization proceedings, see United States v. Lowden, 1939, 308 U.S. 225, 60 S.Ct. 248, 84 L.Ed. 208, but that procedure was not followed in this case. The Commission preferred, instead, to carry out the consolidation under the authority of § 77, sub. b(5) of the Bankruptcy Act, which provides that the plan of reorganization may include 'the merger or consolidation of the debtor with another corporation or corporations'. That power flows from a different source than the power over consolidations under the Interstate Commerce Act. While some of the findings required of the Commission under the two Acts are similar, and § 77, sub. f provides that consolidation and merger of the debtor's property shall not be inconsistent with the provisions and purposes of chapter 1 of the Interstate Commerce Act, their procedural and jurisdictional requirements do not overlap.9 It may be noted, in addition, that § 5(11) contains a proviso that the majority vote provision shall not apply if 'a different vote is required under applicable State law, in which case the number so required shall assent'. Whether that proviso is operative when a state's law requires unanimous consent of the shareholders is a question we need not decide. 10 Nothing that we have said derogates in any way from decisions of this Court upholding the power of the Interstate Commerce Commission, in the exercise of its statutory obligations, to override state laws interposing obstacles in the path of otherwise lawful plans of reorganization. We have recently reaffirmed that power in cases arising under the Interstate Commerce Act.10 Nor is the ambit of federal power less broad in cases arising under the bankruptcy laws of the United States. Section 77, sub. f of the Bankruptcy Act specifically provides that the plan of reorganization shall be put into effect, 'the laws of any State or the decision or order of any State authority to the contrary notwithstanding.' The statute does not, however, give the Commission or court the right to require acceptance by a lessor not in reorganization of an offer for the purchase of its property, and no such power has been asserted by the Commission in this case. The plan of reorganization in effect hands South Western a contract of sale. Whether or not South Western signs the contract must depend not only upon its business judgment, but also upon the charter of the company and the laws of the state of its incorporation. There is therefore no occasion to override state law. The plan implicitly accepts it as controlling. The fact that the law may make acceptance of the offer less likely than would be the case if the offeree were incorporated elsewhere does not change the picture. We do not believe that Congress intended to leave to individual judges the question of whether state laws should be accepted or disregarded, Palmer v. Massachusetts, 1939, 308 U.S. 79, 60 S.Ct. 34, 84 L.Ed. 93, or to make the criterion to be applied the effect of the law upon the prospects of acceptance by the offeree. 11 Second. The district court further held that even if Georgia law governs the question of the authority of South Western's officers to sell its properties, the bankruptcy court has exclusive jurisdiction to decide the state law question. We have held that a court of bankruptcy has exclusive and nondelegable control over the administration of an estate in its possession. Thompson v. Magnolia Petroleum Co., 1940, 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876; Isaacs v. Hobbs Tie & Timber Co., 1931, 282 U.S. 734, 51 S.Ct. 270, 75 L.Ed. 645. There can be no question, however, that Congress did not give the bankruptcy court exclusive jurisdiction over all controversies that in some way affect the debtor's estate.11 One exception is found in the express language of the statute.12 What it did give is exclusive jurisdiction of the debtor and its property wherever located. § 77, sub. a. The interest held by the debtor in South Western's lines was a leasehold estate. Such an estate is the debtor's 'property' within the meaning of the Act. Any controversy involving that estate would have been within the exclusive jurisdiction of the bankruptcy court. 12 Here, however, the question involves not the debtor's leasehold, but the reversion in fee held by South Western as lessor. South Western was not in reorganization jointly with its lessee, nor could it have been reorganized in the Central's proceedings.13 The controversy which respondents initiated in the state court, and which the district court decided after having enjoined the state proceedings, requires a determination of the rights of the stockholders of South Western inter se to sell their reversionary interest in the property. We think that the interest here involved is not part of the property of the debtor, and that the district court's assertion of exclusive jurisdiction was error. 13 In Ex parte Baldwin, 1934, 291 U.S. 610, at page 615, 54 S.Ct. 551, at page 553, 78 L.Ed. 1020, we said: 'All property in the possession of a bankrupt of which he claims the ownership passes, upon the filing of a petition in bankruptcy, into the custody of the court of bankruptcy. To protect its jurisdiction from interference, that court may issue an injunction.' In the Baldwin case this Court upheld the bankruptcy court's exclusive jurisdiction under § 77 to adjudicate the question of forfeiture by the debtor of an easement of right of way—clearly a part of the property of the debtor of which it claimed ownership. See Thompson v. Magnolia Petroleum Co., supra. In Warren v. Palmer, 1940, 310 U.S. 132, 60 S.Ct. 865, 84 L.Ed. 1118, where the debtor under § 77, the New Haven Railroad was lessee of property but had rejected the lease and was operating the property for the account of the lessor under § 77, sub. c(6), we held that the bankruptcy court had exclusive jurisdiction to fix the amount of the deficit resulting from such operation and to declare it a lien upon the property of the lessor. Since the physical property covered by the rejected lease was within the custody of the bankruptcy court, the fact that legal title remained in the lessor was thought to be immaterial. Clearly, control of the physical property must remain in the court which has the ultimate responsibility for operating it. And in order to protect the estate of the debtor from dissipation through losses suffered in the operation of the lessor's property, responsibility for the determination of the amount of the losses and provision for their recoupment from the lessor was properly lodged in the court supervising the reorganization of the debtor. 14 Equally clear, however, is the fact that the internal management of the lessor is not properly subject to the court's control. The anomaly of petitioner's position is demonstrated by the facts of the case just discussed. The New Haven reorganization was proceeding in a Connecticut federal district court, while the lessor railroad, the Boston & Providence, was in reorganization under § 77 in a Massachusetts district court. The plan of reorganization of the New Haven, like the Central's plan in this case, contemplated the purchase of the lessor's property. Since the Boston & Providence reorganization court had exclusive jurisdiction of its property, it can hardly be contended that the New Haven reorganization court could assume exclusive jurisdiction to decide questions arising, for example, between different classes of creditors of the Boston & Providence as to whether the New Haven's offer should be accepted. Such a result would be incompatible with the Massachusetts district court's exclusive jurisdiction over the property of the Boston & Providence under § 77, sub. a.14 Insofar as the power of the court reorganizing the lessee rests on its jurisdiction over the property of the debtor, the fact that the lessor here is not in reorganization in another court is immaterial. 15 Further support for this position is found in our decision in Group of Institutional Investors v. Chicago, M. St. P. & P.R. Co., supra. The Milwaukee reorganization, in one of its aspects, presented a situation analogous to the one now before us: the lessee was in reorganization under § 77, but no proceedings had been instituted for the reorganization of the lessor of some of its lines, the Chicago, Terre Haute & Southeastern Railway Company. The reorganization plan provided for a new lease to be offered the Terre Haute, which required that the latter scale down its bonded indebtedness so that the interest thereon, which was the rental under the lease, would be substantially reduced. The plan did not, however, differentiate between the four classes of bonds of the lessor with respect to the earning power and character of the security of each, as is required in the reorganization of properties of the debtor. Certain bondholders accordingly attacked the plan as unfair, because it did not attempt to preserve the respective priorities of these bond issues. But we said, 318 U.S. at page 546, 63 S.Ct. at page 741, 87 L.Ed. 959: 'Th short answer to that objection is that the Terre Haute properties have not been treated by the Commission or the District Court as a part of the properties of the debtor for reorganization purposes. Nor has any question been raised or argued here as to the power of the Commission or the District Court so to treat them. The Commission and District Court considered the problem solely as one of rejection or affirmance of a lease.' It is abundantly clear that in the case before us, the interest of South Western was similarly considered.15 16 Other provisions of § 77 lend no support to petitioner's contentions. Section 77, sub. b, which makes South Western a creditor in the proceedings, does not, as we have pointed out, give the bankruptcy court any control over its internal organization. It is not a creditor which can be bound by the plan without its assent, except to the extent of its claim for damages for breach of the lease and for amounts due it from the lessee.16 Section 77, sub. b(1) provides that the plan may alter the rights of creditors, while § 77, sub. b(5) requires that the plan provide adequate means for its execution, which may include merger or consolidation of the debtor with another corporation. This subsection also permits rejection of executory contracts and unexpired leases. 17 The bankruptcy power unquestionably gives the Commission and court, working within the framework of the Act, full and complete power not only over the debtor and its property, but also, as a corollary, over any rights that may be asserted against it. These rights may be altered in any way thought necessary to achieve sound financial and operating conditions for the reorganized company, subject to the requirements of the Act. The purchase of formerly leased properties does not involve rights asserted against the debtor, however.17 This Court has said that 'The exclusive jurisdiction granted the reorganization court by § 77, sub. a is that which bankruptcy courts have customarily possessed.' Meyer v. Fleming, 1946, 327 U.S. 161, 164, 66 S.Ct. 382, 384, 90 L.Ed. 595.18 We conceive the jurisdiction asserted by the district court over a solvent lessor not in reorganization to be an extension of these traditional powers not justified by any provisions of the Bankruptcy Act. 18 A serious practical problem would arise if the consequence of rejection of the offer and return of the properties to South Western would be cessation of railroad service on the formerly leased lines. Congress has foreseen that difficulty, however. Under § 77, sub. c(6), if the lessor is unable to operate the leased lines following rejection of the lease, the duty devolves upon the lessee to continue to operate the leased lines for the account of the lessor,19 and such operation may continue after completion of the reorganization of the lessee.20 We need not speculate upon the eventual disposition of South Western's properties. Until some final disposition is made, however, we are assured that service will be maintained on its lines, and that the debtor will not be prejudiced because of the duty thrust upon it. Palmer v. Webster & Atlas National Bank, 1941, 312 U.S. 156, 61 S.Ct. 542, 85 L.Ed. 642. 19 Third. It is argued that Continental Illinois National Bank & Trust Co. of Chicago v. Chicago, R.I. & P.R. Co., 1935, 294 U.S. 648, 55 S.Ct. 595, 605, 79 L.Ed. 1110, and other cases applying similar principles support the district court's injunction of the state action and its determination of the issue there involved. The question specifically before the Court in the Rock Island case was this: 'Under section 77 does the bankruptcy court have authority to enjoin the sale of the collateral here in question if a sale would so hinder, obstruct and delay the preparation and consummation of a plan of reorganization as probably to prevent it?' The affirmative answer given by the Court rested upon the inherent powers of a court of equity to prevent the defeat or impairment of its jurisdiction, upon § 262 of the old Judicial Code (now 28 U.S.C.A. § 1651), which authorized United States courts 'to issue all writs not specifically provided for by statute, which may be necessary for the exercise of their respective jurisdictions,' and upon § 2(15) of the Bankruptcy Act, 11 U.S.C. § 11(15), 11 U.S.C.A. § 11(15), which gives bankruptcy courts the power to 'make such orders, issue such process, and enter such judgments in addition to those specifically provided for, as may be necessary for the enforcement of the provisions of this act'. 20 Reliance upon these cases is based, however, upon the fallacy previously adverted to. The action in the Georgia courts in this case does not embarrass or delay the formulation or promulgation of a plan of reorganization. The plan has been formulated and approved. It leaves open t South Western the alternative of selling its properties to the reorganized debtor or of facing disaffirmance of the lease and the risks of separate operation of its lines. No suggestion has been made that a final decision of the state law question will be unreasonably delayed. Under these circumstances, we do not believe that the Rock Island decision provides any support for the district court's action.21 As we held in Thompson v. Texas Mexican R. Co., 1946, 328 U.S. 134, at page 142, 66 S.Ct. 937, at page 943, 90 L.Ed. 1132: 'Forfeiture of leases by the court in advance of a determination by the Commission of the nature of the plan of reorganization which is necessary or desirable for the debtor may seriously interfere with the performance by the Commissionof the functions entrusted to it.' See also Smith v. Hoboken R.R. Warehouse & S.S. Connecting Co., 1946, 328 U.S. 123, 66 S.Ct. 947, 90 L.Ed. 1123, 168 A.L.R. 497. The same considerations do not prevail at a later stage of the proceedings, however, when, pursuant to a plan formulated by the Commission, the lease is forfeited and an offer of purchase substituted in lieu thereof. Unless the offer is a sham and the lessor's discretion illusory, the plan may be effectively consummated whether the offeree accepts or not. The district court did not merely postpone action which would have hindered the development of the plan; it took to itself the decision of a question which the plan left open for decision elsewhere. 21 We conclude that under the narrow facts presented here, the bankruptcy court erred in enjoining the state court suit leading to a determination of the requirements of Georgia law with respect to sale of the entire assets of South Western. This question was already in litigation in the state court when first raised in the federal court. Title 28 U.S.C. § 2283, 28 U.S.C.A. § 2283, forbids this exercise of power, since, as we hold, the controversy does not involve property of the debtor within the jurisdiction of the bankruptcy court, and the assertion of jurisdiction by the state court is not inconsistent with the provisions of the Bankruptcy Act.22 22 Mr. Justice DOUGLAS, with whom Mr. Justice RUTLEDGE concurs, dissenting. 23 This decision permits control over the plan of reorganization to be taken from the Interstate Commerce Commission and the District Court contrary to the provisions of § 77 and allows a state court to undo what those federal agencies have approved. 24 The plan approved by the Commission and by the District Court provides for the 'consolidation, merger or purchase' of the properties of South Western in lieu of continued operation under the lease, 'if the leased properties can be acquired on the terms set forth in the Plan.' 25 The terms of the acquisition are set forth in the plan. If the leased lines are acquired, South Western shall waive any damages on account of breach of the lease and in respect of equipment. Securities allocated to South Western shall not bear interest or dividends for any period prior to the acquisition. The plan also determines the amount of the allotment to South Western which the Commission and the Court approved as 'fair and equitable' and 'equal the value of the transportation property.' 26 On February 11, 1947, the Commission submitted the plan to all creditors, including South Western, for acceptance or rejection on or before midnight March 28, 1947. On March 13, 1947, the directors of South Western accepted the plan subject to the assent of the holders of a majority of its stock. The stockholders met on March 28, 1947, and accepted the plan by a vote of 30,137 to 9,057. Accordingly South Western mailed its ballot approving the plan to the Commission. 27 The result of the balloting was certified by the Commission to the court. Thereafter the court had a hearing and confirmed the plan, specifically reserving for later adjudication the question whether it had power to enjoin action in a state court which attempted to annul the acceptance of the plan by South Western. Subsequently it held a hearing, overruled objections of the minority of South Western's stockholders and held that the acceptance by South Western was valid under Georgia law. It accordingly issued the injunction involved in this case. 28 It seems plain to me that the Commission and the reorganization court had exclusive jurisdiction, subject to judicial review, to determine the question of the validity of the acceptance of the plan tendered by the officers of South Western. The validity of the acceptance is, of course, a question of state law. But it has been entrusted by Congress to these federal agencies. 29 The plan must first be approved by the Commission and then certified to the court. § 77, subs. d, e. The court, after hearing, passes on the plan; and if the court approves the plan, it certifies that fact to the Commission. § 77, sub. e. The Commission then submits the plan to creditors and stockholders, § 77, sub. e, the lessor and its security holders being included in the definition of creditor. § 77, sub. b. See Group of Institutional Investors v. Chicago, Milwaukee, St. P. & P.R. Co., 318 U.S. 523, 549, 63 S.Ct. 727, 742, 87 L.Ed. 959. The Commission must then determine the result of the balloting and certify to the judge 'the results of such submission.' § 77, sub. e. The court then 'shall confirm' the plan if satisfied (1) that the requisite percentage of each class of creditors and stockholders has been obtained and (2) 'that such acceptances have not been made or procured by any means forbidden by law'. § 77, sub. e. (Italics added.) On confirmation of the plan by the court, the plan and order of confirmation 'shall, subject to the right of judicial review,' be binding upon the debtor and stockholders and 'all creditors secured or unsecured, whether or not adversely affected by the plan, and whether or not their claims shall have been filed, and, if filed, whether or not approved, including creditors who have not, as well as those who have, accepted it.' § 77, sub. f. 30 Section 77, sub. f also provides that on confirmation of the plan the debtor or any other corporation organized to carry out the plan 'shall have full power and authority to, and shall put into effect and carry out the plan and the orders of the judge relative thereto, under and subject to the supervision and the control of the judge, the laws of any State or the decision or order of any State authority to the contrary notwithstanding.' (Italics added.) And § 77, sub. j, with exceptions not material here, gives the court power to enjoin or stay the commencement of any suit against the debtor until after final decree.1 31 The control of the court over the acceptance of the plan and over its confirmation is one of the historic instances of the 'exclusive jurisdiction' vested in the court by § 77, sub. a. The exclusive jurisdiction of the reorganization court is one which heretofore we have zealously guarded against encroachments by state courts. See Thompson v. Texas Mexican R. Co., 328 U.S. 134, 66 S.Ct. 937, 90 L.Ed. 1132. That exclusive jurisdiction is not restricted to protection of the court's possession of the property and operation of the business. Section 77, sub. e gives the reorganization court the sole authority to determine whether the acceptances of the plan have been made or procured 'by any means forbidden by law'. In this case that plainly means that the reorganization court alone had the power to ascertain whether the requisite vote of the directors and stockholders of South Western had been cast in favor of the plan. Once it determined that lawful corporate action had been taken by South Western, then § 77, sub. f bound all of South Western's stockholders, since they are included in the definition of creditors for the purposes of the Act. See Group of Institutional Investors v. Chicago, Milwaukee, St. P. & P.R. Co., supra. And then the reorganization court had the express power under § 77, sub. f to put the plan into effect 'the laws of any State or the decision or order of any State authority to the contrary notwithstanding.' 32 This is precisely one of those situations where the bankruptcy court, if its exclusive jurisdiction is to be maintained, must have the power to enjoin action in state courts. It has long been recognized to have that authority in order to protect its decree. See Local Loan Co. v. Hunt, 292 U.S. 234, 54 S.Ct. 695, 78 L.Ed. 1230, 93 A.L.R. 195. And the policy reflected in old § 265 of the Judicial Code, now 28 U.S.C. § 2283, 28 U.S.C.A. § 2283, which frowned on the stay of state proceedings by federal courts, has for years recognized bankruptcy jurisdiction as an exception. See Toucey v. New York Life Ins. Co., 314 U.S. 118, 132, 62 S.Ct. 139, 143, 86 L.Ed. 100, 137 A.L.R. 967. It was in recognition of the necessity for that power that Congress wrote subdivision j into § 77. 33 If a state court can hold invalid acceptances whose validity has been approved by the Commission and the District Court, then the federal agencies have lost much of the exclusive jurisdiction which Congress granted them. There are myriad questions of state law underlying the consummation of every plan of reorganization. There is the question whether the new company is validly organized; whether proxies are executed in pursuance of the provisions of the state code; whether the charter of a corporation can contain certain kinds of provisions, authorize certain types of securities, etc., etc. If state courts can intrude with injunctions on such state law questions, the exclusive command of the federal agencies over the reorganization process is lost, its efficiency is undermined, and minorities are given leverages which the scheme of § 77 explicitly 1 With respect to South Western's property, the plan reads as follows: 'Prior to or upon consummation of the plan the debtor shall also acquire, if they can be acquired on the terms hereinafter set forth, properties at present leased to the debtor by the South Western Railroad Company. * * * If any of these properties shall not be acquired as a result of the acceptance of the plan by he leased-line security holders, then and in that event the lease or leases of any line or lines not so acquired shall be disaffirmed as of such time at or prior to the consummation of the plan as the court may direct. The method of acquisition, whether through purchase, merger, or consolidation, shall, subject to the approval of the Commission and the court, be determined by the trustee or by the reorganization managers when they begin to function. 'If the leased lines are acquired, the railroads of each of the three and the personal property appurtenant thereto and all of the real estate owned by each lessor shall be conveyed to the reorganized company; each of said lessors shall waive any damages to which it has become or shall become entitled on account of any breach of the lease; and the South Western Railroad Company shall waive all claims in respect to equipment. Such conveyances and waivers shall in each instance be the sole consideration of the delivery to each of the respective lessors of the securities proposed to be allocated to it, as hereinafter specified.' 261 I.C.C.Rep. 515. 2 261 I.C.C.Rep. 309. 3 333 U.S. 853, 68 S.Ct. 736. 4 261 I.C.C.Rep. 515. 5 In its report approving the plan, the Commission said (261 I.C.C. Rep. at p. 308): 'The lessor (South Western) insists that it has the right to severance if it cares to exercise it, and such a right will be recognized in the approved plan.' The district court, in approving the plan, commented that 'If the lessors do not accept the proposal to acquire their lines they are, on disaffirmance, at liberty to take their properties back,' while counsel for the Trustee stated at a meeting of South Western's stockholders, 'The plan makes you an offer, gentlemen; that is all it does.' 6 This precise problem has received little attention from commentators. It was not mentioned in the Committee reports or in debate when § 77 and its 1935 amendments were passed. However, the position of the leased line, a majority of whose stock is not owned by the debtor and which is not in reorganization, is analyzed by Meck, The Problems of the Leased Line, 7 Law and Contemp. Prob. 509, as follows: 'Upon rejection of the lease, although the leased line remains in the custody of the lessee's trustees, it is not part of the lessee's estate and security holders having interests in it cannot be bound in the lessee's reorganiz tion. Consequently, if the lessee's plan provides for a modified lease or merger or consolidation, such a provision is little more than an offer to the lessor. Acceptance of this offer will be determined, not by submitting the lessee's plan to the lessor's security holders, pursuant to Section 77, but according to the law of the state where the lessor is incorporated.' It is also pointed out that when the rights of bondholders of the lessor may be affected, as was the case with Terre Haute bondholders in the Milwaukee Railroad reorganization, see Group of Institutional Investors v. Chicago, M., St. P. & P.R. Co., 318 U.S. 523, 63 S.Ct. 727, 87 L.Ed. 959, and discussion infra, nearly unanimous consent of such bondholders may be required before the changes can be made effective. The Interstate Commerce Commission took that position in the Milwaukee case and provided that the offer to Terre Haute should not be deemed accepted unless substantially all of its bondholders voted to accept. Chicago, M., St. P. & P.R. Co. Reorganization, 239 I.C.C.Rep. 485, 536—538; 240 I.C.C.Rep. 255, 270—271. See also 318 U.S. at pages 532, 533, 63 S.Ct. at pages 734, 735, 87 L.Ed. 959. 7 See In re New York, N.H. & H.R. Co., D.C., 54 F.Supp. 631, at page 638. 8 54 Stat. 905, 49 U.S.C. § 5(11), 49 U.S.C.A. § 5(11). 9 See In re Chicago, R.I. & P. Ry. Co., 7 Cir., 168 F.2d 587, where the State of Texas made the argument that the findings required by the Interstate Commerce Commission under subsection (2)(b), (c), and (f) of § 5 of the Interstate Commerce Act in proceedings for merger or consolidation of railroads are mandatory in proceedings under § 77 of the Bankruptcy Act. 10 Seaboard Air Line R. Co. v. Daniel, 333 U.S. 118, 68 S.Ct. 426; Schwabacher v. United States, 334 U.S. 182, 68 S.Ct. 958; State of Texas v. United States, 292 U.S. 522, 54 S.Ct. 819, 78 L.Ed. 1402. 11 Arkansas Corporation Commission v. Thompson, 313 U.S. 132, 61 S.Ct. 888, 85 L.Ed. 1244; Gardner v. New Jersey, 329 U.S. 565, 67 S.Ct. 467, 91 L.Ed. 504. See Thompson v. Terminal Shares, Inc., 8 Cir., 104 F.2d 1. Even when the controversy involves property within the exclusive jurisdiction of the bankruptcy court, that court may, in its discretion, postpone action pending adjudication of the question in another court. Ex parte Baldwin, 291 U.S. 610, 54 .Ct. 551, 78 L.Ed. 1020; Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 60 S.Ct. 628, 84 L.Ed. 876; Order of Railroad Conductors of America v. Pitney, 326 U.S. 561, 66 S.Ct. 322, 90 L.Ed. 318. See Foust v. Munson S.S. Lines, 299 U.S. 77, 57 S.Ct. 90, 81 L.Ed. 49. Cf. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971; City of Chicago v. Fieldcrest Dairies, 316 U.S. 168, 62 S.Ct. 986, 86 L.Ed. 1355. Whether, if the bankruptcy court had had exclusive jurisdiction in this case, it should have withheld decision of the state law question pending the outcome of the state court action we need not decide. 12 § 77, sub. j. 13 Under the provisions of § 77, as amended in 1935, a lessor railroad can be reorganized in connection with, or as a part of the plan of reorganization of the debtor-lessee only if a majority of its capital stock is owned by the debtor. § 77, sub. a. When § 77 was first enacted in 1933, a lessor could also be reorganized in the lessee's proceedings if the debtor operated substantially all of the properties of the lessor, but this provision was not reenacted, even though it was proposed in the draft amendments submitted by the Federal Coordinator of Transportation, whose proposals formed the basis of the 1935 amendments. Report of the Federal Coordinator of Transportation, 1934. H. Doc. No. 89, 74th Cong., 1st Sess., p. 230. See Friendly, Amendment of the Railroad Reorganization Act, 36 Col.L.Rev. 27, 49; Meck and Masten, Railroad Leases and Reorganization, 49 Yale L.J. 626, 653. 14 A similar question arose in another phase of the New Haven reorganization proceedings, in connection with the use by the debtor of the Boston Terminal, which was in reorganization under § 77 in another court. The obligations owed by the New Haven to the Terminal Company were fixed by a Massachusetts statute, but these obligations were repudiated by the New Haven's plan of reorganization, which offered the Terminal new terms for the use of its facilities by the debtor. In considering the argument made by the Terminal's bondholders that the plan violated the New Haven's obligations under the state law, the Court of Appeals for the Second Circuit made this statement: 'The plan enables New Haven to reject what in effect amounts to a burdensome lease. The plan, however, does not compel Boston Terminal to furnish the service at the rental offered; if Boston Terminal does not choose to accept the offer, it can, as a creditor, file proof of claim against New Haven for any damages to which it may be entitled. It is argued that Boston Terminal has no power under its charter to accept the offer. This seems irrelevant to the problem whether the Commission has power to approve a plan making the offer. Moreover, the reorganization trustee of Boston Terminal may be able to obtain authority to accept either from the bankruptcy court in Massachusetts or through an amendment of the Boston Terminal Act. The plan could not, and does not attempt to, amend the charter of the Terminal Company; but it does amend, as it can, the charter of the New Haven.' In re New York, N.H. & H.R. Co., 147 F.2d 40, 52. 15 It may also be noted that the Terre Haute could have been reorganized in the Milwaukee proceedings if insolvent or unable to meet its debts, since the Milwaukee owned substantially all of the Terre Haute's stock. See note 13, supra. The lessor's bondholders were therefore more like holders of the debtor's bonds than are stockholders of an independently owned lessor. This argument was made before the Commission by an institutional investors group committee, which contended that the assets of Terre Haute should be treated as assets of the debtor for purposes of reorganization. The Commission rejected the argument, saying: 'We agree with the group of Terre Haute bondholders that they are not such creditors of the debtor as would be bound as a class by a confirmed plan of reorganization which divested them of their existing liens upon the Terre Haute properties.' 239 I.C.C.Rep. 485, 535. See Swaine, A Decade of Railroad Reorganization Under Section 77, 56 Harv.L.Rev. 1193, 1217. 16 The dual status of a lessor whose lease has been, or will be, rejected and to whom an offer of purchase or modification is made is explained by Meck, The Problems of the Leased Line, 7 Law and Contempt. Prob. 509, 516, as follows: 'The plan in theory must deal with the lessor in at least two capacities: as an unsecured creditor and as owner of the leased line. In the former capacity the lessor will receive the same treatment as other unsecured creditors. In the latter, however, the lessor will be treated in accordance with the value of the line.' See note 6, supra. 17 The offer of purchase may, as was true in this case, include a provision requiring the lessor-offeree to renounce the claims it could otherwise assert against the debtor, including claims for breach of the lease and for amounts due the lessor under the lease or other agreements between the parties. 261 I.C.C.Rep. 515. These factors are taken into consideration in determining the amount to be offered under the plan. See 261 I.C.C. Rep. at 272 and 295. 18 Cf. In re Adolf Gobel, Inc., 2 Cir., 80 F.2d 849, involving § 77B, 11 U.S.C.A. § 207, proceedings, and Greenbaum v. Lehrenkraus Corp., 2 Cir., 73 F.2d 285, an equity receivership. 19 Section 77 sub. c (6) provides: 'If a lease of a line of railroad is rejected, and if the lessee, with the approval of the judge, shall elect no longer to operate the leased line, it shall be the duty of the lessor at the end of a period to be fixed by the judge to begin operation of such line, unless the judge, upon the petition of the lessor, shall decree after hearing that it would be impractical and contrary to the public interest for the lessor to operate the said line, in which event it shall be the duty of the lessee to continue operation on or for the account of the lessor until the abandonment of such line is authorized by the Commission in accordance with the provisions of section 1 of Title 49, as amended.' 20 Operation of the Boston & Providence Railroad for its account is now being carried on by the reorganized New Haven pending completion of reorganization of the Boston & Providence. See In re New York, N.H. & H.R. Co., 2 Cir., 169 F.2d 337. 21 Cf. In re New York, N.H. & H.R. Co., 2 Cir., 102 F.2d 923; Guaranty Trust Co. of New York v. Henwood, 86 F.2d 347, 108 A.L.R. 1020; Central Hanover Bank & Trust Co. v. Callaway, 5 Cir., 135 F.2d 592. 22 Kline v. Burke Construction Co., 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077; Ex parte Baldwin, 291 U.S. 610, 54 S.Ct. 551, 78 L.Ed. 1020; Mandeville v. Canterbury, 318 U.S. 47, 63 S.Ct. 472, 87 L.Ed. 605. 1 This subsection provides in part: 'In addition to the provisions of section 29 of this title for the staying of pending suits against the debtor, the judge may enjoin or stay the commencement or continuation of suits against the debtor until after final decree * * *.'
910
336 U.S. 207 69 S.Ct. 507 93 L.Ed. 618 REYNOLDSv.ATLANTIC COAST LINE R. CO. No. 234. Argued Jan. 10, 1949. Decided Feb. 14, 1949. Mr. J. Kirkman Jackson, of Birmingham, Ala., for petitioner. Mr. Peyton D. Bibb, of Birmingham, Ala., for respondent. PER CURIAM. 1 The petitioner brought this suit under the Federal Employers' Liability Act, 45 U.S.C.A. § 51 et seq., in an Alabama state court. As permitted by the practice in that state, all the facts which the petitioner expected to prove to establish her cause of action were set forth in the complaint so that any objections to a verdict in her favor based on evidence of those facts could be disposed of prior to trial. The respondent demurred to the complaint on the ground that the facts as thus set forth did not constitute a cause of action. The demurrer was sustained by the trial court and its action was affirmed by the Supreme Court of Alabama.1 We granted certiorari.2 2 It appears from the complaint that the petitioner's husband was a brakeman whose duties customarily required him to cross between cars on moving freight trains. On one such crossing he fell and was killed. This crossing occurred as part of a required journey from the caboose to a car from which a signal was to be given. The signal ordinarily would have been given from the sixth car from the caboose. The complaint charged, however, that because the railroad had negligently allowed canes to grow alongside the roadbed the deceased could not safely signal from the sixth car and so had to cross to the seventh in order to give the required signal. On this additional crossing he was killed. The complaint also charged that the deceased would not have had to make this particular journey at all if the railroad had provided a competent assistant brakeman. Neither the journey nor the crossing on which the accident occurred was alleged to be any more hazardous than that usually undertaken by railroad brakemen. 3 The Alabama Supreme Court conceded that the complaint adequately charged negligence in the failure to remove the canes and in the failure to provide a competent fellow servant. It held, however, that the facts alleged did not show that the accident resulted proximately, in whole or in part, from that negligence. We cannot say that the Supreme Court of Alabama erred. 4 Affirmed. 5 Mr. Justice FRANKFURTER is of opinion that this is also a case in which the petition for certiorari should not have been granted. See Wilkerson v. McCarthy, 336 U.S. 53, 64, 69 S.Ct. 413 (concurring opinion). However, inasmuch as the case does not call for an independent examination of the record in order to appraise conflicting testimony, but merely turns on the facts presented in the pleadings, he joins in the Court's disposition of it. 6 Mr. Justice BLACK, Mr. Justice DOUGLAS, Mr. Justice MURPHY and Mr. Justice RUTLEDGE dissent. See Lillie v. Thompson, 332 U.S. 459, 68 S.Ct. 140; Anderson v. Atchison, T. & S.F.R. Co., 333 U.S. 821, 68 S.Ct. 85 . 1 1948, 251 Ala. 27, 36 So.2d 102. 2 1948, 335 U.S. 852, 69 S.Ct. 81.
78
336 U.S. 176 69 S.Ct. 492 93 L.Ed. 591 WISCONSIN ELECTRIC POWER CO.v.UNITED STATES. No. 237. Argued Jan. 7, 1949. Decided Feb. 14, 1949. Mr. Van B. Wake, of Milwaukee, Wis., for petitioner. Mr. William L. Ransom, of New York City, for Consolidated Edison Co. of N.Y., as amicus curiae, by special leave of Court. Mr. Lee A. Jackson, of Washington, D.C., for respondent. Mr. Justice REED delivered the opinion of the Court. 1 Petitioner, engaged in the business of supplying electric energy to the public, seeks the refund of taxes paid by it pursuant to § 3411 of the Internal Revenue Code. That section, in pertinent part, provides for a tax '* * * upon electrical energy sold for domestic or commercial consumption * * * equivalent to 3 per centum1 of the price for which so sold, to be paid by the vendor under such rules and regulations as the Commissioner, with the approval of the Secretary, shall prescribe.'2 2 Note that the statute taxes energy for domestic or commercial consumption. There is no provision for taxation of electrical energy used for industrial purposes.3 3 The purchasers of the electric power here involved are 27 dairy plants which are engaged primarily in the collection, pasteurization, and distribution of fresh milk. The sole question presented by the case is whether the use of electricity by these dairies is commercial consumption within the meaning of the statute or industrial consumption, a use not covered by the statute. 4 The functions of the dairy plants are sufficiently similar so that they can be treated as one for the purpose of describing their methods of operation. The plants are buildings equipped with milk-handling machinery and facilities located either off the dairy farms, or on the dairy farm itself as an activity apart from milk production. Contracts for the purchase of raw milk are negotiated with nearby farms.4 This milk is delivered in trucks of the producers or of the dairy plant, as the case may be, to the plant where it is received, weighed, tested for butterfat content, cooled, and mixed and standardized so as to achieve the proper butterfat content. Next it is pasteurized. Pasteurization consists of heating the milk to 143 -145 F., maintaining it at that level for about thirty minutes, and then subjecting it to sudden cooling to a point between 38 and 40 F.5 The process is designed to kill pathogenic bacteria without destroying the natural creaming properties or the taste of the milk. Then the milk is drawn into bottles or cans which have been washed, sterilized, and cooled. Finally it is stored in refrigerated rooms to permit the cream line to form and to await delivery.6 Most of it is delivered to customers in the dairy plant's trucks or wagons. In some instances a small proportion is sold at the plant itself. 5 Electric power is employed by the purchasing dairy plants in a number of ways. It is used to light the plants, including the garage space for the collecting and distributing trucks. It drives electric motors which pump refrigerants, deliver milk to and from the pasteurizer and to the boltling machines, operate the homogenizer, the bottling machine, the cream separator, and the machinery used in washing sterilizing and conveying bottles. The electricity used by some of the plants is measured through a single meter, that of others through two or more meters, but in no case are the meters so connected to the incoming power line as to enable the energy supplied for one purpose to be differentiated from that supplied for another. We do not have before us a situation where pasteurization utilizes electrical energy that is measured by a meter exclusively used for pasteurization. 6 Pasteurization is accomplished by the use of special equipment designed for that purpose. Most of the electricity attributable to the process is devoted to the ice machines which perform the rapid cooling of the milk after the initial heating. Since the same cooling units perform the cooling which is necessary before and after pasteurization, however, the electricity which they consume for pasteurization alone cannot be ascertained. Pasteurization equipment, including the increased cooling equipment necessary therefor, accounts for about 15 or 20 percent of the total cost of plant equipment, excluding trucks and other vehicles. About one-tenth of the cost of plant operation, excluding the cost of the raw milk and costs attributable to distribution, is attributable to pasteurization. 7 Petitioner paid the tax on electrical energy sold to the dairy plants during the period from April, 1940, to July, 1943, and then brought suit to recover it on the ground that such energy was sold not for commercial but for industrial consumption. The United States District Court for the Eastern District of Wisconsin held that the sales were for commercial consumption within the meaning of the statute, and therefore that the tax was valid. 69 F.Supp. 743. The United States Court of Appeals for the Seventh Circuit affirmed. 168 F.2d 285. It summarized its views as follows: 8 'We agree with (District) Judge Duffy that the wording and legislative history of the Act make it clear that the predominant character of the business carried on by a consumer of electrical energy is what determines whether the electricity sold has been sold for 'commercial consumption'; hence we are content to adopt his opinion as that of this court.' 168 F.2d at 286. 9 The United States Court of Appeals for the Tenth Circuit had held in United States v. Public Service Co. of Colorado, 143 F.2d 79, that electrical energy sold to dairy plants operating substantially as these was sold for industrial rather than commercial consumption, and consequently was not taxable under § 3411. We granted certiorari in this case in order to resolve the apparent conflict between circuits and to settle the meaning of the statute as it applies to the business of this general type of dairy plant. 335 U.S. 842, 69 S.Ct. 67. 10 The tax now embodied in § 3411 was originally imposed upon the consumer of electricity by the Revenue Act of 1932, 47 Stat. 169, 266. This Act was amended in 1933 to make the burden of the tax fall directly upon the vendor. 48 Stat. 254, 256. No change of any significance for our purposes has occurred since the original enactment of this provision. 11 Although the language of the section does not include the word 'industrial,' it is clear from the legislative history that 'commercial' was used in contradistinction to 'industrial.'7 While electricity sold for commercial consumption is taxed, that sold for industrial consumption is not. Thus our task resolves itself to a determination of the category in which the consumption of electricity by these dairy plants should be classified. We shall not undertake the difficult and here needless task of general definition which differentiates for this statutory clause between industrial and commercial in other lines of business activity. That is a problem primarily for the administrators of the section, with knowledge of the specific and varying facts. 12 The legislativ history indicates that the term 'commercial' was meant to apply to the nature of the business in which the energy is consumed, and not to the specific purpose to which each measurable unit of electricity is devoted.8 Where it is delivered through a single meter at one location, energy utilized to operate sewing machines for a minor manufacturing unit, e.g., shirts, in a department store, would be deemed power sold for commercial consumption, although it might fall within the industrial category if sold to a consumer who did nothing but manufacture shirts. Since any other interpretation of the section would entail the almost insurmountable administrative difficulty of classifying all the electricity sold to a plant according to the specific operations to which such power was devoted by the consumer, the conclusion that the controlling factor is the general nature of a business at a location accords with the natural meaning to be given the words employed by Congress to express its purpose. 13 The regulations interpret the section in line with the legislative history. U.S.Treas.Reg. 46 (1940 ed.) § 316.190 (as amended by T.D. 5099), presently applicable, provides in pertinent part: 14 'Scope of tax.—The tax imposed by section 3411(a) of the Internal Revenue Code, as amended, applies, except as provided hereinafter, to all electrical energy sold for domestic or commercial consumption and not for resale. 15 'The term 'electrical energy sold for domestic or commercial consumption' does not include (1) electrical energy sold for industrial consumption, e.g., for use in manufacturing, mining, refining, shipbuilding, building construction, irrigation, etc., or (2) that sold for other uses which likewise can not be classed as domestic or commercial, such as the electrical energy used by electric and gas companies, waterworks, telegraph, telephone, and radio communication companies, railroads, other similar common carriers, educational institutions not operated for private profit, churches, and charitable institutions in their operations as such. However, electrical energy is subject to tax if sold for consumption in commercial phases of industrial or other businesses, such as in office buildings, sales and display rooms, retail stores, etc., or in domestic phases, such as in dormitories or living quarters maintained by educational institutions, churches, charitable institutions, or others. 16 'Where electrical energy is sold to a consumer for two or more purposes, through separate meters, the specific use for which the energy is sold through each meter, i.e., whether for domestic or commercial consumption, or for other use, shall determine its taxable status. Where the consumer has all the electrical energy consumed at a given location furnished through one meter, the predominant character of the business carried on at such location § all determine the classification of consumption for the purposes of this tax.'9 17 The last sentence of this regulation makes it clear that all electrical energy furnished to a predominantly commercial establishment through a single meter is subject to the tax although portions of such energy are devoted to purposes which, considered separately, might be classified as industrial.10 While the regulation does not deal with the point, we think it obvious from the last quoted paragraph that where the energy is furnished at a single location through various meters, although none of them are shown to carry current for predominantly industrial uses, the same rule would be applied. The last sentence of the regulation adds a qualification, however, which directs our attention, not necessarily to the nature of a business as a whole, but to the nature as a whole of the activities carried on 'at a given location.' 18 We accept the last sentence of the quoted regulation as proper under the statute.11 As applied to these plants we think that the electricity furnished by the petitioner was 'sold for commercial consumption' and consequently was properly taxed. Admittedly the activities of these consumers would be considered commercial if they did not pasteurize the milk prior to its sale. Such business would accurately be called the distribution of fresh milk. The butter and cream extraction appears incidental. We are not dealing with a 'creamery' in the sense of a butter or cheese factory. We agree with the courts below that the addition of pasteurization to the other activities described above does not change the nature of the dairy plants' business from commercial to industrial any more than would the cooking of food for sale in a restaurant, or the cleaning of raw food products prior to distribution or sale. The District Court found that 'pasteurization plays a minor part in the total business of the dairies,' and that 'the predominant business of the dairies here involved * * * is, and was, that of fluid milk dealers and distributors.'12 19 Petitioner argues that the test applied by the Court of Appeals, 'whether the predominant character of the enterprise carried on by such consumer is commercial', is erroneous and contrary to the regulation in that it directs attention to the business as a whole rather than to the activities at a given location. While the language quoted is susceptible to this criticism, the variation is harmless because the plant itself is the location or the focal point of all the relevant activities of each of these consumers of electricity. Pasteurization does not occur at a separate location, but at the same plant where the milk is received, weighed, tested, cooled, homogenized, separated and bottled. The milk is brought to this plant when purchased, and from the plant it is distributed to customers. The fact that most of the sales or deliveries occur off the premises does not alter the essential fact that all activities occur in or pivot around the plant. 20 Thus, though pasteurizing, we assume, is processing and though processing separately viewed may be conceded to be industrial,13 we conclude that the business conducted by these dairy plants is essentially commercial. The contrary conclusion reached in United States v. Public Service Co. of Colorado, 10 Cir., 143 F.2d 79, may be ascribed to the fact that there the court apparently looked to the use to which the electrical energy was devoted rather than to the nature of the business at a given location.14 21 Rulings of the Bureau of Internal Revenue support our conclusion. In 1932, S.T. 518 stated that, 22 'Electrical energy furnished for consumption by bottling works, milk companies, or creameries engaged in the pasteurization and bottling of milk, and in the manufacture of butter, buttermilk, chocolate milk, and cottage cheese, is not furnished for domestic or commercial consumption * * *.'15 23 Apparently, however, the Bureau intended this ruling to apply only to those plants whose business was predominantly pasteurization and the manufacture of milk by-products, because S.T. 637, issued the following year, contained the following statement: 24 'A dairy which obtains milk and converts it into use for retail purposes is held to be engaged in a business commercial in character. Electrical energy used in such operations will be subject to tax.'16 25 In clarification of these two rulings the Bureau explained: 26 'Electrical energy furnished a commercial dairy or milk company which merely produces or purchases raw milk in bulk and pasteurizes it for sale either in bulk or bottled quantities, whose activities consist principally in the handling, distribution and sale of milk, is also subject to the tax. 27 'It is only electrical energy that is furnished for direct consumption by dairies which in addition to pasteurizing and bottling milk are also engaged in all the essential manufacturing processes necessary for the production of dairy products, such as the manufacturing of butter, cheese and other dairy products, for sale on the open market as an article of commerce, that is not subject to the tax.'17 28 Thus we hold that electrical energy supplied to these dairy plants through single meters, or through more than one but without differentiation as to use, is energy sold for commercial consumption. 29 Affirmed. 1 Amended by the Revenue Act of 1941, c. 412, 55 Stat. 687, 707, § 521(a) (19), to change the three percent tax to three and one-third percent. 2 26 U.S.C. § 3411, 26 U.S.C.A. § 3411. 3 See, infra, p. 4, et seq. 4 A few of the consumers of electricity here involved produce their own milk. 5 One of the plants pasteurizes by the so-called 'flash method,' heating the milk to 161° F. for 16 seconds and rapidly cooling it to 32° F. 6 A minor proportion of the milk purchased by these plants is manufactured into butter, cheese, or other by-products. An undisclosed amount of this milk is separated from the cream it contains; some is also homogenized. 7 H. Conference Rep.No.1492, 72d Cong., 1st Sess., p. 22; Senator Harrison, 77 Cong.Rec. 3212—14, 3215. 8 The legislative explanations treat of business consumers as units and do not differentiate as to use within the units. Senator Harrison, Chairman of the Senate Finance Committee, which reported the bill, said: 'I am telling Senators nothing new when I remind them that we had a fight here in 1932 over the imposition of this tax. The Senate imposed a 3-percent electric-energy tax, and it was finally adopted, to be collected from the consumer of electric energy. We applied that only on domestic and commercial energy; that is, electric energy used in stores and dwellings that are classified as commercial and domestic. There was no tax in the 1932 act imposed upon energy employed in industry.' 77 Cong.Rec. 3212—13. Senator Couzens, a member of a subcommittee of the Senate Finance Committee, which was constituted to consider the electrical energy tax, said: 'I mean they eliminated that feature of the tax; they eliminated the tax on electrical energy sold to manufacturing plants and left the tax on electricity used commercially, that is by stores and on electricity used for domestic purposes * * *.' 77 Cong.Rec. 3218. 9 This regulation was substantially the same in its earlier versions. U.S.Treas.Reg. 42, Art. 40 (1932); T.D. 4342, XI—2 Cum.Bull. 495 (1932); T.D. 4393, XII-2 Cum.Bull. 322 (1933). The quoted version, however, omitted the word 'processing,' which was formerly included in the list of activities exemplifying industrial consumption. We do not consider this deletion significant for purposes of oCum.Bull. 495 (1932); T.D. 4393, XII 2 10 Cf. St. Louis Refrigerating & Cold Storage Co. v. United States, 43 F.Supp. 476, 95 Ct.Cl. 694; Fulton Market Cold Storage Co. v. United States, Ct.Cl., 43 F.Supp. 485. 11 We do not intend by these words of limitation to approve or disapprove other provisions. There are ambiguities in this section of the regulation. In the second paragraph, without reference to separate meters, it holds that energy used in the commercial phases of an industrial business is taxable. The reverse would seem to follow as to industrial phases of a commercial business. Yet the third paragraph allows the avoidance of such a tax on industrial use only by the employment of separate meters. 12 For state cases to the effect that this business is primarily commercial, see e.g. City of Louisville v. Ewing Von-Allmen Dairy Co., 268 Ky. 652, 105 S.W.2d 801; People ex rel. Empire State Dairy Co. v. Sohmer, 218 N.Y. 199, 112 N.E. 755, L.R.A.1917A, 48; City of Richmond v. Richmond Dairy Co., 156 Va. 63, 157 S.E. 728. But see Michigan Allied Dairy Ass'n v. State Board of Tax Administration, 302 Mich. 643, 5 N.W.2d 516. 13 See note 9, supra. 14 'The electrical energy was not used in the commercial phase of the dairying enterprise, but in the processing or industrial phase of the enterprise.' 10 Cir., 143 F.2d 79, 82. 15 XI—2 Cum.Bull. 498 (1932). 16 XII—1 Cum.Bull. 409, 410 (1933). 17 Bureau Letter, dated May 13, 1933 (symbols MT: ST: BHF) (333 C.C.H. 6266), 4 C.C.H.Tax Serv. 2633G. 175 (1949).
1112
336 U.S. 198 69 S.Ct. 503 93 L.Ed. 611 LAWSON, Deputy Commissioner,v.SUWANEE FRUIT & STEAMSHIP CO. et al. No. 56. Argued Dec. 7, 1948. Decided Feb. 14, 1949. Mr. Newell A. Clapp, of Washington, D.C., for petitioner. Mr. Harry T. Gray, of Jacksonville, Fla., for respondents. Mr. Justice MURPHY delivered the opinion of the Court. 1 This is a workmen's compensation case, under the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, 33 U.S.C. § 901 et seq., 33 U.S.C.A. § 901 et seq. A narrow and difficult question of statutory construction confronts us. 2 John Davis lost the sight of his right eye in an accident unconnected with industry or his employment. He was later hired by respondent. An injury occurred during this employment, and he is now blind in both eyes. The parties agree that he is totally disabled within the meaning of the Act; they also agree that the employer is liable for compensation for the loss of the left eye. The dispute is narrowed to this question: should the employer or the statutory second injury fund, administered by petitioner, be liable for the balance of payments to equal compensation for total disability? 3 Petitioner concluded that the employer was liable. The employer secured a reversal of this determination in the District Court for the Southern District of Florida, 68 F.Supp. 616,1 and the Court of Appeals for the Fifth Circuit affirmed the judgment of the District Court. 166 F.2d 13. Because this decision conflicted with that of the Court of Appeals for the District of Columbia in National Homeopathic Hospital Association of District of Columbia v. Britton, 79 U.S.App.D.C. 309, 147 F.2d 561, certiorari denied 325 U.S. 857, 65 S.Ct. 1185, 89 L.Ed. 1977, we granted certiorari. 4 Section 8(f)(1) of the Act provides that 'If an employee receive an injury which of itself would only cause permanent partial disability but which, combined with a previous disability,2 does in fact cause permanent total disability, the employer shall provide compensation only for the disability caused by the subsequent injury: Provided, however, That in addition to compensation for such permanent partial disability, and after the cessation of the payments for the prescribed period of weeks, the employee shall be paid the remainder of the compensation that would be due for permanent total disability. Such additional compensation shall be paid out of the special fund established in section 44.' The court below (166 F.2d 14) held that this section is 'clear and unambiguous, and therefore needs no construction. When read in its ordinary sense it can have but one meaning': liability for the second injury fund. 5 But the word 'disability' is defined in the statute. Section 2 provides that 'when used in this Act * * * (10) 'Disability' means incapacity because of injury * * *.' (Emphasis supplied.) The word 'injury' is, in turn, defined as 'accidental injury or death arising out of and in the course of employment * * *.' § 2(2). If these definitions are read into the second injury provision, then, it reads as follows: 'If an employee receive an injury which of itself would only cause permanent partial disability but which, combined with a previous incapacity because of accidental injury or death arising out of and in the course of employment, does in fact cause permanent total disability, the employer shall provide compensation only for the disability caused by the subsequent injury'. Because Davis' previous injury was nonindustrial, this reading points to liability for the employer. 6 If Congress intended to use the term 'disability' as a term of art, a shorthand way of referring to the statutory definition, the employer must pay total compensation. If Congress intended a broader and more usual concept of the word, the judgment below must be affirmed. Statutory definitions control the meaning of statutory words, of course, in the usual case. But this is an unusual case. If we read the definition into § 8(f)(1) in a mechanical fashion, we create obvious incongruities in the language, and we destroy one of the major purposes of the second injury provision: the prevention of employer discrimination against handicapped workers. We have concluded that Congress would not have intended such a result. 7 Chief Justice Groner, dissenting in the National Homeopathic case, supra, 147 F.2d at page 565, noticed that the 'interreplacements of words' we have set out above 'produces a manifest incongruity, for * * * it would literally result in this: '* * * a previous incapacity because of accidental injury or death'—And if to avoid this it be argued that only a portion of the definition of injury should be inserted, the result would be to change or at least to limit the statutory definition only to produce a desired result, which no one would urge or defend. It is evident, therefore,' that the definition of disability was 'not made with watch-like precision' and should not be so applied in § 8(f) (1). If the intent of Congress had been to limit the applicability of this subsection in the fashion for which petitioner contends, 'it could easily have accomplished this by the insertion of the word 'compensable' between the words 'previous' and 'disability' * * *.' And see Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 52 S.Ct. 607, 76 L.Ed. 1204. 8 More important, perhaps, is the disservice we would do to the purpose of the second injury provision. We must look to the explanation of congressional intent behind the subsection. A witness at a hearing on the measure outlined his reasons for favoring the provision in the following manner: 'The second injury proposition is as much to the advantage of the employer and his interests as it is for the benefit of the employee. It protects the employer who has hired, say, a one-eyed worker who goes and loses his other eye and becomes a total disability. The employer without this sort of thing would have to pay total permanent disability compensation. Then, on the other hand, this also protects the worker with one eye from being denied employment on account of his being an extra risk. Now, by simply taking this up in this way it is possible to protect both the employer and to protect the one-eyed employee also.'3 9 Petitioner relies on the statement of another witness before the Senate Committee, who favored inclusion of the second injury provisions because 'they have become a commonplace * * * in State compensation legislation and ought to be included in the Act.'4 And petitioner states that 'we may appropriately refer, therefore, to the second injury provisions in other statutes and to the evaluations made by administrative experts in the field for guidance with respect to the manner in which opposing policy considerations have been resolved.' But our search for guidance in the sources suggested by petitioner convinces us that petitioner's theories are not well-founded. 10 From the attitude of experts in the field, one would not expect Congress to distinguish between two types of handicapped workers. The annual conventions of the International Association of Industrial Accident Boards and Commissions provide the most helpful considerations of the problem. At the 1931 convention, Mr. Joseph Parks of the Massachusetts Commission spoke as follows of workmen's compensation legislation without a second injury provision: 'I little knew that this great piece of legislation . . . would become an instrument of persecution, as I may call it, of men who are physically handicapped, but that is what it has become. Men who are physically handicapped are being discriminated against in our Commonwealth.'5 11 This attitude has been echoed by Mr. Charles Sharkey of the United States Bureau of Labor Statistics;6 Miss Frances Perkins, then Industrial Commissioner in New York;7 and others.8 Perhaps the most impressive evidence of the force behind these statements is that offered by Mr. I. K. Huber of Oklahoma. Nease v. Hughes Stone Co., 114 Okl. 170, 244 P. 778, held the employer liable for total compensation for loss of the second eye. After the decision, Mr. Huber reports, 'thousands of one-eyed, one-legged, one-armed, one-handed men in the State of Oklahoma were let out and can not get employment coming under the workmen's compensation law of Oklahoma. * * * Those * * * court decisions put us in bad shape. * * * The decision displaced between seven and eight thousand men in less than 30 days in Oklahoma.'9 12 A distinction between a worker previously injured in industry and one handicapped by a cause outside of industry has no logical foundation if we accept the premise that the purpose of the fund is that of aid to the handicapped. This is the conclusion of Mr. red Wilcox, then Chairman of the Wisconsin Commission:10 'Wisconsin takes no account of where the injured man may have gotten his first injury. It makes no difference where he got it. It is just as serious to him, when he has the second injury, as if he had gotten the first one in industry.' We cannot attribute the illogic of petitioner's position to Congress. 13 Our conclusion is reinforced by the administrative practice under the New York statute. The federal statute is based upon New York law.11 In New York 'the commission holds that if the man loses his second eye in an industrial accident it is immaterial how he lost his first eye. The loss of eyesight in one eye may have been congenital; it may have occurred when the child was two years old, or it may have occurred after he was grown, but not in an industrial accident. Nevertheless, at the time he loses his second eye he has suffered total disability.'12 14 Petitioner argues that New York law is to the contrary, citing La Belle v. Britton Stone & Supply Corp., 247 App.Div. 843, 286 N.Y.S. 347, and Bervilacqua v. Clark, 225 App.Div. 190, 232 N.Y.S. 502. The La Belle case is inadequately reported; the Bervilacqua case did not consider the precise point involved in this case, and was distinguished by the New York Attorney-General in 1937 when he advised the Department of Labor to continue its established practice. Annual Report of the Attorney-General, State of New York, for 1937 (Albany, 1938), p. 270. 15 Petitioner's most strenuous argument is that the fund will soon be insolvent if we open liability to a nonindustrial previous injury, and that therefore Congress could not have contemplated the result we reach.13 Petitioner's worries seem exaggerated in the light of Wisconsin and New York experience. From 1919 to 1933,14 Wisconsin's fund had only 50 second injury cases charged against it. Second-Injury Funds as Employment Aids to the Handicapped, U.S. Division of Labor Standards (1944), p. 7. From 1919 to 1943, only 99 cases were charged against the New York fund. Id., p. 5. In 1930 Miss Frances Perkins told her associates that the problem is 'not so large * * * as it appears.'15 16 On the basis of the incongruity involved in applying the definition mechanically, the unmistakable purpose of the second injury fund, and the interpretation of the State statute on which the federal act is based, we conclude that the term 'disability' was not used as a term of art in § 8(f)(1), and that the judgment must be affirmed. 17 Affirmed. 18 Mr. Justice DOUGLAS dissents. 1 Under § 21 of the statute. 2 Emphasis supplied. 3 Hearings before Committee on the Judiciary, House of Representatives, S. 3170, 69th Cong., 1st Sess. (1926), p. 208. 4 Hearin § before Subcommittee of the Senate Committee on the Judiciary, S. 3170, 69th Cong., 1st Sess. (1926), p. 43. 5 United States Bureau of Labor Statistics, Bull. No. 564 (1932), p. 278. 6 United States Bureau of Labor Statistics, Bull. No. 577 (1933), p. 146. 7 United States Bureau of Labor Statistics, Bull. No. 536 (1931), p. 254. 8 'We are dealing with a condition and not a theory. If the man is found with some defect which, if he meets with an accident, is likely to be aggravated and made more severe and thus increase the cost to the employer whose experience rating goes up as a result, then he does not want to accept that risk; and that poor fellow is met with the alternative of being deprived of a means of earning a livelihood or of waiving his rights to compensation.' Ibid, p. 256. And see Discussion of Industrial Accidents and Diseases, United States Division of Labor Standards, Bull. No. 94 (1948), p. 104; United States Bureau of Labor Statistics, Bull. No. 602 (1934), p. 11, ff., especially p. 15; United States Bureau of Labor Statistics, Bull. No. 577 (1933), pp. 154, 155. 9 United States Bureau of Labor Statistics, Bull. No. 536 (1931), pp. 268, 272. Mr. Fred Wilcox, former Chairman of the Wisconsin Commission, said: 'Fundamentally, there is no moral reason why the employer of a man, when he gets his second injury, should not pay the full cumulative effect of that injury * * * but that is not the way things work out. The employer escapes the burden and lets the injured man bear it, and he sits at home without a job. * * * The employer is going to be afraid to take them on because of some added responsibility. * * * We allowed the employee who lost his second eye to have twice as much compensation for the loss of the second eye as for the loss of the first eye. But what about it? Did anyone ever get any compensation for the loss of a second eye? No; he never got a job. He never got a chance to lose his second eye in industry—to be blunt in stating the facts Employers would not hire him, because they would take on twice as much liability as they had before.' United States Bureau of Labor Statistics, Bull. No. 577 (1933), pp. 157, 158. 10 Id. 11 H.R.Rep.No.1190, 69th Cong., 1st Sess., p. 2. See Employers' Liability Assurance Corp., Ltd., v. Monahan, 1 Cir., 91 F.2d 130; Hartford Accident & Indemnity Co. v. Hoage, 66 App.D.C. 154, 85 F.2d 411. 12 United States Bureau of Labor Statistics, Bull. No. 577 (1933), p. 154. 13 Payments are made from the special fund established in § 44 of the Act. Employers pay $1,000 into the fund for noncompensable deaths, half of which is available for second injuries. All penalties and fines collected are also paid into the fund. § 44(c). 14 In 1933 the Wisconsin Supreme Court decided Ruehlow v. Industrial Commission, 213 Wis. 240, 251 N.W. 451, which reversed the administrative practice outlined by Mr. Wilcox, supra. Compare Lehman v. Schmahl, 179 Minn. 388, 229 N.W. 553. 15 United States Burea of Labor Statistics, Bull. No. 536 (1931), p. 260. At p. 259, Mr. L. W. Hatch of New York is reported as follows: 'Many people have said, 'Oh, well, if you make a second-injury fund take care of every case in which a prior condition was a material factor in the man's disability, you will bankrupt the State or the taxpayers will be called upon to bear an enormous burden.' The evidence so far as we have gone does not indicate any such situation.'
78
336 U.S. 187 69 S.Ct. 497 93 L.Ed. 599 McCOMB, Adm'rv.JACKSONVILLE PAPER CO. et al. No. 110. Argued Dec. 14, 15, 1948. Decided Feb. 14, 1949. Bessie Margolin, of Washington, D.C., for petitioner. Mr. Louis Kurz, of Jacksonville, Fla., for respondents. [Argument of Counsel from page 188 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court. 1 This is a civil contempt proceeding arising out of Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460, which we decided January 18, 1943. The District Court had held that none of respondent's employees in specified classes were covered by Fair Labor Stand rds Act. 52 Stat. 1060, 29 U.S.C. § 201 et seq., 29 U.S.C.A. § 201 et seq. We sustained a judgment of the United States Court of Appeals, Fleming v. Jacksonville Paper Co., 5 Cir., 128 F.2d 395, which reversed the District Court, modifying it slightly to include a larger class of employees than the United States Court of Appeals had held to be covered. 2 On remand the District Court, without a further hearing, entered a decree enjoining respondents from violating the Act in any of the following particulars: (1) by paying the designated classes of employees less than 30¢ an hour from the date of the judgment to October 24, 1945, or less than 40¢ an hour thereafter, except as permitted by orders of the Administrator under § 8 or § 14 of the Act; (2) by employing such employees for a workweek longer than 40 hours unless they receive compensation for employment in excess of 40 hours in the workweek at a rate not less than one and one-half times the regular rate at which they are employed; and (3) by failing to keep and preserve records as prescribed by the Administrator, particularly records of the hours worked each workday and each workweek by each of the employees and of the total wages paid to each for each workweek. 3 Respondent took no appeal from this order. This was in 1943. In 1946 the Administrator instituted this contempt proceeding alleging that respondents had not complied with the minimum wage, overtime, and record-keeping provisions of the judgment in many specified respects. He prayed that respondents be required to terminate their continuing violations and in order to purge themselves of their contempts to make payment of the amounts of unpaid wages due the affected employees. The District Court found violations of the provisions of the decree. It found that (1) respondents had set up a completely false and fictitious method of computing compensation without regard to the hours actually worked which were unlawful under the Act; (2) respondents had adopted a plan which gave the employees a wage increase in the guise of a bonus and yet excluded that increase from the regular rate of pay for the purpose of computing overtime; (3) respondents had classified some employees as executive or administrative employees in plain violation of the regulations of the Administrator adopted under § 13(a)(1) of the Act; and (4) one of the respondents had employed piece-workers in excess of the maximum workweek without paying them overtime compensation.1 4 The District Court held that a civil contempt required a 'wilful' violation of a decree; and that there was in this case no showing of any 'wilful' violation of any 'specific' provision of the former decree 'prohibiting the doing of any specific thing.' The District Court further held that it had no power on the application of the Administrator to enforce compliance with its former decree by ordering the payment of unpaid statutory wages. It accordingly considered the application of the Administrator as an amended complaint seeking a broadening of the previous decree and entered such an injunction. 69 F.Supp. 599, 608. 5 All parties appealed. The United States Court of Appeals affirmed the judgment, 5 Cir., 167 F.2d 448. It ruled that respondents had violated the provisions of the decree couched in terms of the Act in the respects found by the District Court. It also held that the District Court was warranted in concluding that there was no 'wilful contempt' since neither the law nor the injunction specifically referred to or condemned the practices which were found to violate the Act. 6 The case is here on a petition for a writ of certiorari which we granted because of the importance of the problem in the administration of the Act. 7 First. The absence of wilfulness does not relieve from civil contempt. Civil as distinguished from criminal contempt is a sanction to enforce compliance with an order of the court or to compensate for losses or damages sustained by reason of noncompliance. See United States v. United Mine Workers, 330 U.S. 258, 303, 304, 67 S.Ct. 677, 701, 91 L.Ed. 884; Penfield Co. v. Securities & Exchange Commission, 330 U.S. 585, 590, 67 S.Ct. 918, 921, 91 L.Ed. 1117; Maggio v. Zeitz, 333 U.S. 56, 68, 68 S.Ct. 401, 407. Since the purpose is remedial, it matters not with what intent the defendant did the prohibited act.2 The decree was not fashioned so as to grant or withhold its benefits dependent on the state of mind of respondents. It laid on them a duty to obey specified provisions of the statute. An act does not cease to be a violation of a law and of a decree merely because it may have been done innocently. The force and vitality of judicial decrees derive from more robust sanctions. And the grant or withholding of remedial relief is not wholly discretionary with the judge, as Mr. Justice Brandeis wrote for a unanimous Court in Union Tool Co. v. Wilson, 259 U.S. 107, 111, 112, 42 S.Ct. 427, 428, 429, 66 L.Ed. 848. The private or public rights that the decree sought to protect are an important measure of the remedy. 8 Second. As we have noted the decree directed respondents to obey the provisions of the Act dealing with minimum wages, overtime, and the keeping of records. There was no appeal from it. By its terms it enjoined any practices which were violations of those statutory provisions. Decrees of that generality are often necessary to prevent further violations where a proclivity for unlawful conduct has been shown. See May Stores Co. v. National Labor Relations Board, 326 U.S. 376, 390, 391, 66 S.Ct. 203, 211, 212, 90 L.Ed. 145; United States v. Crescent Amusement Co., 323 U.S. 173, 186, 65 S.Ct. 254, 260, 89 L.Ed. 160. Respondent's record of continuing and persistent violations of the Act would indicate that that kind of a decree was wholly warranted in this case. Yet if there were extenuating circumstances or if the decree was too burdensome in operation, there was a method of relief apart from an appeal. Respondents could have petitioned the District Court for a modification, clarification or construction of the order. See Regal Knitwear Co. v. National Labor Relations Board, 324 U.S. 9, 15, 65 S.Ct. 478, 481, 89 L.Ed. 661. But respondents did not take that course either. They undertook to make their own determination of what the decree meant. They knew they acted at their peril. For they were alerted by the decree against any violation of specified provisions of the Act. 9 It does not lie in their mouths to say that they have an immunity from civil contempt because the plan or scheme which they adopted was not specifically enjoined. Such a rule would give tremendous impetus to the program of experimentation with disobedience of the law which we condemned in Maggio v. Zeitz, supra, 333 U.S. at page 69, 68 S.Ct. at page 408. The instant case is an excellent illustration of how it could operate to prevent accountability for persistent contumacy. Civil contempt is avoided today by showing that the specific plan adopted by respondents was not enjoined. Hence a new decree is entered enjoining that particular plan. Thereafter the defendants work out a plan that was not specifically enjoined. Immunity is once more obtained because the new plan was not specifically enjoined. And so a whole series of wrongs is perpetrated and a decree of enforcement goes for naught. 10 That result not only proclaims the necessity of decrees that are not so narrow as to invite easy evasion; it also emphasizes the danger in the attitude expressed by the courts below that the remedial benefits of a decree will be withheld where the precise arrangement worked out to discharge the duty to pay which both the statute and the decree imposed was not specifically enjoined. 11 We need not impeach the findings of the lower c urts that respondents had no purpose to evade the decree, in order to hold that their violations of it warrant the imposition of sanctions. They took a calculated risk when under the threat of contempt they adopted measures designed to avoid the legal consequences of the Act. Respondents are not unwitting victims of the law. Having been caught in its toils, they were endeavoring to extricate themselves. They knew full well the risk of crossing the forbidden line. Accordingly where as here the aim is remedial and not punitive, there can be no complaint that the burden of any uncertainty in the decree is on respondent's shoulders. 12 Third. We have no doubts concerning the power of the District Court to order respondents, in order to purge themselves of contempt, to pay the damages caused by their violations of the decree. We can lay to one side the question whether the Administrator, when suing to restrain violations of the Act, is entitled to a decree of restitution for unpaid wages. Cf. Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332. We are dealing here with the power of a court to grant the relief that is necessary to effect compliance with its decree. The measure of the court's power in civil contempt proceedings is determined by the requirements of full remedial relief. They may entail the doing of a variety of acts, such as the production of books. Penfield Co. v. Securities and Exchange Commission, supra. They may also require the payment of money as in the alimony cases. See Gompers v. Buck's Stove & Range Co., 221 U.S. 418, 442, 31 S.Ct. 492, 498, 55 L.Ed. 797, 34 L.R.A., N.S., 874; Oriel v. Russell, 278 U.S. 358, 364, 365, 49 S.Ct. 173, 174, 175, 73 L.Ed. 419. 13 The decree that was violated in the present case relates to the payment of wages and overtime pay required by §§ 6 and 7 of the Act. It does not, however, compute the weekly and monthly amount that is due each employee under the correct construction of the Act. Nor does it contain the names of the payees. But it provides the formula by which the amounts can be simply computed. If it had gone one step further and made the computation, listing the amounts due each employee, the case would then be on all fours with the alimony cases. Yet the circumstance that changing payrolls and fluctuating rates of pay make that impractical in this type of case does not mark a material difference. 14 The direction of the court was that respondents make payments of wages to their employees pursuant to a prescribed formula. If the court is powerless to require the prescribed payments to be made, it has lost the most effective sanction for its decree and a premium has been placed on violations. The fact that another suit might be brought to collect the payments3 is, of course, immaterial. For the court need not sit supinely by waiting for some litigant to take the initiative. Vindication of its authority through enforcement of its decree does not depend on such whimsical or fortuitous circumstances. The fact that the Administrator is the complainant4 and that the back wages go to the employees are not material. It is the power of the court with which we are dealing—the power of the court to enforce compliance with the injunction which the Act authorizes,5 which the court has issued, and which respondents have long disobeyed. 15 Reversed. 16 Mr. Justice RUTLEDGE concurs in the result. 17 Mr. Justice RANKFURTER, with whom Mr. Justice JACKSON concurs, dissenting. 18 Obedience must of course be secured for the command of a court. To secure such obedience is the function of a proceeding for contempt. But courts should be explicit and precise in their commands and should only then be strict in exacting compliance. To be both strict and indefinite is a kind of judicial tyranny. 19 In such a case as this, only after an administrative order has been formulated and a court has adjudicated that the order is within the administrator's statutory authority does the command of a court come into existence, disobedience of which may be punished as contempt. For violation of the Fair Labor Standards Act as such, one may be made to suffer civil penalties or imprisonment, but the latter only after conviction by a jury. For violation of the command of an injunction issued under the Act, however, he may not only be exposed to more severe civil penalties than the Act by its own terms imposes, but made to suffer imprisonment without benefit of jury trial. It is for such reasons that this Court has indicated again and again that a statute cannot properly be made the basis of contempt proceedings merely by incorporating a reference to its broad terms into a court order. See, e.g., Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 279, 49 L.Ed. 518; New York, N.H. & H.R. Co. v. Interstate Commerce Comm., 200 U.S. 361, 404, 26 S.Ct. 272, 282, 50 L.Ed. 515; National Labor Relations Board v. Express Publishing Company, 312 U.S. 426, 435, 61 S.Ct. 693, 699, 85 L.Ed. 930. These considerations become increasingly important as there is increasing use of injunctions for the enforcement of administrative orders and statutory duties. 20 These are general principles but their application governed the decisions of the District Court and of the Circuit Court of Appeals; they should control the decision here. The two lower courts found that while the practices now complained of by the Administrator of the Wage and Hour Division of the Department of Labor constituted violations of the Fair Labor Standards Act, they were not on any fair consideration covered by the injunction, contempt of which is now charged. The injunction underlying this proceeding takes eight pages of a printed record and particularizes in great detail the violations which were enjoined. It also contains omnibus clauses prohibiting violations of the Fair Labor Standards Act. On full consideration, the District Court treated the application for an adjudication of civil contempt 'as an amended complaint seeking a broadening of the injunctive orders heretofore entered in this case, and will enter an amended judgment enjoining defendants from violating the provisions of the Fair Labor Standards Act as adjudicated in this Memorandum Opinion.' 69 F.Supp. 599, 608. The Circuit Court of Appeals agreed with this view of the District Court (with a minor modification not here relevant). 167 F.2d 448. In short, both courts found no contempt. They did so because there was lacking that clearness of command in the court's order which warranted a finding of its disobedience, if due regard were paid to the proper construction of the injunction as the starting point of the contempt proceedings. At the least, such was a warrantable interpretation of the circumstances of this case, and we are disentitled to set our interpretation against theirs. 21 In reversing the conclusion of the two lower courts that there was no contempt because there was no disobedience of the injunction, the Court is rendering a decision of far-reaching import to the law of injunctions. Today's ruling happens to concern an injunction against an employer. Tomorrow it may be an injunction against employees, as it was yesterday and too often in the past. One of the grievances which led to the Norris-LaGuardia Act, 29 U.S.C.A. § 101 et seq., was the generality of the terms of labor injunctions. Ambiguity lurks in generality and may thus become an instrum nt of severity. Behind the vague inclusiveness of an injunction like the one before us is the hazard of retrospective interpretation as the basis of punishment through contempt proceedings. The two lower courts, in finding that generally to enjoin obedience to a law is too vague a foundation for proceedings in contempt, were avoiding the very evil with which labor injunctions were justly charged. And of course it is not to be assumed that the allowable vagueness of an injunction varies with the use to which the injunction is put. This Court ought not to encourage injunctions couched in such indefinite terms by setting aside the findings of the courts below that the injunction did not forbid with explicitness sufficient to justify a finding of contempt. 22 I would affirm the judgment of the Circuit Court of Appeals. 1 It also found violations of the record-keeping provisions of the decree, some of which it held to be trivial and others of which had been discontinued. 2 See 2 High on Injunctions (4th ed., 1905) §§ 1416 et seq. 3 Section 16(b) authorizes suits by employees to recover wages and overtime unlawfully withheld. 4 It is the Administrator who is directed and authorized by § 11(a) of the Act to bring actions to restrain violations of the Act of the character involved here. Cf. Inland Steel Co. v. United States, 306 U.S. 153, 157, 59 S.Ct. 415, 417, 83 L.Ed. 557; United States v. Morgan, 307 U.S. 183, 193, 194, 59 S.Ct. 795, 800, 801, 83 L.Ed. 1211; Public Service Commission v. Brashear Freight Lines, 312 U.S. 621, 628—630, 61 S.Ct. 784, 788, 789, 85 L.Ed. 1083. 5 See § 17.
01
336 U.S. 220 69 S.Ct. 550 93 L.Ed. 632 DANIEL, Atty. Gen. of South Carollna, et al.v.FAMILY SECURITY LIFE INS. CO. et al. No. 297. Argued Feb. 2, 1949. Decided Feb. 28, 1949. On Appeal From the United States District Court for the Eastern District of South Carolina. Mr. David W. Robinson, of Washington, D.C., for appellants. Mr. Donald Russell, of Spartenburg, S.C., for appellees. Mr. Justice MURPHY delivered the opinion of the Court. 1 A South Carolina statute provides that life insurance companies and their agents may not operate an undertaking business, and undertakers may not serve as agents for life insurance companies. Criminal sanctions are provided. Act No. 787, S.C. Acts of 1948, 45 Stat. at Large, p. 1947.1 Respondents brought action before a three-judge District Court in the Eastern District of South Carolina, seeking an injunction forbidding the enforcement of the statute. 28 U.S.C. § 380, now 28 U.S.C. §§ 2281, 2284, 28 U.S.C.A. §§ 2281, 2284. The court, one judge dissenting, upheld respondents' contentions that the statute, as applied in this case, did not provide that due process of law and equal protection of the laws guaranteed by the Fourteenth Amendment to the Constitution of the United States. A permanent injunction issued, D.C., 79 F.Supp. 62, and the South Carolina Attorney General has appealed to this Court. 28 U.S.C. § 380, now 28 U.S.C. §§ 1253, 2281, 28 U.S.C.A. §§ 1253, 2281. 2 The respondent insurance company is incorporated and licensed to do business in South Carolina, and conforms with the comprehensive code of insurance regulations established by Act No. 232, S.C.Acts of 1947, 45 Stat. at Large, p. 322. The other respondents are its officers and directors. It issues life insurance with cash benefits ranging from $125 to $750. The amount of outstanding policies had reached a total of $838,375 in May of 1948, compared to nothing in February of the same year. Most of the company's agents are undertakers. Parties to the insurance contract contemplate use of the policy's proceeds to pay funeral expenses. A 'facility of payment' clause might justify payment of proceeds to an undertaker for the insured's funeral. at the time of the trial, respondent company was the only concern in South Carolina selling 'funeral insurance' as an established practice. 3 For many years South Carolina has prohibited the payment of insurance proceeds in merchandise or services. Act No. 205, S.C. Acts of 1929, 36 Stat. at Large p. 234; S.C. Code of 1942, § 7984; Act No. 232, S.C. Acts of 1947, § 65, 45 Stat. at Large, p. 350. Possibilities of fraud, misunderstanding in valuation, and the comparatively useless character of the merchandise delivered or services rendered make respondents readily concede the desirability of this ban. Other states have similar statutes.2 4 The South Carolina lagislature might well have concluded that funeral insurance, although paid in cash, carries the same evils that are present in policies payable in merchandise or services: the beneficiary's tendency to deliver the policy's proceeds to the agent-undertaker for whatever funeral the money will buy, whether or not an expensive ceremony is consistent with the needs of the survivors.3 Considerations which might have been influential include the likelihood of overreach on the part of insurance companies, and the possibilities of monopoly control detailed in affidavits introduced in the court below. 5 The South Carolina legislature is not alone in seeing evils in this kind of insurance, and in invoking its police powers to combat them. See the similar provisions in N.Y. Insurance Law, Consol.Laws, c. 28, § 165(c); Fla.Code, § 639.02, F.S.A.; Ga.Code, 56-9920; Page's Ohio General Code, § 666(1946) (see Robbins v. Hennessey, 86 Ohio St. 181, 99 N.E. 319); Md.Code, Art. 48A, § 110 (1939). And see the summary of critical arguments in Business Week, October 20, 1945, pp. 48, 51. 6 Yet the court below held that the statute is 'arbitrary and discriminative and designed to destroy, and will destroy, the plaintiff insurance company and its business, * * * it seems obvious from the record that this legislation had its genesis in the desire of the existing insurance companies to eliminate the plaintiff company as a competitor. * * *' 79 F.Supp. at pages 70, 68. The court found that the respondent's policies are actuarially sound; that funeral insurance is desirable; and that the other South Carolina insurance regulations are 'ample' to correct any evils resulting from respondents' business. The Court concluded that the statute now before us is so unreasonable that it offends the Due Process Clause. 7 First. It is said that the 'insurance lobby' obtained this statute from the South Carolina legislature. But a judiciary must judge by results, not by the varied factors which may have determined legislators' votes. We cannot undertake a search for motive in testing constitutionality. See Hammer v. Dagenhart, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R. 649, Ann.Cas.1918E, 724, overruled in United States v. Darby, 312 U.S. 100, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430. Compare Bailey v. Drexel Furniture Co., 259 U.S. 20, 42 S.Ct. 449, 66 L.Ed. 817, 21 A.L.R. 1432, and United States v. Constantine, 296 U.S. 287, 56 S.Ct. 223, 80 L.Ed. 233, with Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 393, 60 S.Ct. 907, 912, 84 L.Ed. 1263. Compare United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914, with Steward Machine Co. v. Davis, 301 U.S. 548, 592, 57 S.Ct. 883, 893, 81 L.Ed. 1279, 109 A.L.R. 1293, and Cincinnati Soap Co. v. United States, 301 U.S. 308, 57 S.Ct. 764, 81 L.Ed. 1122. 8 Second. Despite evidence to the contrary, respondents see no evil to be corrected by this legislation. We are asked to agree with respondents and call the statute arbitrary and unreasonable. 9 Looking through the form of this plea to its essential basis, we cannot fail to recognize it as an argument for invalidity because this Court disagrees with the desirability of the legislation. We rehearse the obvious when we say t at our function is thus misconceived. We are not equipped to decide desirability; and a court cannot eliminate measures which do not happen to suit its tastes if it seeks to maintain a democratic system. The forum for the correction of ill-considered legislation is a responsive legislature. 10 We cannot say that South Carolina is not entitled to call the funeral insurance business an evil. Nor can we say that the statute has no relation to the elimination of those evils. There our inquiry must stop.4 11 This rationale did not find expression in Liggett Co. v. Baldridge, 278 U.S. 105, 49 S.Ct. 57, 73 L.Ed. 204, on which respondents rely. According to the majority in Liggett, 'A state cannot, 'under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them." 278 U.S. at page 113, 49 S.Ct. at page 59, 73 L.Ed. 204. But a pronounced shift of emphasis since the Liggett case has deprived the words 'unreasonable' and 'arbitrary' of the content for which respondents contend. See Lincoln Federal Labor Union v. Northwestern Iron & Metal Co., 335 U.S. 525, 69 S.Ct. 251; where the cases are reviewed. 12 The Liggett case, however, was concerned with a statute far different from the one we are considering now. Pennsylvania required drug store owners to be licensed pharmacists. Because the statute was directed at owners, who might have no connection with the pharmaceutical branches of modern drug stores, a divided Court thought the measure unreasonable. The Pennsylvania statute was clearly less adapted to the recognized evil than the provision now before us. The Liggett case, on its facts, is not authority for the invalidation of the South Carolina Mortuary Act. 13 The South Carolina statute, on its face, does not contravene the provisions of the Fourteenth Amendment. Neither does it offend the Amendment as applied to these respondents.5 We reverse the judgment below. 14 Reversed. 1 'Section 1: Life insurance companies and their employees not own or operate undertaking business.—It shall be unlawful for any life insurance company, corporation, or association, except fraternal benefit societies licensed to do business in this State to own, manage, supervise, or operate or maintain a mortuary or undertaking establishment, or to permit its officers, agents or employees to own, operate of maintain any such funeral or undertaking business. 'Section 2: Life insurance company or sick or funeral benefit company not contract with undertaker conduct funeral of person insured by it.—It shall be unlawful for any life insurance company, sick or funeral benefit company, or any company, corporation or association engaged in a similar business to contract or agree with any funeral director, undertaker or mortuary to the effect that such funeral director, undertaker, or mortuary shall conduct the funeral of any person insured by such company, corporation or association. 'Section 3: Undertaker and his employees not act as agent for life insurance company.—It shall be unlawful for any funeral director, undertaker, or mortuary, or any agent, officer or employee thereof to be licensed as agent, solicitor or salesman for any life insurance company, corporation or association doing business in this State. 'Section 4: Penalties.—Any person violating any of the provisions of this Act shall be deemed guilty of a misdemeanor, and each violation thereof shall be a separate offense, and upon conviction shall be punished by fine not exceeding One Thousand ($1000.00) Dollars or by imprisonment at hard labor for not exceeding six (6) months, or both such fine and imprisonment within the discretion of the courts. * * *' 2 See Fla.Code, § 639.04, F.S.A.; Me.Rev.Stat. c. 56, § 138 (1944); Ky.Rev.Stat., § 303.120 (1946); Ill.Rev Stat., c. 73, § 956 (1947). 3 'You come to the place of business, the mortuary, to pay it. Month in and month out. The inducement for a funeral director to align himself with this is the fact that it will freeze this business to him. He doesn't have to, let me hasten to say. You don't have to call that funeral director, but if he continuously beats a path to his door to pay his insurance, there is no question about it that if he has any decent employees, they are going to convince the man the thing to do is to come to them. Now, is that a healthy situation?' Proceedings of the Senate Banking and Insurance Committee, State of South Carolina, March 31, 1948, No. 1382, In re 'The Mortuary Bill.' R. 85. 4 Our deference to the legislative judgment is particularly pronounced in a field as traditionally well regulated as insurance. See Osborn v. Ozlin, 310 U.S. 53, 65, 66, 60 S.Ct. 758, 762, 763, 84 L.Ed. 1074; La Tourette v. McMaster, 248 U.S. 465, 467, 468, 39 S.Ct. 160, 161, 63 L.Ed. 362; Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 416, 66 S.Ct. 1142, 1147, 1148, Note 13, 90 L.Ed. 1342, 164 A.L.R. 476. 5 That respondent company is the only concern now affected by the statute does not, of course, mean a denial of equal protection. The statute is drawn in general terms; the company's success might well induce others to enter the business. See the dissenting opinion below, 79 F.Supp. at pages 73, 74. And see Mason v. Missouri, 179 U.S. 328, 21 S.Ct. 125, 45 L.Ed. 214.
78
336 U.S. 210 69 S.Ct. 530 93 L.Ed. 621 UNITED STATES ex rel. HIRSHBERGv.COOKE. No. 231. Argued Jan. 13, 1949. Decided Feb. 28, 1949. Mr. John J. O'Neil, of Boston, Mass., for petitioner. Mr. Peyton Ford, of Washington, D.C., for respondent. Mr. Justice BLACK delivered the opinion of the Court. 1 This case raises important questions concerning the statutory jurisdiction of general courts-martial of the Navy. 2 In 1942 the petitioner was serving a second enlistment in the Navy. Upon the surrender of the United States forces on Corregidor petitioner became a war prisoner of Japan. After liberation in September, 1945, petitioner was brought back to the United States and hospitalized. He was restored to duty in January, 1946. March 26, 1946, he was granted an honorable discharge because of expiration of his prior enlistment. The next day he re-enlisted, obligating himself to serve four years 'subject to such laws, regulations and articles for the government of the Navy as are or shall be established by the Congress * * * or other competent authority * * *.' 3 About a year later, petitioner was served with charges directing his trial by a general court-martial of the Navy. The specifications included charges that during his prior enlistment the petitioner had maltreated two other naval enlisted men who were also Japanese prisoners of war and who were members of groups of prisoners working under petitioner's charge. Petitioner filed a plea in bar of the trial, one ground being that the court-martial was without jurisdiction to try him for alleged offenses committed during a prior enlistment at the end of which he had received an honorable discharge. His plea was overruled. He was acquitted on some specifications but was convicted on others that charged maltreatment. His sentence was ten months confinement, reduction from chief signalman to apprentice seaman, and dishonorable discharge from the Navy. 4 Petitioner then brought this habeas corpus proceeding in a federal district court charging that the court-martial judgment was void because of want of statutory power to convict him for an offense committed if at all during his prior enlistment.1 That court sustained petitioner's contention and ordered his release from custody. 73 F.Supp. 990. The Court of Appeals reversed, one judge dissenting. 168 F.2d 503. The importance of the statutory construction, which appeared to affect the court-martial powers of the Army as well as the Navy, caused us to grant certiorari. 5 Aside from naval regulations to which reference will later be made, court-martial authority to try and to punish petitioner for his prior enlistment conduct primarily depends on the language in Article 8 (Second) of the Articles for the Government of the Navy, 34 U.S.C. § 1200, art. 8, 34 U.S.C.A. § 1200, art. 8, subd. 2, which particularly provides that 'such punishment as a court-martial may adjudge may be inflicted on any person in the Navy * * * who is guilty of * * * maltreatment of, any person subject to his orders * * *.' The Government contends that this language given its literal meaning authorized the court-martial to try and to punish petitioner for conduct during a prior enlistment. It is pointed out that petitioner was 'in the Navy' when the offense was committed and when he was tried; this language it is argued brings his case under the Article. In aid of this interpretation the Government emphasizes that during the whole period of time involved, petitioner was continuously 'in the Navy' except for an interval of a few hours between his honorable discharge and his re-enlistment. This latter circumstance we think cannot justify the statutory interpretation urged. For if that interpretation is correct, court-martial jurisdiction would be satisfied if a sailor was merely 'in the Navy' when the offense was committed and when brought before the court-martial, regardless of the duration of any interim period out of the naval service, provided the prosecution we not barred by the two-year limitation period provided by 34 U.S.C. § 1200, art. 61, 34 U.S.C.A. § 1200, art. 61. 6 The concessions made by the Government in urging such a literal construction of this Article expose the whimsical and uncertain nature of the distinctions that would mark the boundaries of court-martial powers. It is conceded that had petitioner not re-enlisted in the Navy after his 1946 discharge, no Navy court-martial could have tried him for offenses committed during his prior naval service. Thus, under the construction here urged, naval court-martial jurisdiction for a prior enlistment offense is made wholly to depend on whether the naval offender either voluntarily re-enters the Navy or is drafted into its service. And punishment of the gravest nature might be imposed on a naval volunteer or draftee which no court-martial could have imposed but for such a voluntary or forced entry into the Navy. For under this interpretation had the same naval offender re-entered his country's service by way of the Army rather than the Navy, either by choice or by accident of draft assignment, no court-martial, either Navy or Army, could have punished him. Jurisdiction to punish rarely, if ever, rests upon such illogical and fortuitous contingencies. We therefore must look beyond the literal language of the Article, ambiguous at best, in order to determine whether this court-martial acted within its power. See Runkle v. United States, 122 U.S. 543, 555, 556, 7 S.Ct. 1141, 1145, 1146, 30 L.Ed. 1167; Ex parte Reed, 100 U.S. 13, 23, 25 L.Ed. 538. 7 While n t itself determinative of the question here, 34 U.S.C. § 1200, art. 14 (Eleventh), 34 U.S.C.A. § 1200, art. 14, subd. 11, has greatly influenced the Army and Navy in determining their court-martial jurisdiction to try service personnel for offenses committed in prior enlistments. That Article provides that where any person previously discharged or dismissed from the Navy has 'while in the naval service' been guilty of certain types of fraud against the Government, such person 'shall continue to be liable to be arrested and held for trial and sentence by a court-martial, in the same manner and to the same extent as if he had not received such discharge nor been dismissed.' 8 Article 14 (Eleventh) stems from an Act of Congress passed in 1863, particularly designed to punish frauds against the military branches of the Government in connection with the procurement of supplies for war activities. 12 Stat. 696. That the attention of the 1863 Congress was directly focused upon the powers that could and should be vested in courts-martial is made clear by the debates and by the fact that Congress deleted from the bill as proposed specific provisions which would have made civilian government contractors subject to trial before military and naval courts-martial. Cong.Globe, 37th Cong., 3d Sess. 952—958 (1863), and Part II, Appendix to Cong.Globe, 3d Sess. 199 (1863). See Ex parte Henderson, C.C.D.Ky. 1878, 11 Fed.Cas. 1067, No. 6,349. And see United States ex rel. Marcus v. Hess, 317 U.S 537, 539-545, 63 S.Ct. 379, 382-385, 87 L.Ed. 443. But after elimination of certain provisions which would further have expanded court-martial jurisdiction, Congress left in the bill § 3, now Naval Article 14 (Eleventh), which makes naval personnel guilty of service frauds, subject to court-martial after discharge or dismissal. The same 1863 provision has also been made applicable to Army personnel by Article of War 94, 10 U.S.C. § 1566, 10 U.S.C.A. § 1566. 9 Congress in this 1863 Act plainly recognized that there was a significant difference between court-martial power to try men in the service and to try former service men after their discharge. The Government correctly argues that the attention of the 1863 Congress was not focused on the precise question here, namely, the extent of a military court's statutory power to punish a man presently 'in the service' for an offense committed in a prior enlistment period from which he has been discharged. But the fact remains that the 1863 Congress did act on the implicit assumption that without a grant of congressional authority military courts were without power to try discharged or dismissed soldiers for any offenses committed while in the service. Acting on this assumption, Congress granted such a power to courts-martial but only in the very limited category of offenses there defined—frauds against the Government.2 Since the 1863 Act, Congress has not passed any measure that directly expanded court-martial powers over discharged servicemen, whether they re-enlisted or not. 10 Obviously Article 8 [Second], which subjects to court-martial jurisdiction persons 'in the Navy,' supports an argument that petitioner was subject to trial by this court-martial. It is equally obvious that the language of Article 8 (Second) particularly in view of Article 14 (Eleventh) suppor § an argument that this court-martial could not try petitioner for an offense committed prior to his honorable discharge. Under these circumstances the manner in which court-martial jurisdiction has long been exercised by the Army and Navy is entitled to great weight in interpreting the Articles. 11 The question of the jurisdiction of a naval court-martial over discharged personnel was submitted by the Secretary of the Navy to the Attorney General in 1919. The precise question of whether re-enlistment could revive jurisdiction of a military court was not considered, but as to the power of military courts over discharged personnel in general the Attorney General reached the conclusion that a person discharged from the Navy before proceedings were instituted against him 'for violations of the Articles Governing the Navy, excepting Article 14' could not 'thereafter be brought to trial * * * for such violations, though committed while he was in the service.' 31 Op.Atty.Gen. 521, 529. This conclusion of the Attorney General relied on statements of the Judge Advocate Generals of the Army and Navy that their offices had 'from the beginning and uniformly held that a person separated from the service ceases to be amenable' to military and naval jurisdiction. Previous to the Attorney General's 1919 opinion neither the Navy nor Army had ever claimed court-martial power to try their personnel for offenses committed prior to an honorable discharge where proceedings had not been instituted before discharge. See Winthrop, Military Law and Precedents 93 (2d ed. 1920). The Government concedes that the Army has always so construed its court-martial jurisdiction whenever the question arose. And the Government concedes that the Navy also followed this view of its jurisdiction until 1932.3 Many holdings and opinions of Army and Navy authorities are cited to support these concessions. The Government's brief quotes the following language by the Navy Department in one of the cases which considered the precise issue raised here. The case appears in CMO 12-1921, p. 11. 12 'Except in cases of offenses in violation of Article 14 of the Articles for the Government of the Navy, there is no authority of law giving jurisdiction to a court-martial to try an enlisted man for an offense committed in a prior enlistment from which he has an honorable discharge, regardless of the fact that he has subsequently reenlisted in the naval service and was serving under such reenlistment at the time the jurisdiction of the court was asserted.' 13 Accepting as we do the longstanding Army and Navy interpretation of the Articles previously referred to, an interpretation which necessarily would deny jurisdiction to court-martial here, there remains the contention that the Navy has by a recent congressionally authorized regulation acquired such jurisdiction for its courts-martial. 34 U.S.C. § 591, 34 U.S.C.A. § 591, authorizes the Secretary of the Navy, with the approval of the President, to adopt and alter regulations and orders for control of the Navy. The Government claims that a regulation adopted pursuant to this authority has been promulgated,4 and that it vested the necessary power in this court-martial to try petitioner. This authorized regulation, it is contended, had the force of law, Ex parte Reed, 100 U.S. 13, 22, 25 L.Ed. 538, and consequently supplants the prior statutes which, as interpreted, had denied the jurisdiction here asserted. There has been considerable argument as to whether the language of the Navy regulation was sufficiently precise to endow it with the force of law. Passing over this argument, however, we are not able to agree that the Navy could in this manner ac uire the expanded court-martial jurisdiction it claimed. For we cannot construe 34 U.S.C. § 591, 34 U.S.C.A. § 591, as permitting the Navy to extend its courtmartial jurisdiction beyond the limits Congress had fixed. United States v. Symonds, 120 U.S. 46, 49, 50, 7 S.Ct. 411, 412, 413, 30 L.Ed. 557. 14 The regulation stands no better if it be considered merely as an evidence of a revised naval interpretation of the Article. This revised naval interpretation was given in 1932. Before that time, both Army and Navy had for more than half a century acted on the implicit assumption that discharged service men, whether reenlisted or not, were no longer subject to court-martial power. The Attorney General of the United States had proceeded on the same assumption. And see United States v. Kelly, 15 Wall. 34, 36, 21 L.Ed. 106. Under these circumstances, little weight can be given to the 1932 separate effort of the Navy to change the long-accepted understanding of its statutory court-martial power. For should this belated naval interpretation be accepted as correct, there would be left outstanding an Army interpretation of its statutory court-martial powers directly opposed to that of the Navy. Since the Army and Navy court-martial powers depend on substantially the same statutory foundations, the opposing interpretations cannot both be right, unless it be assumed that Congress has left each free to determine its own court-martial boundaries. We cannot assume that Congress intended a delegation of such broad power in an area which so vitally affects the rights and liberties of those who are now, have been, or may be associated with the Nation's armed forces. 15 Reversed. 1 Court-martial jurisdiction to try petitioner depends on a part of Article 8 (Second), which reaches only conduct of an offender charged with 'maltreatment of, any person subject to his orders.' Before the court-martial and in the District Court petitioner contended that the court-martial was without jurisdiction in his case because the alleged maltreatment was of naval enlisted men who were not 'subject to his orders' by virtue of his United States Navy obligations, but that whatever authority he then had over the other Navy men came from duties assigned him by the Japanese as a prisoner of war. Both the District Court and the Court of Appeals rejected this suggested interpretation of the Article, and the contention is not urged here. 2 The discussion of the 1863 Act showed that Congress rather grudgingly conceded this comparatively slight expansion of the court-martial power apparently prompted by reports of particularly abhorrent recent frauds by war contractors, such as the supply of shells to the Army 'filled not with the proper explosive materials for use, but with sawdust.' Cong. Globe, 37th Cong., 3d Sess. 955 (1863). This action of the 1863 Congress does not support an argument that Congress has been quick in response to appeals for expansion of court-martial jurisdiction. See Duncan v. Kahanamoku, 327 U.S. 304, 66 S.Ct. 606, 90 L.Ed. 688; Ex parte Milligan, 4 Wall. 2, 1 8 L.Ed. 281. 3 Since 1932 the Navy has consistently adhered to its revised interpretation of Art. 8 (Second). In 1934 the Navy Department incorporated this revised interpretation in an official Navy publication, Naval Courts and Boards, and this interpretation became § 344(a) of Naval Courts and Boards (1937 ed.). 4 The regulation appearing in the 1937 Naval Courts and Boards § 334 contained the following language: '* * * Except for offenses provided for in article 14, A.G.N., a court martial may not try an individual who has been formally separated from the Navy and is no longer in the service unless proceedings were instituted against him while he was in the service. * * * Similarly, the Navy Department has passed cases as legal in which enlisted men have been convicted by court martial of offenses committed in a previous enlistment, although such offenses were not provided for in article 14, A.G.N.'
12
336 U.S. 226 69 S.Ct. 541 93 L.Ed. 638 NATIONAL LABOR RELATIONS BOARDv.STOWE SPINNING CO. et al. No. 46. Argued Dec. 9 and 10, 1948. Decided Feb. 28, 1949. Mr. Mozart G. Ratner, of Washington, D.C., for petitioner. Mr. Paul C. Whitlock, of Charlotte, N.C., for respondents. Mr. Justice MURPHY delivered the opinion of the Court. 1 The principal question for decision is whether the circumstances justified the finding of an unfair labor practice. A union organizer was refused the use of a company-owned meeting hall, and the union complained to the Board. After the usual proceedings, the Board found an unfair labor practice had been committed, 70 N.L.R.B. 614. The Court of Appeals refused to enforce the Board's order, 165 F.2d 609, and the case is her on certiorari. A subsidiary problem is the breadth of the order we are asked to enforce. 2 First. We are asked to overrule the Board's finding that it is an unfair labor practice1 to discriminate against a union by denying it the only available meeting hall in a company town when the Board finds that the 'sole purpose' of the discriminatory denial is 'to impede, prevent, and discourage self-organization and collective bargaining by the (company's) employees within the meaning of Section 7 of the Act (29 U.S.C.A. § 157).' 3 North Belmont, North Carolina, is the home of the four respondents' mills. Interlocking directorates and family ties make the four equal one for our purposes.2 Each of the mills owns a large number of houses in North Belmont which are rented to employees. At a central location are a school, a theatre, and a building housing a post office, all owned or controlled by the mill owners. In sum, North Belmont is a company town. 4 In December, 1944, Harris, a union organizer, appeared in North Belmont and began the first organization drive since the textile strike ten years earlier. He decided to begin with employees of respondent Stowe. A meeting hall was needed for the activity, and the post office building was the only choice open to the organizer—he was refused permission to use the school building, and was told that the theatre could be used only for motion pictures. Most of the post office building was erected by respondents for the Patriotic Order Sons of America, a 'patriotic secret order to which any male citizen of the United States of good moral character' can belong. Many of respondents' employees are members; respondents check off monthly dues. 5 The Order's president, Baxter Black, told Harris that the proposed meeting might be held in the hall on the payment of a janitor's fee. Harris emphasized that he was willing to pay for the use of the hall. It is clear he was not asking special favors. Circulars were printed announcing the time and place of the meeting. Thereupon D. P. Stowe, for the four employer-owners, rescinded the permission granted—because Harris was a textile organizer. While the building seems to have been erected on the understanding that only the Patriotic Order might use it, that condition was never enforced until Harris' union affiliation reached the ears of the owners. Until then the Order had handled its own affairs; Black had been sure that his permission was the final word on the matter. 6 The Board found that the refusal 'to permit use of the hall * * * under the circumstances constituted unlawful disparity of treatment and discrimination against the union.' The union's complaint also charged that several employees had been discharged because of union activity, and again the Board found for the union. The Court of Appeals enforced the reinstatement order, but refused enforcement of the order relating to the use of the hall. On the latter determination we granted certiorari3 to resolve an asserted conflict with prior decisions of this Court. 7 Company rules in Republic Aviation Corporation v. National Labor Relations Board and National Labor Relations Board v. Le Tourneau Company of Georgia, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372, 157 A.L.R. 1081, forbade union solicitation on company property. Under the circumstances the Board found that these rules offended the Act, and we upheld the Board. Stowe tells us that its case is far removed from the principles established in those decisions: the Board is now invading private property unconnected with the plant, for a private purpose, in the very teeth of the Fifth Amendment. 'From Magna Charta on down,' we are warned, 'the individual has been guaranteed against disseisin of property.' A privately owned hall is different from the parking lot involved in Le Tourneau's case. 8 In the sense suggested by Stowe, the Board finding goes further than those upheld previously by this Court. But in a larger sense it does not. We mention nothing new when we notice that union organization in a company town must depend, even more than usual, on a handsoff attitude on the part of management.4 And it is clear that one of management's chief weapons, in attempting to stifle organization, is the denial of a place to meet.5 We cannot equate a company-dominated North Carolina mill town with the vast metropolitan centers where a number of halls are available within easy reach of prospective union members. We would be ignoring the obvious were we to hold that a common meeting place in a company town is not an important part of the company's business. The question is of course one of degree. But isolated plants must draw labor, and an element in that drawing power is a community hall of some kind.6 In the background of discrimination found by the Board in this case, we cannot say that its conclusion should be upset.7 As we will point out below, the Board may weigh the employer's expressed motive in determining the effect on employees of management's otherwise equivocal act. 9 Stowe contends that its denial of facilities to the union was in accord with § 8(2) of the Act, prohibiting employer interference with the formation or administration of a labor organization. One Board member agreed, citing a number of cases in which the Board had made a grant of company facilities the basis for unfair practice findings. But Stowe would have the cases hold more than they do. In each of them, granting such facilities to the union was only one facet in a pattern of domination found by the Board.8 The opinion of the Board in this case states that the 'mere granting of a meeting place to a union by an employer under the conditions present here would not * * * in and of itself constitute unlawful assistance to that union. * * *' We have said that the Wagner Act 'left to the Board the work of applying the Act's general prohibitory language in the light of the infinite combination of events which might be charged as violative of its terms.' Republic Aviation Corporation v. National Labor Relations Board, supra, 324 U.S. at page 798, 65 S.Ct. at page 985, 89 L.Ed. 1372, 157 A.L.R. 1081. Sections 8(1) and 8(2) of the Act would seem to run into each other in the situation before us, were we to forget that the Board is the agency which weighs the relevance of factural data. Presumptions such as those employed in the Peyton Packing Company case, 49 N.L.R.B. 828, at pages 843, 844,9 may be important in cases like this one. While the Wagner Act does not ask punishment for evil intent, repeated acts of discrimination may establish a natural tendency to view justifications of other labor prac ices with some skepticism. Calculating a cumulative effect on employees is not a job for this Court. We cannot say that the Board was wrong as a matter of law in view of the setting. 10 The philosophy expressed in the Fifth Amendment does not affect the view we take. The Wagner Act was adopted pursuant to the commerce clause, and certainly can authorize the Board to stop an unfair labor practice as important as the one we are considering. Respondents are unquestionably engaged in interstate commerce within the meaning of the Act. It is not "every interference with property rights that is within the Fifth Amendment * * * Inconvenience or even some dislocation of property rights, may be necessary in order to safeguard the right to collective bargaining." 324 U.S. at page 802, 65 S.Ct. at page 987, 89 L.Ed. 1372, 157 A.L.R. 1081.10 11 Accordingly, we think the Court of Appeals should have upheld the Board's unfair practice charge. 12 Second. Stowe's final contention, that the Board's order is too broad, is more serious. Stowe is ordered to 'cease and desist from * * * refusing to permit the use of the Patriotic Order Sons of America hall by its employees or employees of (the other respondents) or by Textile Workers Union of America, C.I.O., or any other labor organization, for the purpose of self-organization or collective bargaining.' There are none of the usual qualifications on the face of the order;11 one construction would permit unions to use the hall at all times, whatever the legitimate activity of the Patriotic Order. 13 We are asked to read the decree in its background, and reject what is called a strained construction. Implicit in the order, we are told, is the word 'reasonable.' Perhaps this is true. The words of even a judicial decree must be read in their setting. But violation of the order brings the swift retribution of contempt, without the normal safeguards of a full-dress proceeding. Some notice of the prior proceeding must be taken in a contempt action—the very word 'reasonable' invites a glance at what has gone before. But too great dependence on the former action places defendants under a restraint that makes the order itself a useless formality. Again the question is of degree. 14 In this case, however, the Board did not find that the very denial of the hall was an unfair labor practice. It found that the refusal by these respondents was unreasonable because the hall had been given freely to others, and because no other halls were available for organization. Now the Board asks us to enforce an order that simply does not mean what it says. We must require explicit language making it clear that the mere denial of facilities will not subject respondents to punishment for contempt. What the Board found, and all we are considering here, is discrimination. The decree should be modified to order respondents to refrain from any activity which would cause a union's application to be treated on a different basis than those of others similarly situated. 15 We therefore direct the Court of Appeals to remand the case to the Board for amendment of its order to conform to the Board's findings and this opinion. 16 Reversed and remanded. 17 Mr. Justice JACKSON, dissenting in part. 18 I find myself unable to join the Court's opinion because I have a different view as to the nature of the unfair labor practice involved which leads me to a different conclusion as to the remedy that the Board may prescribe. 19 The employers' plant was located in a company-owned town. It contained only three buildings suitable for use for a public meeting. The Union needed a meeting place and sought to use any one of the three. 20 One is a motion picture theater owned and controlled by the employers but operated by a lessee. The Union was refused its use upon the ground that it was available only for motion pictures. 21 Another was a school building publicly owned but controlled by a school board composed entirely from officers of the employers. The Union sought to use the schoolhouse but, after some negotiations, was told by its custodian that an officer of one of the employers had issued instructions not to permit such use. 22 The third was a building owned and controlled by the employers, occupied by the post office and a grocery store on the first floor and by a meeting hall on the second. This hall for some time had been the quarters of the Patriotic Order Sons of America, a fraternal organization which in practice had exercised full control over it and had permitted various other organizations to use it for community purposes. Its officers consented to the Union's use of the hall on the payment of a nominal janitor's fee. Before the scheduled meeting, however, an officer of the employers told the head of the fraternal order that he should not have allowed the use of the hall and caused the permission to be withdrawn. While the tenure of the fraternal organization is somewhat shadowy, it appears that it had been given at least such control of the use of the hall that its consent would have constituted a license so that the Union would not have been trespassing. 23 But for the interference of the employers, either the schoolhouse or the Patriotic Sons hall might have been obtained. I agree with the Court that the Board was justified in finding that the employers' action in preventing the Union from obtaining this place of assembly constituted an unfair labor practice. But I do not think this finding is or can be based on discrimination. The employers, having permitted the Patriotic Sons to control use of the hall, could not properly interfere and command reversal of the Sons' approval of the Union's application. On these facts, such conduct would amount to an unfair labor practice, even though no other organization had ever been allowed to use the hall. The interference to oust the Union was enough without a discrimination, which could hardly occur unless some other union had been allowed to use the hall. Consequently, I think the Board could require the employer to notify the Patriotic Sons that it has been unfair in the objections heretofore made and that it will make no objections in the future, and that the Patriotic Sons are free to allow such temporary use if they see fit. 24 But the Board's order goes beyond this. It has ordered that the employers take affirmative action to place the hall of the Patriotic Sons at the disposal of the Union. It is one thing to forbid the employers to bring pressure on the custodian of the hall to shut out the Union; it is another thing to order them to bring pressure on the custodian to admit the Union, or to order the employers to repossess the hall and turn it over to the Union. If the employers were controlling the hall directly, I would have serious doubts whether denial of union use of the hall could be an unfair labor practice, and equally serious doubts whether it would not be an unfair labor practice under § 8(2) of the Act to allow it. Neither the complaining Union nor any other has yet been chosen as bargaining agent for these employees. For the employers to provide this Union a hall, by direct permission or by indirect pressure on the Patriotic Sons, may readily convey to employees an impression of favoring the Union thus indulged. As the court below pointed out, the policy of the Act as heretofore applied is one of preventing the employer from extending financial aid or support to any union. I think in the longrun interpretation of the Act to require a complete hands-off attitude on the part of employers will better effectuate the purposes of the Act than an occasional departure from it to require some kind of aid to a union as an expedient for correcting or punishing an unfair labor practice. 25 If the Act permitted imposing such a penalty upon the employers, it would perhaps be appropriate to compel them to provide a meeting hall in lieu of those it kept the Union from obtaining. However, it is well established by decisions of this Court that § 10(c) of the Act, 29 U.S.C.A. § 160(c), is remedial, not punitive. Consolidated Edison Co. of New York v. National Labor Relations Board, 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126; Republic Steel Corporation v. National Labor Relations Board, 311 U.S. 7, 61 S.Ct. 77, 85 L.Ed. 6. In both cases, Chief Justice Hughes said for the Court 'this authority to order affirmative action does not go so far as to confer a punitive jurisdiction enabling the Board to inflict upon the employer any penalty it may choose because he is engaged in unfair labor practices, even though the Board be of the opinion that the policies of the Act might be effectuated by such an order.' 305 U.S. 197, 235, 59 S.Ct. 206, 219, 83 L.Ed. 126, and 311 U.S. 7, 11, 61 S.Ct. 77, 79, 85 L.Ed. 6. 26 Consequently, I think the order should be modified to provide that the employer shall cease and desist from interfering in any manner with the discretion of the Patriotic Sons with respect to use of the hall and that appropriate notices shall be posted. 27 Mr. Justice REED, with whom the CHIEF JUSTICE joins, dissenting. 28 The controlling point for decision in this case is whether the Board was justified in concluding that the four respondent companies interfered with rights guaranteed by § 7 of the Wagner Act. Section 7 provides that 'Employees shall have the right to self-organization, to form, join, or assist labor organizations * * *.' 49 Stat. 452. The Board's complaint charged an unfair labor practice under § 8(1) against the four respondent companies by their interference with the rights guaranteed by § 7. The form of interference was the refusal of the use of a hall jointly owned by respondents to employees of one of them for the purpose of self-organization. If the four respondents violated § 7, did the Board have power to redress that violation by entering § 1(b) and § 2(c) of its order against Stowe and similar orders against the other three respondents? Section 1(b) ordered the respondents to cease and desist from 'Refusing to permit the use of the Patriotic Order Sons of America hall by its employees or employees of Acme Spinning Company, Perfection Spinning Company, or Linford Mills, Inc., or by Textile Workers Union of America, C.I.O., or any other labor organization, for the purpose of self-organization or collective bargaining;' 29 And § 2(c) ordered respondents to 'Upon request, grant to its employees and employees of Acme Spinning Company, Perfection Spinning Company, or Linford Mills, Inc., and to Textile Workers of America, C.I.O., or any other labor organization, the use of the Patriotic Order Sons of America hall for the purposes of self-organization or collective bargaining;' 30 The Board decided that the refusal of the hall violated § 7 and concluded as a matter of law: '3. By interfering with, restraining, and coercing their employees in the exercise of the rights guaranteed in Section 7 of the Act, the respondents Stowe Spinning Company, Acme Spinning Company, Perfection Spinning Company, and Linford Mills, Inc., have engaged in and are engaging in unfair labor practices within the meaning of Section 8(1) of the Act.' The Court of Appeals accurately summarized the Board's action in these words: 'It (the Board) made the finding that the owner's refusal 'to permit use of the hall for purposes of self organization in a labor union under the circumstances constituted unlawful disparity of treatment and discrimination against the Union.' It pointed out that foremost among the methods universally utilized by employees in self organization is the exercise of the constitutional right of peaceable assembly. It held that the sole purpose of the respondents' action was to impede, prevent and discourage the employees in the exercise of this basic right and that by refusing the union permission to use the only available meeting place in the community, the respondents in fact deprived the employees of Stowe of the right.' National Labor Relations Board v. Stowe Spinning Co., 4 Cir., 165 F.2d 609, 611. 31 In reversing the Board the Court of Appeals said: '* * * the employer has not interfered with, restrained or coerced its employees in the exercise of their rights. Even though it was evident to the workers that the action of the owners of the hall was inspired by hostility to the union, the refusal did not amount to unlawful interference, restraint or coercion.' Id., 165 F.2d 611. 32 A determination that as a matter of law it is or it is not an unfair labor practice for respondents to refuse the use of their hall for union organization purposes will decide this case. 33 The findings show that the center of the village of North Belmont is approximately 2 1/2 miles from the center of the town of Belmont. In the village there are four textile mills and about each textile mill a number of houses that belong to the corporations that own the respective mills. At a central location in the village, reached by what we assume are public roads and streets, are the school, a theater, and a combined post office and store; above the post office and store is the meeting hall in question. These facilities, except the school, are owned jointly by the four corporations that own the mills. Neither the record nor the findings show whether or not there is privately owned realty in the village belonging to others than the textile mills, but we assume that there is none. 34 Respondents provided the hall as a meeting place for the Patriotic Order Sons of America. The Board found, 70 N.L.R.B. 614, 621, 'As to the arrangements under which the P.O.S. of A. was permitted use of this company-owned property, Stowe credibly testified without contradiction that 'it was built especially for the Patriotic Sons of America to hold their meetings in and was not to be rented to anybody else.' He also testified: 35 '* * * we told the Patriotic Sons of America that we were going to let them use the building free of rent, but were not going to allow it to be rented for any (other) purposes." 36 Under such an arrangement the members of the fraternal order were licensees, who were permitted to use the hall only by virtue of the owner's consent. There was the further Board statement, quoted below, as to the use of the hall.1 37 It does not appear from the record how far this village center is from the respective mills. It is clear, however, that the Patriotic Order Sons of America hall is not connected with the mill operations, nor is its use open to employees because of their employment by any of the mills. There is a distinct line of cleavage as to the rights of employees between facilities and means of production open to the use of employees through their employment contract and other property of the employer that may be used by any person other than the owner only through some contract, license, or permission, not a part of an employment contract. The undisputed evidence discloses that membership in the fraternal order is not restricted to the employees of the mills, and that it includes others. 38 The error into which the Board fell concerning the right to use the Patriotic Order Sons of America hall is, it seems to us, that it thought the 'disparity of treatment and discrimination against the Union' involved in the refusal of the hall was a violation of the employees' 'right to self-organization, to form, join, or assist labor organizations'.2 § 7. It is only when there is a violation through an interference with or a restraining or coercion of employees' rights under § 7 that an unfair labor practice finding may be predicated on the employer's acts. The employer is not required to aid employees to organize. The law forbids only interference. 39 Employment in a business enterprise gives an employee no rights in the employer's other property disconnected from that enterprise. As to such property, the employer stands on the same footing as any other property owner. As indicated above, that is the condition as to the Patriotic Order Sons of America hall. The refusal of this owner to allow the hall's use for union organization is not an unfair labor practice under §§ 7 and 8 any more than a refusal by any other private owner would be. As far as the hall is concerned, the relation of employer-employee does not exist between the mill owners and the mill workers. There cannot be an unfair labor practice as to the use of this hall under the applicable sections of the Labor Relations Act. 40 Perh ps the ruling of this Court in Marsh v. State of Alabama, 326 U.S. 501, 66 S.Ct. 276, 90 L.Ed. 265, approaches closer to this problem than any other case. There Alabama punished a distributor of religious literature for trespass when she insisted on passing out the pamphlets on a private sidewalk, used by the owners' permission to enter stores and the post office. This Court reversed and held the application of the state law of trespass violated the Fourteenth Amendment. This Court held, 326 U.S. page 509, 66 S.Ct. page 280: 'Insofar as the State has attempted to impose criminal punishment on appellant for undertaking to distribute religious literature in a company town, its action cannot stand.' Certain expressions, set out below,3 occur in the opinion as to the right to private property for speech, press and assembly but they must be read in the light of the facts in the Marsh case. So read, or however read, they cannot be construed as a holding that the natural right of free expression or of assembly, guaranteed by our Constitution, is a delusion unless organizers and evangelists can commandeer private buildings for use in the propagation of their ideas. The Marsh case, in my view, goes no further than to say that the public has the same rights of discussion on the sidewalks of company towns that it has on the sidewalks of municipalities. 41 There is nothing in this record that indicates a situation such as exists in employer-owned lumber camps or mining properties. Where an employer maintains living, recreation and work places on such business premises open to employees by virtue of their employment, it has been held that exclusion of union organizers from contact with the employees is an unfair labor practice and that the Board's ordering the employer to grant union representatives access in non-working hours to the employees under reasonable regulations is a proper means to effectuate the purposes of the Act. National Labor Relations Board v. Lake Superior Lumber Corporation, 6 Cir., 167 F.2d 147. It has never been held that where the employees do not live on the premises of their employer a union organizer has to be admitted to those premises. The p esent situation differs from the employer-controlled areas where employees both live and work in that here union organizers may solicit the employees on the streets or in their homes or at public meeting houses within a few miles of their employment. Employees are not isolated beyond the hours of labor from an organizer nor is an organizer denied access to the employees. After an organizer has convinced an employee of the value of union organization, that employee can discuss union relations with his fellow-employees during non-working hours in the mill. This gives opportunity for union membership proliferation. Republic Aviation Corporation v. National Labor Relations Board and National Labor Relations Board v. Le Tourneau Company of Georgia, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372, 157 A.L.R. 1081. 42 The present case differs from the Le Tourneau and Republic cases in that in those cases the problem concerned the right of an employer to maintain discipline by forbidding employees to foster by personal solicitation union organization on the grounds or in the plant of the company during the employees' non-working time. We held that, unless there were particular circumstances that justified such a regulation to secure discipline and production, the employer must allow such discussion. Republic Aviation Corporation v. National Labor Relations Board, supra. 43 The Board now seeks an extension of this rule. It is argued that where the only readily available meeting place is a piece of property belonging to the employer, the Board may require him to permit his employees to use that meeting place for presentation of arguments for unionization. Even where the employer has allowed other organizations to use his property, I do not think that the words of the statute guaranteeing employees the right to organize and to form labor unions permit such an extension. Employment furnishes no basis for employee rights to the control of property for union organization when the property is not a part of the premises of the employer, used in his business. So to construe the statute raises serious problems under the Fifth Amendment. Would the theater, also owned by the mill proprietors, be subject to the union's user? Would that construction as applied in the finding and particularly in the earlier quoted sections of the order deprive respondents of their property without just compensation or force private owners to devote their property to private purposes, i.e., union organization? Definite legislative language only would authorize such a construction of this statute. United States v. C.I.O., 335 U.S. 106, 120, 121, 68 S.Ct. 1349, 1356. 44 Labor unions do not have the same right to utilize the property of an employer not directly a part of the employment facilities, that an employer has. The Board cannot require that such meeting places be furnished for employees by an employer under the terms of the Act. To require the employer to allow labor union meetings in or on property entirely disconnected in space and use from the business of the employer and employees is too extravagant an extension of the meaning of the Act for me to believe it is within its language or the purpose of Congress. 45 I would affirm the Court of Appeals. 1 Under the Wagner Act, 49 Stat. 449, 29 U.S.C. §§ 151, 158(1), 29 U.S.C.A. §§ 151, 158(1). 2 The Board found that 'A. C. Lineberger is president of the respondents Perfection, Acme and Linford; J. Harold Lineberger is vice president of the respondents Perfection and Linford, and secretary-treasurer of the respondent Acme; D. P. Stowe is vice president of the respondent Acme and secretary-treasurer of the respondent Perfection. The officers of the respondent Stowe are C. T. Stowe, president; C. P. Stowe, vice president; and R. L. Stowe, secretary-treasurer, all of whom are cousins of D. P. Stowe.' 3 Stowe's petition was denied, 334 U.S. 831, 68 S.Ct. 1344; the reinstatement order is not being reviewed in this Court. 4 See Laine, The Cotton Mill Worker (New York, 1944), pp. 50 51. 5 See MacDonald, Southern Mill Hills (New York, 1928), p. 34; Blanshard, Labor in Southern Cotton Mills (New York, 1927), p. 64. 6 See notes 4 and 5. 7 Respondents do not contest the Board finding that antiunion bias was the cause for their refusal of the hall. And four employees were discharged for union activity. See 165 F.2d 609, 614. Even in the Republic and Le Tourneau cases no such discrimination was shown. 324 U.S. at pages 797, 801, 65 S.Ct. at pages 985, 987, 89 L.Ed. 1372, 157 A.L.R. 1081. 8 See, for example, Berkshire Knitting Mills v. National Labor Relations Board, 3 Cir., 139 F.2d 134 (company union given use of hall denied to outside union); National Labor Relations Board v. Carlisle Lumber Co., 9 Cir., 94 F.2d 138 (company union given preference over Board-certified bargaining representative); National Labor Relations Board v. Norfolk Shipbuilding & Drydock Corporation, 4 Cir., 109 F.2d 128 (recognition of inside union without ascertaining employees' wishes—inside union given use of company rooms); National Labor Relations Board v. Lane Cotton Mills, 5 Cir., 111 F.2d 814 (refusal to bargain with certified union coupled with use of recreation room by company union). And see Cudahy Packing Co. v. National Labor Relations Board, 10 Cir., 118 F.2d 295; Matter of Standard Oil of California, 61 N.L.R.B. 1251; Matter of Virginia Electric & Power Co., 44 N.L.R.B. 404, enforced Virginia Electric & Power Co. v. National Labor Relations Board, 319 U.S. 533, 63 S.Ct. 1214, 87 L.Ed. 1568. 9 Cited and quoted with approval in the Republic case, 324 U.S., at pages 803, 804, 65 S.Ct. at pages 987, 988, 89 L.Ed. 1372, 157 A.L.R. 1081. 10 We pointed out that neither the Republic nor Le Tourneau cases 'is like a mining or lumber camp where the employees pass their rest as well as their work time on the employer's premises, so that union organization must proceed upon the employer's premises or be seriously handicapped.' 324 U.S. at page 799, 65 S.Ct. at page 986. 11 Compare National Labor Relations Board v. Lake Superior Lumber Corporation, 6 Cir., 167 F.2d 147, 150, where the Board recognized that the employer might impose 'lawful and reasonable conditions'. 1 'As a matter of practice, since 1937, the hall has been used, according to the credible testim ny of Black, on numerous occasions for community and employee meetings. Various churches have used the hall for banquets; 'Ladies Aid' societies have gathered there; the North Belmont School had the use of the hall for at least one Christmas party; and for several weeks employees of the respondents attended a 'Safety school' held in the hall. That no other fraternal order met there is explained by the fact, established by Stowe's testimony, that the P.O.S. of A. is the only such organization in North Belmont. Furthermore, Black's credible testimony is undisputed that it was the practice, when any other organization wanted to use the hall, for the P.O.S. of A. 'lodge' itself to pass upon the request. There is no evidence that any other organization, except the Union, was ever refused use of the hall, either by the P.O.S. of A. or by the respondent.' 70 N.L.R.B. 614, 621. 2 The Board said: 'Moreover, irrespective of the respondents' motive, we are convinced, and find upon the consideration stated above, that by refusing to permit their employees to exercise the right to meet on company-owned property for the purpose of holding a union meeting, when no other suitable property in the community was available for the purpose, under the circumstances set forth above, the respondents have placed an unreasonable impediment on freedom of communication and of assembly essential to the exercise of employees' rights guaranteed by Section 7 of the Act. By their conduct in revoking the grant of privilege to use the hall and thus denying the use of the hall to the Union, the respondents Stowe, Acme, Perfection, and Linford interfered with, restrained, and coerced their employees in the exercise of the rights guaranteed in Section 7 of the Act, in violation of Section 8(1) thereof.' Id., 624. 3 'Ownership does not always mean absolute dominion. The more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the statutory and constitutional rights of those who use it. * * * Had the corporation here owned the segment of the four-lane highway which runs parallel to the 'business block' and operated the same under a State franchise, doubtless no one would have seriously contended that the corporation's property interest in the highway gave it power to obstruct through traffic or to discriminate against interstate commerce. * * * And even had there been no express franchise but mere acquiescence by the State in the corporation's use of its property as a segment of the four-lane highway, operation of all the highway, including the segment owned by the corporation, would still have been performance of a public function and discrimination would certainly have been illegal. 'We do not think it makes any significant constitutional difference as to the relationship between the rights of the owner and those of the public that here the State, instead of permitting the corporation to operate a highway, permitted it to use its property as a town, operate a 'business block' in the town and a street and sidewalk on that business block.' 326 U.S. pages 506, 507, 66 S.Ct. page 278, 90 L.Ed. 265. 'In our view the circumstance that the property rights to the premises where the deprivation of liberty, here involved, took place, were held by others than the public, is not sufficient to justify the State's permitting a corporation to govern a community of citizens so as to restrict their fundamental liberties and the enforcement of such restraint by the application of a State statute.' 326 U.S. page 509, 66 S.Ct. page 280.
34
336 U.S. 245 69 S.Ct. 516 93 L.Ed. 651 INTERNATIONAL UNION, U.A.W., A.F. OF L., LOCAL 232 et al.,v.WISCONSIN EMPLOYMENT RELATIONS BOARD et al. (two cases). Nos. 14, 15. Argued Nov. 17, 18, 1948. Decided Feb. 28, 1949. Rehearing Denied May 2, 1949. See 336 U.S. 970, 69 S.Ct. 935. Mr. David Previant, of Milwaukee, Wis., for petitioners. Mrs. Beartrice Lampert, of Madison, Wis., for respondent Wisconsin Emp oyment Board. [Argument of Counsel from page 246 intentionally omitted] Mr. Jackson M. Bruce, of Milwaukee, Wis., for respondent Briggs & Stratton Corporation. Mr. Justice JACKSON delivered the opinion of the Court. 1 Certain labor legislation of the State of Wisconsin,1 as applied by its Supreme Court, is challenged because it is said to transgress constitutional limitations imposed by the Thirteenth and Fourteenth Amendments and by the Commerce Clause2 as implemented by the National Labor Relations Act3 and the Labor Management Relations Act of 1947.4 2 The Supreme Court of Wisconsin held5 that its Act authorizes the State Employment Relations Board to order a labor union to cease and desist from instigating certain intermittent and announced work stoppages which it had caused under the following circumstances: Briggs & Stratton Corporation operates two manufacturing plants in the State of Wisconsin engaging approximately 2,000 employees. These are represented by the International Union, Automobile Workers of America, A.F. of L., Local No. 232, as collective bargaining agent, it having been duly certified as sucy by the National Labor Relations Board in proceedings under the National Labor Relations Act. Under such certification, the Union had negotiated collective bargaining agreements, the last of which expired on July 1, 1944. Negotiation of a new one reached a deadlock and bargaining sessions continued for some time without success. 3 On November 3, 1945, its leaders submitted to the Union membership a plan for a new method of putting pressure upon the employer. The stratagem consisted of calling repeated special meetings of the Union during working hours at any time the Union saw fit, which the employees would leave work to attend. It was an essential part of the plan that this should be without warning to the employer or notice as to when or whether the employees would return. The device was adopted and the first surprise cessation of work was called on November 6, 1945; thereafter, and until March 22, 1946, such action was repeated on twenty-six occasions. The employer was not informed during this period of any specific demands which these tactics were designed to enforce nor what concessions it could make to avoid them.6 4 This procedure was publicly described by the union leaders as a new technique for bringing pressure upon the employer. It was, and is, candidly admitted that these tactics were intended to and did interfere with production and put strong economic pressure on the employer, who was disabled thereby from making any dependable production plans or delivery commitments. And it was said that 'this can't be said for the strike. After the initial surprise or walk-out, the company knows what to do and plans accordingly.' It was commended as a procedure which would avoid hardships that a strike imposes on employees and was considered 'a better weapon than a strike.' 5 The employer did not resort to any private disciplinary measures such as discharge of the employees; instead, it sought a much less drastic remedy by plea to the appropriate public authority under Wisconsin law7 to investigate and adjudge the Union's conduct under the law of the State. After the prescribed procedures, the Board ordered the Union to cease and desist from '(a) engaging in any concerted efforts to interfere with production by arbitrarily calling union meetings and inducing work stoppages during regularly scheduled working hours; or engaging in any other concerted effort to interfere with production of the complainant except by leaving the premises in an orderly manner for the purpose of going on strike.'8 6 Two court proceedings resulted from the Board's order: one by the Board to obtain enforcement and the other by the Union to obtain review. They are here considered, as they were below, together. 7 The Supreme Court of Wisconsin sustained the Board's order but significantly limited the effect of its otherwise general prohibitions. It held that what the order does, and all that it does, is to forbid individual defendants and members of the Union from engaging in concerted effort to interfere with production by doing the acts instantly involved. As we have heretofore pointed out, the construction placed upon such an order by the State Supreme Court is conclusive on us. Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S.Ct. 820, 86 L.Ed. 1154. Our only question is, therefore, whether it is beyond the power of the State to prohibit the particular course of conduct described.9 8 The Union contends that the statute as thus applied violates the Thirteenth Amendment in that it imposes a form of compulsory service or involuntary servitude. However, nothing in the statute or the order makes it a crime to abandon work individually, compare Pollock v. Williams, 322 U.S. 4, 64 S.Ct. 792, 88 L.Ed. 1095, or collectively. Nor does either undertake to rohibit or restrict any employee from leaving the service of the employer, either for reason or without reason, either with or without notice. The facts afford no foundation for the contention that any action of the State has the purpose or effect of imposing any form of involuntary servitude. 9 It is further contended that the statute as applied invades rights of free speech and public assemblage guaranteed by the Fourteenth Amendment. We recently considered a similar contention in connection with other state action concerning labor relations. Lincoln Federal Labor Union No. 19129, A.F. of L. et al. v. Northwestern Iron & Metal Co. and Whitaker et al. v. State of North Carolina, 335 U.S. 525, 69 S.Ct. 251 and American Federation of Labor v. American Sash & Door Co., 335 U.S. 538, 69 S.Ct. 258. For reasons there stated, these contentions are without merit. 10 No serious question is presented by the Commerce Clause of the Constitution standing alone. It never has been thought to prevent the state legislatures from limiting 'individual and group rights of aggression and defense' or from substituting 'processes of justice for the more primitive method of trial by combat.' Mr. Justice Brandeis, dissenting, Duplex Printing Press Co. v. Deering, 254 U.S. 443, 488, 41 S.Ct. 172, 184, 65 L.Ed. 349, 16 A.L.R. 196; see also Dorchy v. State of Kansas, 272 U.S. 306, 311, 47 S.Ct. 86, 87, 71 L.Ed. 248, cited with approval, Thornhill v. State of Alabama, 310 U.S. 88, 103, 60 S.Ct. 736, 744, 745, 84 L.Ed. 1093; and see Hotel and Restaurant Employees' International Alliance, Local No. 122 v. Wisconsin Employment Relations Board, 315 U.S. 437, 62 S.Ct. 706, 86 L.Ed. 946. 11 The substantial issue is whether Congress has protected the union conduct which the state has forbidden, and hence the state legislation must yield. When the order of the State Board and the decision of the State Supreme Court were made, the National Labor Relations Act, 49 Stat. 449, 29 U.S.C. §§ 151—166, 29 U.S.C.A. §§ 151—166, was in effect and questions of conflict between state and federal law were raised and decided with reference to it. However, the order imposes a continuing restraint which it is contended now conflicts with the Labor Management Relations Act of 1947, 61 Stat. 136, 29 U.S.C. §§ 141—197, 29 U.S.C.A. §§ 141—197, which amended the earlier statute. We therefore consider the state action in relation to both Federal Acts. 12 Congress has not seen fit in either of these Acts to declare either a general policy or to state specific rules as to their effects on state regulation of various phases of labor relations over which the several states traditionally have exercised control. Cf. Securities Act of 1933, §§ 18, 48 Stat. 74, 85, 15 U.S.C. § 77r, 15 U.S.C.A. § 77r; Securities Exchange Act of 1934, § 28, 48 Stat. 881, 903, 15 U.S.C. § 78bb, 15 U.S.C.A. § 78bb; United States Warehouse Act, before and after 1931 Amendment, 39 Stat. 486, 490, 46 Stat. 1465, 7 U.S.C. § 269, 7 U.S.C.A. § 269. However, as to coercive tactics in labor controversies, we have said of the National Labor Relations Act what is equally true of the Labor Management Act of 1947, that 'Congress designedly left open an area for state control' and that 'the intention of Congress to exclude states from exerting their police power must be clearly manifested.' Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 750, 749, 62 S.Ct. 820, 826, 825, 86 L.Ed. 1154. We therefore turn to its legislation for evidence that Congress has clearly manifested an exclusion of the state power sought to be exercised in this case. 13 Congress made in the National Labor Relations Act no express delegation of power to the Board to permit or forbid this particular union conduct, from which an exclusion of state power could be implied. The Labor Management Relations Act declared it to be an unfair labor practice for a union to induce or engage in a strike or concerted refusal to work where an object thereof is any of certain enumerated ones. § 8(b)(4), 61 Stat. 140, 141, 29 U.S.C. § 158(b)(4), 29 U.S.C.A. § 158(b)(4). Nevertheless the conduct here described is not forbidden by this Act and no proceeding is authorized by which the Federal Board may deal with it in any manner. While the Federal Board is empowered to forbid a strike, when and because its purpose is one that the Federal Act made illegal, it has been given no power to forbid one because its method is illegal—even if the illegality were to consist of actual or threatened violence to persons or destruction of property. Policing of such conduct is left wholly to the states. In this case there was also evidence of considerable injury to property and intimidation of other employees by threats and no one questions the state's power to police coercion by those methods.10 14 It seems to us clear that this case falls within the rule announced in Allen-Bradley11 that the state may police these strike activities as it could police the strike activities there, because 'Congress has not made such employee and union conduct as is involved in this case subject to regulation by the federal Board.' There is no existing or possible conflict or overlapping between the authority of the federal and state Boards, because the federal Board has no authority either to investigate, approve or forbid the union conduct in question. This conduct is governable by the state or it is entirely ungoverned. 15 This case is not analogous to Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234, on which petitioners rely. There the state board undertook to determine the bargaining unit in an industry, an identical question which the federal Board was authorized to determine, and the two had deliberately laid down contrary policies to govern decisions of this same matter. In that case, of course, the federal policy was necessarily given effect as the supreme law of the land. See also La Crosse Telephone Corporation v. Wisconsin Employment Relations Board, 336 U.S. 18, 69 S.Ct. 379. 16 But it is claimed that the congressional labor legislation confers upon or recognizes and declares in unions and employees certain rights, privileges or immunities in connection with strikes and concerted activities, and that these are denied by the state's prohibition as laid down in this case. It is elementary that what Congress constitutionally has given, the state may not constitutionally take away. Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.ed. 1782. 17 The argument is that two provisions, found in §§ 7 and 13 of the Labor Relations Act, not relevantly changed by the Labor Management Act of 1947, grant to the union and its members the right to put pressure upon the employer by the recurrent and unannounced stoppage of work. Both Acts provide that 'Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities, for the purpose of collective bargaining or other mutual aid or protection.'12 Because the acts forbidden by the Wisconsin judgment are concerted activities and had a purpose to assist labor organizations in collective bargaining, it is said to follow that they are federally authorized and thereby immunized from state control. 18 It is urged here that we are bound to hold these activities protected by § 7 because that has become the settled interpretation of the Act by the Board charged with its administration. This contention is based on decisions by the Board in American Mfg. Concern, 7 N.L.R.B. 753; Harnischfeger Corp., 9 N.L.R.B. 676; The Good Coal Co., 12 N.L.R.B. 136; Armour & Co., 25 N.L.R.B. 989; Cudahy Packing Co., 29 N.L.R.B. 830; and Mt. Clemens Pottery Company, 46 N.L.R.B. 714. We do not think it can fairly be said that even the cumulative effect of those cases amounts to a fixed Board interpretation that all work stoppages are federal protected concerted activities. In those cases, but in a context of antiunion animus on the employer's part, the Board condemned as unfair labor practices summary discharges attempted in retaliation for isolated work stoppages reflecting temporary rebellion over rules or conditions of work. The drastic remedy of discharge, so outweighing any possible damage in those cases to the employer and so tainted by antiunion motives, led to the Board's conclusion of unfair labor practices proscribed by the Act. The Board, however, made it clear in the Harnischfeger and Armour cases that such a conclusion does not necessarily follow a finding that the employees' activities were concerted: 19 '* * * Section 7 of the Act expressly guarantees employees the right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection. We do not interpret this to mean that it is unlawful for an employer to discharge an employee for any activity sanctioned by a union or otherwise in the nature of collective activity. The question before us is, we think, whether this particular activity was so indefensible, under the circumstances, as to warrant the respondents, under the Act, in discharging the stewards for this type of union activity. We do not think it was.'13 20 In view of that statement, the facts of the present case do not bring it within the pectation of the Act as administered by the Board. Here the employer has resorted to no retaliatory measures and its motive in asking help from the state is not even alleged to be antiunion but merely a desire to keep its plant in operation. The remedy sought against repeated disruption of production is not summary dismissal but invocation of a statutory procedure made available by the state for the adjudication and resolution of such difficulties. Consequently, we do not find any fixed Board policy to apply the Act to such facts as we have here. The quoted statement from the Board's two opinions indicates lack of belief that it was creating any such rule. 21 However, in no event could the Board adopt such a binding practice as to the scope of § 7 in the light of the construction, with which we agree, given to § 7 by the Courts of Appeals, authorized to review Board orders. In similar cases they have denied comparable work stoppages the protection of that section. C. G. Conn, Ltd. v. National Labor Relations Board, 7 Cir., 108 F.2d 390; National Labor Relations Board v. Condenser Corporation of America, 3 Cir., 128 F.2d 67; Home Beneficial Life Ins. Co. v. National Labor Relations Board, 4 Cir., 159 F.2d 280; and see National Labor Relations Board v. Draper Corporation, 4 Cir., 145 F.2d 199, 156 A.L.R. 989; National Labor Relations Board v. Indiana Desk Co., 7 Cir., 149 F.2d 987. To hold that the alleged fixed Board interpretation has irrevocably labeled all concerted activities 'protected' would be in the teeth of the Board's own language and would deny any effect to the Courts of Appeals' decisions. The latter decisions and our own, National Labor Relations Board v. Fansteel Metallurgical Corporation, 306 U.S. 240, 59 S.Ct. 490, 83 L.Ed. 627, 123 A.L.R. 599; Southern S.S. Co. v. National Labor Relations Board, 316 U.S. 31, 62 S.Ct. 886, 86 L.Ed. 1246; National Labor Relations Board v. Sands Mfg. Co., 306 U.S. 332, 59 S. t. 508, 83 L.Ed. 682; Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S.Ct. 820, 86 L.Ed. 1154; and see Hotel and Restaurant Employees' International Alliance, Local No. 122 v. Wisconsin Employment Relations Board, 315 U.S. 437, 62 S.Ct. 706, 86 L.Ed. 946, clearly interdict any rule by the Board that every type of concerted activity is beyond the reach of the states' adjudicatory machinery. The bare language of § 7 cannot be construed to immunize the conduct forbidden by the judgment below and therefore the injunction as construed by the Wisconsin Supreme Court does not conflict with § 7 of the Federal Act. 22 In the Light of labor movement history, the purpose of the quoted provision of the statute becomes clear. The most effective legal weapon against the struggling labor union was the doctrine that concerted activities were conspiracies, and for that reason illegal. Section 7 of the Labor Relations Act took this conspiracy weapon away from the employer in employment relations which affect interstate commerce. No longer can any state, as to relations within reach of the Act, treat otherwise lawful activities to aid unionization as an illegal conspiracy merely because they are undertaken by many persons acting in concert.14 But because legal conduct may not be made illegal by concert, it does not mean that otherwise illegal action is made legal by concert. 23 Reliance also is placed upon § 13 of the Labor Relations Act, which provided, 'Nothing in this Act shall be construed so as to interfere with or impede or diminish in any way the right to strike.' 49 Stat. 449, 457. The 1947 Amendment carries the same provision but that Act includes a definition. Section 501(2) says that when used in the Act 'The term 'strike' includes any strike or other concerted stoppage of work by employees (including a stoppage by reason of the expiration of a collective-bargaining agreement) and any concerted slow-down or other concerted interruption of operations by employees.' 61 Stat. 161. 24 This provision, as carried over into the Labor Management Act, does not purport to create, establish or define the right to strike. On its face it is narrower in scope than § 7—the latter would be of little significance if 'strike' is a broader term than 'concerted activity.' Unless we read into § 13 words which Congress omitted and a sense which Congress showed no intention of including, all that this provision does is to declare a rule of interpretation for the Act itself which would prevent any use of what originally was a novel piece of legislation to qualify or impede whatever right to strike exists under other laws. It did not purport to modify the body of law as to the legality of strikes as it then existed. This Court less than a decade earlier had stated that law to be that the state constitutionally could prohibit strikes and make a violation criminal. It had unanimously adopted the language of Mr. Justice Brandeis that 'Neither the common law, nor the Fourteenth Amendment, confers the absolute right to strike.' Dorchy v. State of Kansas, 272 U.S. 306, 311, 47 S.Ct. 86, 87, 71 L.Ed. 248. Dissenting views most favorable to labor in other cases had conceded the right of the state legislature to mark the limits of tolerable industrial conflict in th public interest. Duplex Printing Press Co. v. Deering, 254 U.S. 443, 488, 41 S.Ct. 172, 184, 65 L.Ed. 349, 16 A.L.R. 196. This Court has adhered to that view. Thornhill v. State of Alabama, 310 U.S. 88, 103, 60 S.Ct. 736, 744, 745, 84 L.Ed. 1093. The right to strike, because of its more serious impact upon the public interest, is more vulnerable to regulation than the right to organize and select representatives for lawful purposes of collective bargaining which this Court has characterized as a 'fundamental right' and which, as the Court has pointed out, was recognized as such in its decisions long before it was given protection by the Labor Relations Act. National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U.S. 1, 33, 57 S.Ct. 615, 622, 81 L.Ed. 893, 108 A.L.R. 1352. 25 As to the right to strike, however, this Court, quoting the language of § 13, has said, 306 U.S. 240, 256, 59 S.Ct. 490, 496, 83 L.Ed. 627, 123 A.L.R. 599, 'But this recognition of 'the right to strike' plainly contemplates a lawful strike—the exercise of the unquestioned right to quit work', and it did not operate to legalize the sit-down strike, which state law made illegal and state authorities punished. National Labor Relations Board v. Fansteel Metallurgical Corporation, 306 U.S. 240, 59 S.Ct. 490, 83 L.Ed. 627, 123 A.L.R. 599. Nor, for example, did it make legal a strike that ran afoul of federal law, Southern S.S. Co. v. National Labor Relations Board, 316 U.S. 31, 62 S.Ct. 886, 86 L.Ed. 1246; nor one in violation of a contract made pursuant thereto, National Labor Relations Board v. Sands Mfg. Co., 306 U.S. 332, 59 S.Ct. 508, 83 L.Ed. 682; nor one creating a national emergency, United States v. United Mine Workers, 330 U.S. 258, 67 S.Ct. 677, 91 L.ed. 884. 26 That Congress has concurred in the view that neither § 7 nor § 13 confers absolute right to engage in every kind of strike or other concerted activity does not rest upon mere inference; indeed the record indicates that, had the Courts not made these interpretations, the Congress would have gone as far or farther in the direction of limiting the right to engage in concerted activities including the right to strike. The House Committee of Conference handling the bill which became the Labor Management Relations Act, on June 3, 1947 advised the House to recede from its disagreement with the Senate and to accept the present text upon grounds there stated under the rubric 'Rights of Employees.' H.R. Rep. No. 510, 80th Cong., 1st Sess., p. 38. The Committee pointed out that 'the courts have firmly established the rule that under the existing provisions of section 7 of the National Labor Relations Act, employees are not given any right to engage in unlawful or other improper conduct. In its most recent decisions the Board has been consistently applying the principles established by the courts. * * *' And 'it was believed that the specific provisions in the House bill excepting unfair labor practices, unlawful concerted activities, and violation of collective bargaining agreements from the protection of section 7 were unnecessary. Moreover, there was real concern that the inclusion of such a provision might have a limiting effect and make improper conduct not specifically mentioned subject to the protection of the Act.' The full text of this section of the report is printed in the margin.15 27 Thus, the obvious purpose of the Labor Management Amendments was not to grant a dispensation for the strike but to outlaw strikes when undertaken to enforce what the Act calls unfair labor practices, an end which would be defeated if we sustain the Union's claim in this respect. By § 8(b)(4), strikes to attain named objectives are made unfair labor practices and by § 10(a),16 the Board is authorized to prevent them. The definition plainly enough was designed to enable the Board to order a union to cease and desist from a strike so made illegal, whether it consisted of a strike in the usual or conventional meaning or consisted of some of the other practices mentioned in the definition. However, if we add the definition to § 13, it does not change the effect of the Act on state powers. It still gives the Federal Board no authority to prohibit or to supervise the activity which the State Board has here stopped nor to entertain any proceeding concerning it, because it is the objectives only and not the tactics of a strike which bring it within the power of the Federal Board. And § 13 plus the definition only provides that 'Nothing in this Act * * * shall be construed so as to interfere with or impede' the right to engage in these activities. What other Acts or other state laws might do is not attempted to be regulated by this section. Since reading the definition into § 13 confers neither federal power to control the activities in question nor any immunity from the exercise of state power in reference to them, it can have no effect on the right of the state to resort to its own reserved power over coercive conduct as it has done in this instance. 28 If we were to read § 13 as we are urged to do, to make the strike an absolute right and the definition to extend the right to all other variations of the strike,17 the effect would be to legalize beyond the power of any state or federal authorities to control not only the intermittent stoppages such as we have here but also the slowdown and perhaps the sit-down strike as well. Cf. Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 751, 62 S.Ct. 820, 826, 86 L.Ed. 1154. And this is not all; the management also would be disabled from any kind of self-help to cope with these coercive tactics of the union except to submit to its undeclared demands. To dismiss or discipline employees for exercising a right given them under the Act or to interfere with them or the union in pursuing it is made an unfair labor practice and if the rights here asserted are rights conferred by the Labor Management Relations Act, it is hard to see how the management can taken any steps to resist or combat them without incurring the sanctions of the Act. It is certain that such a result would be inconsistent with the whole purpose disclosed by the Labor Management Relations Act amendments to the Labor Relations Act. Nor do we think such is the result of any fair interpretation of the text of the Act. 29 We think that this recurrent or intermittent unannounced stoppage of work to win unstated ends was neither forbidden by Federal statute nor was it legalized and approved thereby. Such being the case, the state police power was not superseded by congressional Act over a subject normally within its exclusive power and reachable by federal regulation only because of its effects on that interstate commerce which Congress may regulate. National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352; Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767, 67 S.Ct. 1026, 91 L.Ed. 1234. 30 We find no basis for denying to Wisconsin the power, in governing her internal affairs to regulate a course of conduct neither made a right under federal law nor a violation of it and which has the coercive effect obvious in this device. 31 The judgment is affirmed. 32 Affirmed. 33 Mr. Justice DOUGLAS, with whom Mr. Justice BLACK and Mr. Justice RUTLEDGE concur, dissenting. 34 This strike was legal under the Wagner Act in 1945 and 1946 and its legality was not affected by the Labor Management Act of 1947. I think, therefore, that the effort of Wisconsin to make it unlawful must fail because it conflicts with the national policy. 35 Section 13 of the Wagner Act is written in language too plain to admit of doubt or ambiguity: 'Nothing in this Act shall be construed so as to interfere with or impede or diminish in anyway the right to strike.' The Court held in National Labor Relations Board v. Fansteel Metallurgical Corporation, 306 U.S. 240, 256, 59 S.Ct. 490, 496, 83 L.Ed. 627, 123 A.L.R. 599, that by this provision Congress 'recognized the right to strike,—that the employees could lawfully cease work at their own volition because of the failure of the employer to meet their demands.' The congressional policy of protection of strikes as economic sanctions is now converted into a congressional policy of hands off. 36 If the States can outlaw this strike, I see no reason why they cannot adopt regulations which determine the manner in which strikes may be called in these interstate industries. Can they in practical effect outlaw strikes by requiring a unanimous vote of the workers in order to call one? The federal Board is not authorized, it is said, to forbid or control strikes because of the method by which they are called or the way in which they are utilized. If that is the criterion, as the Court declares, then the manner of calling of strikes is left wholly to the States. The right to strike, which Congress has sanctioned, can in that way be undermined by state action. The federal policy thus becomes a formula of empty words. 37 That conclusion is made all the more surprising when § 13 of the Act is read in conjunction with § 7 which provides, 'Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities, for the purpose of collective bargaining or other mutual air or protection.'1 (Italics added.) Section 7 read in conjunction with § 13 must mean that one of the 'concerted activities' in which employees may engage is to strike in these interstate industries. In all of labor's history no 'concerted activity' has been more conspicuous and important than the strike; and none was thought to be more essential to recognition of the right to collective bargaining. Moreover, the strike historically and in the present cases was used to make effective the collectiv bargaining power which § 7 of the Wagner Act guarantees. The right to strike, recognized by § 13, is thus an integral part of the federal labor-management policy. 38 Section 7 was invoked in Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 750, 62 S.Ct. 820, 826, 86 L.Ed. 1154, to challenge as unconstitutional Wisconsin's regulation of picketing, threats, and violence in connection with labor disputes. We disallowed the defense, holding that those matters were problems within the reach of the traditional police power of the States and remained there after passage of the federal Act because it had not undertaken to regulate them. 39 The Wagner Act, to be sure, did not undertake to give the federal agency control over the manner of calling strikes or the purpose for which they may be called. To that extent these cases have common ground with the Allen-Bradley decision. But there the similarity ends. In Allen-Bradley, supra, the Congress had not expressed a policy on picketing, threats or violence in connection with labor disputes. In this case, as § 13 read in conjunction with § 7 makes plain, it has adopted a policy on strikes. 40 It is the presence of a conflicting federal policy that determines whether state action must give way under the Supremacy Clause,2 even though there may be no actual or potential collision between federal and state administrative agencies. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 67 S.Ct. 1146, 91 L.Ed. 1447. In Hill v. State of Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782, a state regulation of the licensing of business agents of unions subject to the federal Act was held to be in conflict with the Wagner Act not because the federal Board had any licensing jurisdiction but because the state law interfered with the freedom of collective bargaining guaranteed by § 7 of the Act. The present cases follow a fortiori, if the strike is included in the 'concerted activities' guaranteed by § 7. 41 The concerted activities in these cases were as old as labor's struggle for existence and were aimed at (as well as a part of) the purposes which § 7 of the federal Act was designed to protect.3 Therefore the legality of the methods used is exclusively a question of federal law.4 42 Mr. Justice MURPHY, with whom Mr. Justice RUTLEDGE concurs, dissenting. 43 To interfere with production and to enforce their bargaining demands, employees of Briggs and Stratton called twenty-seven union meetings during working hours without advance notice to the employer. Employees left their work and returned later in the day, or the following day. Wisconsin has made this concerted activity unlawful. The question is whether the State's action violates the federal guarantee contained in § 7 of the Wagner and Taft-Hartley Acts: 'Employees shall have the right to * * * engage in concerted activities, for the purpose of collective bargaining or other mutual aid or protection.' 44 We have recognized that the phrase 'concerted activities' does not make every union activity a federal right. We have held that violence by strikers is not protected, Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 62 S.Ct. 820, 86 L.Ed. 1154; that a sit-down strike, National Labor Relations Board v. Fansteel Metallurgical Corporation, 306 U.S. 240, 59 S.Ct. 490, 83 L.Ed. 627, 123 A.L.R. 599, a mutiny, Southern S.S. Co. v. National Labor Relations Board, 316 U.S. 31, 62 S.Ct. 886, 86 L.Ed. 246, and a strike in violation of a contract, National Labor Relations Board v. Sands Mfg. Co., 306 U.S. 332, 59 S.Ct. 508, 83 L.Ed. 682, must be withdrawn from the literal language of § 7. 45 But the Court, by its reasoning and its quotation from a Congressional report, now makes intermittent work stoppages the equivalent of mutiny, contract-breaking, and the sit-down strike. It stretches the 'objectives and means' test to include a form of pressure which is peaceful and direct. In effect, it adopts the employer's plea that it cannot plan production schedules, cannot notify its customers and suppliers, cannot determine its output with any degree of certainty and that these inconveniences withdraw this activity from § 7 of the national statutes. The majority and the Wisconsin court call the weapon objectionable, then, only because it is effective. 46 To impute this rationale to the Congress which enacted the Wagner Act is, in may opinion judicial legislation of an extreme form. 47 The Court chooses to ignore the consistent policy of the agency charged with primary responsibility in interpreting and administering § 7. The National Board has repeatedly held that work stoppages of this nature are 'partial strikes' and 'concerted activities' within the meaning of § 7. Cudahy Packing Company, 29 N.L.R.B. 837, 863; Armour & Company, 25 N.L.R.B. 989; The Good Coal Company, 12 N.L.R.B. 136, 146; American Mfg. Concern, 7 N.L.R.B. 753, 758; Harnischfeger Corporation, 9 N.L.R.B. 676, 685; Mt. Clemens Pottery Company, 46 N.L.R.B. 714, 716. In each of these six cases, the Board's interpretation of § 7 is directly contrary to that reached by the Court in the case before us. In each case the Board concluded that work stoppages or 'partial strikes' cannot be withdrawn from the language of § 7. To ignore the Board's consistent rulings in this case is a new and unique departure from the rule of deference to settled administrative interpretation. The fact that the stoppages in the Board cases were fewer in number than those at Briggs and Stratton is not, of course, a controlling difference—unless we are to say that the stoppages are not protected by § 7 because they are effective from the union's point of view. 48 Wisconsin's action clearly conflicts with § 7, and accordingly, I would reverse the judgment. 1 The Wisconsin Employment Peace Act provides in part as follows: 'It shall be an unfair labor practice for an employe individually or in concert with others: (a) To coerce or intimidate an employe in the enjoyment of his legal rights, including those guaranteed in section 111.04, or to intimidate his family, picket his domicile, or injure the person or property of such employe or his family. * * * (e) To co-operate in engaging in, promoting or inducing picketing (not constituting an exercise of constitutionally guaranteed free speech), boycotting or any other overt concomitant of a strike unless a majority in a collective bargaining unit of the employes of an employer against whom such acts are primarily directed have voted by secret ballot to call a strike. * * * (h) To take unauthorized possession of property of the employer or to engage in any concerted effort to interfere with production except by leaving the premises in an orderly manner for the purpose of going on strike.' Wis.Stat. 1947, c. 111, § 111.06(2). 2 U.S. Const. Art. 1, § 8, Cl. 3, giving the Congress power 'To regulate Commerce * * * among the several States * * *'. 3 49 Stat. 449, 29 U.S.C. §§ 151—166, 29 U.S.C.A. §§ 151—166. 4 61 Stat. 136, 29 U.S.C. §§ 141—197, 29 U.S.C.A. §§ 141—197. 5 250 Wis. 550, 27 N.W.2d 875. The State Supreme Court concluded that petitioners were guilty of unfair labor practices as defined in §§ 111.06(2) (a), (e) and (h) of the Wisconsin statutes. Those provisions are set out in note 1. 6 Petitioners suggest that the stoppages were initiated to force the employer to comply with a War Labor Board directive. However, the stoppages began several weeks before that directive reached either the union or the employer. By the latter date, the National Board h d been abolished. Consequently the issuance of the directive would not seem to throw any light on the Union's motives or to have any effect on the State Board's jurisdiction. 7 The Employment Relations Board was created by the 1939 Act. See Wis. Stat. 1947, c. 111, § 111.03. The Board's jurisdiction over unfair labor practices is delineated in § 111.07. 8 The Board also ordered petitioners to cease and desist from '(b) Coercing or intimidating employees by threats of violence or other punishment to engage in any activities for the purpose of interfering with production or that will interfere with the legal rights of the employes.' This provision of the order, based on evidence of some violence and threats, is not challenged here. 9 In the consolidated case before the Circuit Court of Milwaukee County, that court denied enforcement of paragraph (a) of the Board's order forbidding the work stoppages, but upheld paragraph (b) enjoining violence and threats. See note 8. The Supreme Court approved the order in its entirety. Review of that court's action in upholding paragraph (a) is sought in these petitions by the Union and nine of its officers, seven of whom are employees of respondent corporation, and all of whom are members of the Union's Bargaining Committee. 10 See notes 8 and 9. 11 Allen-Bradley Local No. 1111, United Electrical Radio and Machine Workers of America v. Wisconsin Employment Relations Board, 315 U.S. 740, 749, 62 S.Ct. 820, 825, 86 L.Ed. 1154. 12 § 7 of National Labor Relations Act, 49 Stat. 449, 452. The Labor Management relations Act of 1947 added a proviso that employees also have the right to refrain from any or all activities mentioned in this section, except to the extent that the right to refrain might conflict with an agreement requiring membership in a union as a condition of employment as authorized b the Act. 61 Stat. 140. 13 9 N.L.R.B. 676, 686; 25 N.L.R.B. 989, 996. 14 With respect to activities subject to state control, § 111.04 of the Wisconsin statutes provides that employees shall have the right of self-organization, the right to form, join and assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in lawful, concerted activities for the purpose of collective bargaining or other mutual aid or protection. Section 111.06(1) makes it an unfair labor practice for an employer to interfere with, restrain or coerce his employees in the exercise of the rights guaranteed in § 111.04, and lists other unfair labor practices which the Board is also empowered to prevent. 15 'Both the House bill and the Senate amendment in amending the National Labor Relations Act preserved the right under section 7 of that act of employees to self-organization, to form, join, or assist any labor organization, and to bargain collectively through representatives of their own choosing and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. The House bill, however, made two changes in that section of the act. First, it was stated specifically that the rights set forth were not to be considered as including the right to commit or participate in unfair labor practices, unlawful co certed activities, or violations of collective bargaining contracts. Second, it was specifically set forth that employees were also to have the right to refrain from self-organization, etc., if they chose to do so. 'The first change in section 7 of the act made by the House bill was inserted by reason of early decisions of the Board to the effect that the language of section 7 protected concerted activities regardless of their nature or objectives. An outstanding decision of this sort was the one involving a 'sit down' strike wherein the Board ordered the reinstatement of employees who engaged in this unlawful activity. Later the Board ordered the reinstatement of certain employees whose concerted activities constituted mutiny. In both of the above instances, however, the decision of the Board was reversed by the Supreme Court. More recently, a decision of the Board ordering the reinstatement of individuals who had engaged in mass picketing was reversed by the Circuit Court of Appeals. National Labor Relations Board v. Indiana Desk Co., 7 Cir., 1945, 149 F.2d 987. 'Thus the courts have firmly established the rule that under the existing provisions of section 7 of the National Labor Relations Act, employees are not given any right to engage in unlawful or other improper conduct. In its most recent decisions the Board has been consistently applying the principles established by the courts. For example, in the American News Company case (55 N.L.R.B. 1302) (1944) the Board held that employees had no right which was protected under the act to strike to compel an employer to violate the wage stabilization laws. Again, in the Scullin Steel case (65 N.L.R.B. 1294) and in the Dyson case (decided February 7, 1947), the Board held that strikes in violation of collective bargaining contracts were not concerted activities protected by the act, and refusal to reinstate employees discharged for engaging in such activities. In the second Thompson Products case (decided February 21, 1947) the Board held that strikes to compel the employer to vio- late the act and rulings of the Board thereunder were not concerted activities protected by the provisions of section 7. The reasoning of these recent decisions appears to have of the Board as that in Matter of the Board as that in Matter of Berkshire Knitting Mills (46 N.L.R.B. 955 (1943)), wherein the Board attempted to distinguish between what is considered as major crimes and minor crimes for the purpose of determining what employees were entitled to reinstatement. 'By reason of the foregoing, it was believed that the specific provisions in the House bill excepting unfair labor practices, unlawful concerted activities, and violation of collective bargaining agreements from the protection of section 7 were unnecessary. Moreover, there was real concern that the inclusion of such a provision might have a limiting effect and make improper conduct not specifically mentioned subject to the protection of the act. 'In addition, other provisions of the conference agreement deal with this particular problem in general terms. For example, in the declaration of policy to the amended National Labor Relations Act adopted by the conference committee, it is stated in the new paragraph dealing with improper practices of labor organizations, their officers, and members, that the 'elimination of such practices is a necessary condition to the assurance of the rights herein guaranteed.' This in and of itself demonstrates a clear intention that these undesirable concerted activities are not to have any protection under the act, and to the extent that the Board in the past has accorded protection to such activities, the conference agreement makes such protection no longer possible. Furthermore, in section 10(c) of the amended act, as proposed in the conference agreement, it is specifically provided that no order of the Board shall require the reinstatement of any individual or the payment to him of any back pay if such individual was suspended or discharged for cause, and this, of course, applies with qual force whether or not the acts constituting the cause for discharge were committed in connection with a concerted activity. Again, inasmuch as section 10(b) of the act, as proposed to be amended by the conference agreement, requires that the rules of evidence applicable in the district courts shall, so far as practicable, be followed and applied by the Board proof of acts of unlawful conduct cannot hereafter be limited to proof of confession or conviction thereof. 'The second change made by the House bill in section 7 of the act (which is carried into the conference agreement) also has an important bearing on the kinds of concerted activities which are protected by section 7. That provision, as heretofore stated, provides that employees are also to have the right to refrain from joining in concerted activities with their fellow employees if they choose to do so. Taken in conjunction with the provisions of section 8(b)(1) of the conference agreement (which will be hereafter discussed), wherein it is made an unfair labor practice for a labor organization or its agents to restrain or coerce employees in the exercise of rights guaranteed in section 7, it is apparent that many forms and varieties of concerted activities which the Board, particularly in its early days, regarded as protected by the act will no longer be treated as having that protection, since obviously persons who engage in or support unfair labor practices will not enjoy immunity under the act.' 16 61 Stat. 136, 146, 29 U.S.C. § 160(a), 29 U.S.C.A. § 160(a). 17 To call these stoppages a strike we would have to ignore petitions' own conception of this activity. As we have shown, they adopted this technique precisely because it was believed to be 'better * * * than a strike.' See text 69 S.Ct. 519. 1 It was held in National Labor Relations Board v. Peter Cailler Kohler Swiss Chocolates Co., 2 Cir., 130 F.2d 503, 505, 506, that the right to engage in a sympathetic strike or a secondary boycott was a concerted activity protected by § 7 prior to the 1947 amendments. It was also held in National Labor Relations Board v. Remington Rand, Inc., 2 Cir., 94 F.2d 862, 871, that a strike because of an employer's refusal to negotiate was protected by § 13, and employees so engaged could recover their positions even at the expense of workers hired to replace them during the strike. 2 Article VI, Clause 2 of the Constitution. 3 Although this litigation is controlled by the Wagner Act, there is nothing in the Labor Management Relations Act of 1947 that suggests that Congress wished to withdraw its protection from the right to strike except to the extent specially provided by the amendments to the Act. See S.Rep.No.105, 80th Cong., 1st Sess. 434 (1947). It makes some strikes unfair labor practices. 61 Stat. 141, 29 U.S.C. § 158(b), 29 U.S.C.A. § 158(b). But the strikes so condemned concededly do not include the kind we have in the present cases. The amendments to §§ 7 and 13, 29 U.S.C. §§ 157, 163, 29 U.S.C.A. §§ 157, 163, do not restrict the right as it previously existed. Moreover, the 1947 legislation comprehensively defines a strike, 29 U.S.C. § 142, 29 U.S.C.A. § 142, as 'any concerted slow-down or other concerted interruption of operations by employees', which is broad enough to include the activity which Wisconsin has condemned here. 4 The Court heretofore has held that the measure of the right to strike in these interstate industries is a question of federa law. National Labor Relations Board v. Fansteel Metallurgical Corporation, 306 U.S. 240, at pages 255—257, 59 S.Ct. 490, at pages 496, 497, 83 L.Ed. 627, 123 A.L.R. 599. Thus § 2(3) of the Wagner Act defined employee to 'include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute * * *.' 49 Stat. 450, 29 U.S.C. § 152(3), 29 U.S.C.A. § 152(3). In accordance with this section the Court has held that participation in a strike did not remove workers from the protection of the Act and that they retained the status of employees. See National Labor Relations Board v. Mackay Radio & Telegraph Co., 304 U.S. 333, 345—347, 58 S.Ct. 904, 910, 911, 82 L.Ed. 1381. The question of what is a 'labor dispute' within the meaning of § 2(3) necessarily involves a consideration of whether the strike was or was not justified. See National Labor Relations Board v. Stackpole Carbon Co., 3 Cir., 105 F.2d 167, 176. Determination of the legality of strikes in interstate industries by federal law is necessary if the administration of the federal system of labor-management relations is to be uniform and harmonious. The status of workers as employees will determine what relief they may be entitled to under the Federal Act. See Phelps Dodge Corporation v. National Labor Relations Board, 313 U.S. 177, 61 S.Ct. 845, 85 L.Ed. 1271, 133 A.L.R. 1217. Reinstatement rights may indeed depend on whether a worker has lost his status as an employee through activities not comprehended in the federal protection of the right to strike. National Labor Relations Board v. Fansteel Metallurgical Corporation, supra.
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